August 10, 2014 at 4:21 pm ET
Hispanics As Bitcoin’s Biggest Fans
Despite all of the attention Bitcoin has generated, a majority of Americans still say they don’t really know what it is. Morning Consult polling this month found that 53 percent of people said they knew “not much” or “nothing at all” when it comes to Bitcoin. But there is one demographic that has been an outlier in these results.
Hispanic respondents reported a greater intensity of knowledge around the burgeoning digital payment system, with eighteen percent of Hispanics reporting they know “a lot” about Bitcoin, versus ten percent of whites. This finding was mirrored in a June Morning Consult poll, which found 21 percent of Hispanics reported knowing “a lot” about Bitcoin, compared to 8 percent of whites.
And it’s not just that Hispanics report a higher level of knowledge regarding Bitcoin. They are also more likely to say they will use Bitcoin. In August, 42 percent of Hispanics said they were likely to use Bitcoin to purchase goods and services, compared to 24 percent of whites. In June, 52 percent of Hispanics said they were likely to use Bitcoin, versus 21 percent of whites.
Both polls were conducted among a nationally representative sample of more than 1,700 likely voters. The sample of Hispanic voters is smaller, but the fact that the findings were repeated in month-to-month polls suggests a trend. But it gets more difficult when you try to parse exactly what is behind the trend.
Some have suggested Hispanics’ higher level of knowledge about Bitcoin could be a result of the group being more likely to send money abroad. According to Pew Research, $22.8 billion was sent from the United States to Mexico in the form of remittances in 2012, making up nearly 20 percent of total remittances sent out of the United States that year.
But Enrique Lopezlira, a senior policy advisor at National Council of La Raza, said lower levels of remittances since the economic crash in 2008 and recent government regulations might tamp down the use of Bitcoin to send money abroad.
“Of course it is hard to identify causation,” Lopezlira said in an interview. “But I would point to a couple of things. First, the remittance market to Latin America has sort of recovered, it hasn’t in Mexico – it is 29 percent below its 2006 peak,” Lopezlira said.
“And the potential for Bitcoin to lower the cost of remittances, it is not the case in the U.S. The Consumer Financial Protection Bureau said Bitcoin is money…so they would have to follow any other regulations about remittances.”
And than means remittances using Bitcoin could be just as expensive as the methods that exist today.
Instead of remittances, it could simply be that the Hispanic population is typically younger than other groups. Ana Gonzalez-Barrera of the Pew Research Center pointed to this as an explanation for the findings.
“We have results from Pew Hispanic and Pew Internet that shows Hispanics tend to have higher shares of technology usage, particularly with mobile technology…part of that is actually that Hispanics are younger than other groups, and they are more likely to use technology because they are younger,” Gonzalez said.
Morning Consult’s August poll followed this trend. In the survey, 39 percent of Hispanics were between the ages of 18 and 29, while 13 percent of whites reported the same age.
The fact that younger Hispanics are more familiar with digital currencies and more willing to use them could have important implications for the marketing of financial products. One company taking advantage of this potential nexus is the startup Quippi, which allows customers to buy a gift card in the United States and give a PIN number to a recipient in Mexico. That person can then use those funds at designated stores, and the transaction is conducted free-of-charge for the customer. In other words, it’s a lower cost way for people in the United States to get money to Mexico than a traditional remittance, which can carry heavy fees.
Quippi CEO Michael Aleles said Bitcoin is not a factor for his customer base, who largely use cash and may not have bank accounts or credit cards.
“For our customers, it’s just not even a consideration,” Aleles said in an interview. “It’s completely irrelevant…our customers are underbanked, they don’t have credit cards, they don’t have banks. It’s a leap to use bank accounts or credit cards, let alone Bitcoin.”
Still, Aleles saw a huge market and untapped potential, even with remittances not fully recovering from the financial crisis and many customers not having traditional bank accounts. He said Quippi’s users are both young and old, and they will use both cash or cell phones to complete transactions.
“The market is enormous from the US to Mexico – it bounces up or down in any given year, but the volume of money that moves to US to Mexico is significant…what we are doing is an easy value proposition – if you are using a paid service, now you can do that for free.”