In a new study on financial literacy, crypto exchange Bybit promotes the need to delve into the journey of retail investors in the Wild West of the digital asset space.
While the level of investment knowledge is slowly improving and there are signs that retail crypto investors are diversifying their portfolios, there is still much to be done, according to the survey.
In the process, per bit presents the industry’s first investment literacy framework and highlights key findings to equip existing and potential crypto investors with the proper education.
As part of its survey, Bybit and Toluna surveyed 10,500 unique participants across 19 markets on their knowledge and attitudes toward cryptocurrencies with 1,748 identified as “crypto investors.”
The aim of the joint study, launched in November 2022, was to provide insight into how crypto investors view centralized exchanges, KYC. It also aims to determine whether there are significant differences between countries, markets and generations in terms of retail investment literacy.
For the purposes of this investigation, the authors have identified three main steps for a typical crypto investor to get involved. First, their decision to invest in crypto, second, choosing a vendor or project, and finally, how they manage their portfolios.
Although the KYC procedure is recognized as a useful tool to prevent cybercrimes and hacks, more than 50% of participants have little or no preference when it comes to exchanges using identity checks. However, 1 in 2 investors demand more centralized control for broader Web3 adoption.
CEX and DeFi are not mutually exclusive
When asked if they would prefer to trade to protect their crypto investments, 25% of correspondents said they were willing to accept CEX regulations for greater security. As the survey’s success rate shows, cryptocurrency investors give lower scores to NFT and DeFi than most web2 players, reflecting their security concerns in a decentralized environment.
Interestingly, however, the results indicate that DeFi believers still place high trust scores on CEX. Around 90% of respondents gave at least 4 out of 5 trust scores, debunking the myth that centralization and decentralization cannot go together.
The report states that 40% of investors surveyed spend less than 2 hours doing due diligence on a project before investing. More worryingly, they prioritized reputation factors over other more fundamental ones.
Nearly one in three correspondents invest in crypto because of its potential for growth and wealth accumulation. However, 46% of crypto investors are in it for the long term, with an investment horizon of 7 months to over 2 years.
In summary, the results represent brief cause for optimism with some promising upsides in an otherwise chaotic industry. After gaining a deeper insight into the user journey of crypto investors, per bit believes that the investment literacy of crypto investors is progressing with more room to mature. The study also highlights the need for accessible crypto education that anyone can grab, regardless of income, gender, race, or educational status.