According to a study by Bybit and Toluna, 64% of North Americans spend less than two hours or do no research before investing in cryptocurrencies.
Boomers (those aged 56-64) tend to be more cautious, focusing on technical factors and surveying the market for a few days before diving into it.
Jumping on the bandwagon without proper analysis
Cryptocurrency exchange Bybit and consumer intelligence platform Toluna surveyed more than 10,000 people to determine if they follow proper due diligence procedures before allocating funds in digital currencies.
Nearly 50% of North American respondents admitted to becoming HODLers after weighing the pros and cons for just a couple of hours, while 15% said they completely trust social media and advice from friends.
Younger generations are more likely to neglect the due diligence process than older ones. 33% of Gen Xers and 47% of Boomers spend at least a few days before investing in a cryptocurrency project.
The study further revealed that more than 1,700 of the participants have already purchased digital assets. 50% do not see stricter regulatory standards as a concern, while 25% would support more oversight on centralized exchanges for additional protection.
Know-your-customer verification seems to have little effect on users when choosing a platform, with 50% saying they have no preference on the type of requirements. On the other hand, 21% would choose a trading venue that does not impose such validation.
“In an ideal world, it is understandable why some might oppose KYC verifications. However, in reality, abuse of the system by malicious people should be prevented. Thus giving rise to the need for such forms of protection, not only for exchanges but also for users,” the report explains.
Bybit and Toluna also noted that KYC requirements are useful tools that could prevent cybercrime and cyber attacks, which “ultimately contribute greatly to the security of the ecosystem.”
CEXs are more trustworthy than banks
The analysis showed that cryptocurrency investors have more faith in centralized exchanges than traditional banks, internet providers, local governments, and NFTs. It is worth noting that even DeFi believers give CEX high trust scores.
These platforms have been in the spotlight after the FTX crash. Many have presented proof of reserves to clients to show they are not cash-strapped. Despite that, a significant number of investors transferred their holdings to self-custody wallets or withdrew them in the weeks after the infamous crash.
The world’s leading cryptocurrency exchange Binance processed over $8 billion in daily withdrawals as of mid-December. Chief Executive Changpeng Zhao did not seem concerned, viewing it as a “stress test” that could show the trading venue could fulfill a large number of requests at any one time.
He argument that the wave of withdrawals was the result of a FUD, saying that users should feel free to store their cryptocurrencies in cold wallets if in doubt. “If not, here we are,” she assured.
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