According to a study by FCA, the number of buyers went from 1.5 million in 2019 to 2.6 million this year. Most of those who venture into cryptocurrencies know that they are in an unregulated environment.

There has been a significant boom in the number of cryptocurrency buyers in the UK between 2019 and 2020. People who have purchased cryptocurrencies at some point went from 1.5 million in 2019 to 2.6 million in 2020; this, represents an increase of 42%, according to a study by the UK Financial Conduct Authority (FCA).

The research is part of a joint effort by the FCA, the Bank of England, and other government agencies. FCA Managing Director Sheldon Mills said that the popularity of cryptocurrencies among British consumers has grown, which highlights the importance of this agency’s work in reaching a better understanding of that market and how people interact with those assets.

According to the FCA, most of the respondents are familiar with cryptocurrencies are aware of the lack of a regulatory framework for cryptocurrencies, and understand the risks of volatility. However, the study notes that around 300,000 cryptocurrency holders believe that they are secure. The regulator warns that this could leave them at risk of financial harm.

Figures Highlighted in the Study

The FCA estimates that 3.86% of the population has acquired cryptocurrencies. This corresponds to 1.9 million of the British population over 18 years old, estimated at 50 million. Seventy-five percent of consumers have cryptocurrencies with funds equivalent to less than GBP 1,000, about USD 1,240.

The most popular reason for buying cryptocurrencies (47% of the respondents) was “a bet in which people could win or lose money,” from which it follows that they perceive cryptocurrencies as volatile. In the second place, cryptocurrencies are “part of a more diverse investment portfolio (25%).”

Fear of Missing Out (FOMO) was also a motivating factor for the acquisition of cryptocurrencies since some respondents did “not want to remain out of the purchase of cryptocurrencies” (22%). At the bottom of the list of preferences, it is possible to see two prominent reasons that could come from people with more information about cryptocurrencies: “as part of a long-term savings plan (17%)” and “for political or ideological reasons, or mistrust in the financial system (17%).

The study showed the respondents the list of cryptocurrencies, including Facebook’s Libra, to ascertain which ones were better known. Although they have not yet launched the project, Libra was the second most popular currency, with 22% of respondents having heard of this currency, but almost a fourth of Bitcoin’s popularity (78%).

The percentage of the people consulted who had not heard of cryptocurrencies also decreased by 27%, compared to 58% in 2019. Nine out of ten could identify the definition of cryptocurrency and claimed to have done some type of research before acquiring cryptocurrencies.

These latest figures reveal that many of those who hold cryptocurrencies have basic knowledge about them and are also aware of the lack of regulatory protections, the FCA notes.

Concerning places of purchase, 77% of cryptocurrency holders acquired them from exchanges, of which only 17% use UK-based exchanges. Twenty-three percent of cryptocurrency holders acquired them through unspecified channels.

Advertising is one of the main motivating factors since it can influence consumer sentiment, according to the study. The document states that “traditional media and online news also impact consumer behavior.”

Of all current and former cryptocurrency holders, 45% said that they had seen an advertisement for cryptocurrencies. Of these, 35%, about 400,000 adults, said that advertising made the purchase more likely. An advertisement influenced 6% of current and former cryptocurrency holders.

By Alexander Salazar

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