Fear of the unknown: just one in ten understand how cryptocurrencies work

17th June 2019 – A new Kaspersky survey has discovered that a lack of understanding and trust is holding consumers back from using cryptocurrencies. Its report, ‘Uncharted territory: why consumers are still wary about adopting cryptocurrency’, reveals that whilst 29% of people have some knowledge of cryptocurrencies and there is a demand among many to use the technology, just 10% fully comprehend how they work. 

The rate in which cryptocurrencies are being adopted by global consumers is slowing down, despite celebrities like Johnny Depp and YouTube influencers such PewDiePie embracing the technology. Many consumers still lack a proper understanding of how cryptocurrencies work, and this is continuing to halt mainstream adoption. To date, 81% have never purchased cryptocurrency, highlighting just how far away we are from it being accepted as a common form of payment or investment.

Kaspersky’s survey found that there is a desire amongst many consumers to use cryptocurrency, but a knowledge gap is getting in the way of taking the plunge. In addition, many people who thought they knew with what they are dealing with, later decided against using cryptocurrency. 18% stopped because it became too technically complicated.

This lack of understanding could be leading to mistrust in cryptocurrencies’ ability to keep consumers’ money safe. For instance, 31% of respondents stated that they believe cryptocurrencies are quite volatile and they need to be stabile before they are prepared to use them. There is also a common perception amongst consumers that cryptocurrency will not be around forever. A third believe cryptocurrencies are a fad that is not worth bothering about.

While widespread interest may have already peaked, there is still a demand to use the technology. A fifth of those surveyed said that while they are not using cryptocurrency at the moment, they would like to in the future. Yet there is still doubt amongst consumers – often led by a fear that there is a real risk to their finances. Fraudsters can use cryptocurrencies to their advantage, with 19% of those surveyed saying they have experienced hacking attacks on exchanges. Criminals also create fake e-wallets to attract people to unwisely invest their money, and 15% of consumers have been victims of cryptocurrency fraud.

Following several years of cybersecurity research into crypto startups, Kaspersky recommends crypto businesses adopt best security practices for smart contract developers, use proven frameworks for smart contracts (such as https://openzeppelin.org/) and conduct a third-party assessment of the smart contract to ensure any potential vulnerabilities are not missed.

“It is clear that mainstream adoption and growth of cryptocurrency is being held back due to the vulnerable nature of the technology. While there is a high appetite to use it, giving your hard-earned cash to something you don’t fully understand, or trust, is a hurdle. With the safety of investments being of paramount importance to consumers, it is vital that they take their own steps to safeguard it,” says Vitaly Mzokov, Head of Commercialisation at Kaspersky.

“Like with any cyberthreat, there is no substitute for vigilance – if something looks too good to be true, then it probably is. If you want to trade crypto-assets on any exchange, pay attention to the safety of your account’s credentials. If your goal is long-term investment or use cryptocurrencies for payments, then store it in safe environments and use multiple wallets, or distribute between both software and hardware. We also encourage crypto businesses to organise themselves effectively to show they are able to protect their customers’ investments.”

To help improve stability and foster trust in cryptocurrencies, Kaspersky partners such as Merkeleon have developed legitimate marketplace platforms, online auction platforms, cryptocurrency exchanges and crypto payment systems.

“Cryptocurrency certainly has its benefits but, as we can see, many consumers are still unaware of what they are due to concerns over security and how the technology works. It is an exciting industry to be involved in but it is one that is built upon trust. It is, therefore, imperative that cryptocurrency businesses do all they can to protect their networks and ensure their customers’ finances are safe and secure,” explains Alexey Sidorowich, Head of Sales and Business Development at Merkeleon.