Cryptocurrency is growing in popularity amongst traders and investors, but according to a new report issued by the Bank of Canada, most people that own cryptocurrency don?t really understand it, and are simply getting involved as a means of taking part in a trend.
Bank of Canada: Financially Illiterate People Are Likely to Get Involved in BTC
The report says that people who are financially illiterate are far more likely to hold cryptocurrency than those that have been investing or trading for a long time. Published at the end of August, the bank says it?s time for people to take their financial education to a new level before they simply jump into a new trading venue.
To garner its results, the Bank of Canada utilized what?s known as the Cash Alternative Study. Researchers involved in writing the report state in the document that approximately 47 percent of Canadians ? nearly half the country ? is highly financially illiterate. About 35 percent are in the middle, while another 18 percent do have some financial knowledge. It is estimated that only about four percent of Canadians fall into the ?highly financially literate? sector.
Here?s the real clincher. The study took place between the months of August and September of 2019, so roughly one year ago. Respondents took part in a survey and answered questions regarding their use of cash and adoption of digital payment means. In addition, they also talked about what could potentially happen should paper or fiat currencies disappear completely.
The fact that the study took place a year ago and is just being released now leaves a lot to be desired, and it?s possible that the bank is leaving out a lot of new information. Data that could potentially disprove its present theories. For example, it?s been suggested that institutional investors are becoming much more involved in the crypto space. Companies such as Grayscale, for example, are reporting billion-dollar BTC investments during their second quarters.
This means that customers were trading more than $300 million in bitcoin each month for a period of three months. In addition, companies such as MicroStrategy have invested more than $400 million in bitcoin and crypto over the past few weeks alone not for speculative purposes, but because the company sees bitcoin as much more stable than cash or other assets.
Some Missing Data?
Institutional traders are long thought to be professional traders, so the idea that these customers would be investing in bitcoin because they don?t know what they?re doing is a bit ludicrous. In addition, these are large amounts we?re witnessing, which suggests that institutions have strong ideas about not only the size and scope of the crypto space now, but about how big it will become in the future.
The good news about the report is that it suggests crypto is becoming much more mainstream. The document suggests that about 84 percent of Canadians have some familiarity of digital currencies.