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Cryptocurrency is still a financial
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platform that is not totally understood
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by a segment of the population. To that
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end, the Wharton School has developed a
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cryptocurrency confidence index so we
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can better understand the perception of
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that marketplace. Pleasure to be joined
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by Dave Reestein, marketing professor
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here at the Wharton School, who is one
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of the collaborators on this report.
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Dave, it's been a while. How are you,
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sir?
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>> I'm doing great and thank you very much
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for having me on today.
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>> Thank you. Let's start, I guess, by
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giving us the background on doing a
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report like this. And obviously, with
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something like cryptocurrency that is
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still relatively new for a lot of
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people, having a better understanding of
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what people's understanding is is
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probably a good thing.
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>> I think the way you say stated it is
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exactly right. We're trying to
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understand what people think and and
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their perceptions of of the currency.
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And so, it's a new financial instrument.
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And the question is so how confident are
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people about that? That's what we were
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trying to do.
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>> All right. So tell us more about the
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report how the data is collected the
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question the types of questions that are
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asked.
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>> So we have a variety of questions but
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let's first start as you say with how
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the data is collected. We're using an
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online panel. We do a sample once a
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month and we sample 1,000 people from
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across the United States. So, it's US
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only and and only, you know, looking at
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1,000 people, but we've been doing it
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now for 36 months. Actually, this is we
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just did our 38th month because we
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started January 2023
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and um and we have a variety of
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questions. the key set of questions that
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we have asking people about how
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confident they are in the currency. And
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so we do that asking four different
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questions and we want to know
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specifically sort of what it is they
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think about the future of
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cryptocurrency. And we're trying to see
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does consumer sentiment does their
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confidence in it in any way help us
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predict what's going to happen with
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crypto prices. So right now what is the
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report telling us about people's
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thoughts on cryptocurrency?
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>> Well, what I will tell you is for the
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first several years, you know, crypto
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prices and confidence kept going up and
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it was sort of hard to separate. Is is
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confidence lagging prices that as prices
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go up, people become more confident or
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as they become more confident, do prices
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then go up? And the and the answer was
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it's some of both. But what we started
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seeing is while the prices were going
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up, we saw confidence starting to go
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down. And it was like suddenly these
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these two lines that were in parallel
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started to separate. And it was like,
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hm, what's this going to tell us? And as
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we saw confidence go down, two months
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later, prices started to go down. And so
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the confidence we're precursors to the
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prices and what it is that we saw.
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>> Do we know why the confidence has kind
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of led us on this path right now?
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>> We don't know why. What what we do know
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is we ask people what is it that
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influences them a and um and use that to
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try and see so what could be leading
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actually their confidence and um but we
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don't have you know so tell us why
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you're less confident we we don't have
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that we have a whole bunch of other
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questions about you know so who are you
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where do you live right
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>> how how confident are you in in the Fed
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and the SEC we have questions like that
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that are part of
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>> well and and so that is another
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important part to this because the
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regulatory side is something that is
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still very much up in the air but it is
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a very important component to where I
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think most people think cryptocurrency
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is going to have an impact the next 5 10
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20 years down the road
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>> no no question about it it's it's going
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to be part of what happens
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>> and and and and I might say that
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I think that owners of crypto are
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becoming more appreciative of um of
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regulatory playing some role and and
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assuring that it's going to be stable.
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>> How much do you see a lack of
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understanding still about the platform
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out there and if it's out there
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obviously what kind of impact does that
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have?
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uh there's no question there is a a
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great deal of uncertainty, lack of
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understanding as you put it and and yet
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I think what that means is that people
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view this as a risky investment
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but they but they do view it actually to
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me what's really interesting is we refer
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to it as cryptocurrency.
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>> Yeah. like it's it's an alternative
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currency, but to a very large degree,
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it's viewed like an investment and and
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people do see it as a risky one because
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there's so much uncertainty about what's
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really behind it and and where it's
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going to go,
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>> right? And and I think that's a key
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component there. And so then from that
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perspective, do people feel like it is
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something good to potentially invest in
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right now?
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So they were feeling more and more
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positive about it. Um when President
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Trump came out supporting it, we do have
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evidence that you know Trump's support
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bolstered confidence,
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>> bolstered prices, but now what we see is
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some people I don't know I can't say
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they're losing confidence in the
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president because they still say he
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plays a role in in it. But um but
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obviously some of their confidence has
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gone down with the currency.
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>> Yeah. and and it probably can't help
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that we get these anecdotal stories uh
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of cryptocurrency being used somehow in
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illegal activities and and obviously
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when you're thinking about the marketing
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of a product
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I know there's the old line about you
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know any press is good press but in a
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certain like this I think negative press
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certainly can't help the growth of
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something like cryptocurrency
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>> that is absolutely the case It it makes
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it seem a little bit dirty when it's
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being used in any criminal activities.
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>> Yeah.
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>> And and those have ranged in in all
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sorts of different types of activities.
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And I and I think that has led to some
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of the volatility that we see.
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>> I was going to ask you next, can you see
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the level of confidence adjusting as we
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have seen some of the price volatility
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in cryptocurrency over the last uh last
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year, year and a half? So it to to my
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amazement the confidence grew over the
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last year and a half and it's only been
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in the last few months that we've seen
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the confidence starting to go down
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>> and and then subsequently we see the
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prices going down.
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>> What then are you watchful for from a
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researcher's perspective as you move
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forward with this type of work talking
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with people every month? So, we're we're
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trying to see shifts in who it is that
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is owning cryptocurrency and who it is
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that is confident about cryptocurrency.
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Yeah. One of the things that is amazing
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to me is, you know, I I ask people, so
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who who do you think is most likely to
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be confident in cryptocurrency, East
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Coast, West Coast, or the Midwest? And
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people always guess the coast, and it's
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the Midwest that happens to be the
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confident. And that really surprises
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people. Uh and and then the question is
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so why? And and we've tried digging from
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a researcher's perspective about why
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that would be the case.
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>> And some of some of that is just in
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terms of confidence and centralized, you
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know, uh control. And so thinking about
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the banking system and then their
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centralized control, a a lot of the
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Midwest and a lot of uh the more
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conservative sector of the population
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tends to want things decentralized
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and um and and we see that in the data
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>> and I assume that that the mindset of
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the public at least right now is they do
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see it as an investment. They do see it
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as a component to move value back and
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forth, but they probably don't see it as
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a traditional currency as we know it,
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like a dollar, $20, etc. Um, and it
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doesn't feel like we're going to get to
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that point, you know, anytime in the
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near future.
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>> So, one of the questions that we've
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asked people in past is, would you like
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to be paid in cryptocurrency?
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And and the answer is no, no, no. Even
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those that are confident say, "No, don't
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give me hard cash." You know, I want I
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want cash. I have much more confidence
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in cash. Um, I'll selectively take money
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I could afford to gamble with and and
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put it into crypto, but don't put my
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paycheck in crypto. That's too much.
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>> Dave, I appreciate the time today.
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Thanks very much. All the best.
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>> Okay. Well, thank you very much. And
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enjoy the snow.
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>> Thank you. Dave Reestein, professor of
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marketing here at the Wharton School.
