Bitcoin buyers are not the slick cryptocurrency money-men that most people think, according to new research.
They are more likely to be men aged between 20 and 44 spending less than £200 from their disposable income on their investments.
The profile comes from research by the UK Financial Conduct Authority, the government agency regulating financial services.
A wide-ranging study shows that most people do not understand the intricacies of cryptocurrency trading.
Many talk of buying an entire Bitcoin without realising they can buy just a share.
Get rich quick schemers
Despite not realising how the market works, most saw cryptocurrency investment to get rich quick, explaining friends and social media influencers good fortune has spurred them on.
“Often consumers don’t complete due diligence prior to purchasing. Several consumers said that they hadn’t completed much, or any, research on cryptoassets. Similarly, another survey found that 1 in 6 consumers don’t complete any research prior to purchasing cryptoassets.,” says the report.
“Some consumers are aware of risks, including price volatility. But some even say that risk is part of the attraction. Many don’t appear to have any strategy to sell their assets or a sense of what would motivate them to do so.”
A staggering 73% of consumers had never heard of cryptocurrency.
Only 3% of people interviewed had bought a cryptocurrency asset, and with those that had, Bitcoin (50%) and ethereum (34%) were the most popular.
Evidence for regulators
Christopher Woolard, the FCA’s executive director of strategy and competition said: “This research gives us evidence we haven’t had before about how consumers interact with cryptoassets.
“This will help us ensure we are acting on evidence as we seek to protect consumers and market integrity. The results suggest that although cryptoassets may not be well understood by many consumers, the vast majority don’t buy or use them currently.
“While the research suggests some harm to individual cryptoasset users, it does not suggest a large impact on wider society. Nevertheless, cryptoassets are complex, volatile products – consumers investing in them should be prepared to lose all of their money.’
Cryptocurrency is not a regulated investment in the UK, which means investors with complaints have no recourse to the Financial Ombudsman and must look to the courts to resolve their issues with exchanges or coin operators.