By Anthony Broderick, CoinSchedule‘s Cryptocurrency Analyst
In a surprise announcement yesterday the FCA revealed its findings from its first-ever cryptoassets consumer research. The FCA along with the other governmental institutions have paid increasing attention to the rise and now fall of cryptoassets because of both the media hype they were receiving near the end of 2017/start of 2018 as well as the number of retail investors who invested in one or more of these assets. Prior to this monumental boom in the interest surrounding cryptoassets, you would rarely hear any comments from government bodies or government representatives regarding this subject matter. However, this trend is something we expect to see continue to increase over time.
The main take away from the research was as follows – “The results suggest that although cryptoassets may not be well understood by many consumers, the vast majority don’t buy or use them currently. Whilst 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.”
In truth, there are no groundbreaking findings here. Cryptoassets are still in their infant stage of development, both in terms of technological development as well as mass adoption by society at large. My view is that the industry is in roughly the same phase of development as the internet was in 1993. Therefore it is way too early to assume that cryptoassets have done, or could do, anything substantive to impact wider society just yet.
Regarding the rate of cryptoasset investment in society, the FCA revealed the following statistic – “We estimate only 3% of consumers we surveyed had ever bought cryptoassets. Of the small sub-sample of consumers who had bought cryptoassets, around half spent under £200 – a large majority of these said they had financed the purchases through their disposable income.” If nothing else this statistic is quite comforting. A quick gander through various sub-Reddit threads will reveal many stories being broadcast to the relevant community about people investing all of their money into this or that coin and having lost nearly all of it. By reading many of these stories it begins to paint a bleak picture of the average cryptoasset investor and their questionable approach to risky investments. However, this FCA finding is comforting as it reveals that most cryptoasset investors are wiser and more reserved than Reddit would have you believe.
In my view, these findings suggest that although there is a long way to go in terms of mainstream adoption, if as an industry we can work to educate consumers on the benefits of cryptoassets relative to legacy systems and address the issue of trust then there is significant potential to create a new (and inclusive) financial system backed by cyptoassets.