Usage Rises as Understanding Shrinks: The UK’s Cryptocurrency Conundrum Continues
Amid a rising population of people in the UK who are buying into cryptocurrencies, there appears to be a diminishing percentage of people who actually understand what they are doing.
A study published by the Financial Conduct Authority (FCA) claims that the number of people aware of cryptocurrencies has gone up from 73% of the adult population to 78%. This corresponds to about 2.1 million people in the UK who own and are aware of cryptocurrencies. Keeping in line with the swell in awareness, the ownership volumes have also risen. Median holdings in pounds sterling have gone up from 260 to 300.
What Does This Mean?
This study shows quite conclusively that trading and owning cryptocurrencies is becoming more and more accepted and popular among the adult population of the United Kingdom. However, there is a rather dangerous flipside to this. As part of the same study, the FCA has declared that there is a very noticeable decline in the number of people who understand how crypto mining works.
According to the 2021 study, there was a decrease of 4% in the number of people who correctly identified what cryptocurrency was from a list of definitions. What was 75% in 2020 is now down to 71% in 2021. This is somewhat alarming, as crypto trading is highly risky. People stand to lose a lot financially if they partake in the trading process without knowing what exactly they are doing.
The FCA study also shows that among all the different kinds of cryptocurrency available all across the world, the most popular one seems to be Bitcoin. In fact, most of the people taking part in the survey think Bitcoin is synonymous with cryptocurrency. This makes a certain kind of sense since BTC is the most popular crypto out there, but being unaware of other options in the market is not conducive to smart strategy.
The Trend Unlikely to End Soon
However, this trend is set to continue. Close to half of the people taking part in the survey have said that they will be buying more crypto going forwards because they believe they will make more money eventually. Again, based on a limited understanding of the crypto ecology, this is a dangerous mindset to have.
The executive director of consumers and competition from the FCA, Sheldon Mills, points out the risks associated with this scenario. “It is important for customers to understand that because these products are largely unregulated, that if something goes wrong, they are unlikely to have access to the FSCS or the Financial Ombudsman Service,” he said.
Crypto trading, without a doubt, is a risky business. Without a proper understanding of how the world of cryptocurrency works, the general populace is setting itself up for losses. This is why the people who make this their life’s work are trading almost full time in order to make profit. Without the prerequisite knowledge, there is only so far the regular populace can push itself through their lack of knowledge.
Trading is a game rife with volatility and thus requires hawkish monitoring of trends along with near-constant vigilance. It is not something to be taken lightly. Everyone taking part should educate themselves on the topic, especially the risks, before moving forward with it. They need to know every liability they are likely to trigger and only then decide if this is a trend they want to continue with.
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