Facebook’s Libra is the latest name in the great crypto game. But how much do users know about virtual currencies to begin with?
Findings from a report released by the multinational cybersecurity firm Kasperksy suggest that consumers are still not ready to adopt cryptocurrencies
Facebook officially threw its hat into the cryptocurrency ring with Libra, a new global digital currency that will be powered by blockchain technology. According to a detailed white paper, the proposed virtual currency is designed to be a stable digital cryptocurrency that will be fully backed by a reserve of real assets—known as the Libra Reserve—and supported by a competitive network of exchanges buying and selling Libra.
Today, more than 1,500 cryptocurrencies are available on the internet. These currencies are transferred from “peer to peer" without the intervention of financial institutions, with transactions moderated by miners who record them in a blockchain.
But findings from a report released earlier in June by the multinational cybersecurity firm Kasperksy suggest that consumers are still not ready to adopt cryptocurrencies despite a surge in their popularity among global businesses and rich individuals. The Kaspersky Cryptocurrency Report 2019 is based on a study of consumer attitudes for which 13,434 people were surveyed in 22 countries in October-November.
The most notable example of a cryptocurrency is Bitcoin. As of May, the currency had reached a market capitalization of nearly $100 billion (around ₹6.9 trillion), the report adds.A key finding of the report is that 81% of users have never purchased cryptocurrency, while 35% believe cryptocurrencies are a fad. The reason for this, it would appear, is the technology’s unproven status and volatility.
Towards the end of 2017, Bitcoin set a record high valuation of $19,783.06. This was swiftly followed by the “great crypto crash" of early 2018 when Bitcoin lost almost 65% of its value, with other digital currencies experiencing similar drastic falls. Today, one Bitcoin is valued at roughly $11,383.70. Nearly a third (31%) of those surveyed in the report said they believe cryptocurrencies are volatile. Only a fifth (19%) use them for monthly online payments, the report adds.
Digital currencies are also dogged by cybercrime: Nearly 15% of the users spoken to for the report have been victims of cryptocurrency fraud, while nearly 19% of those surveyed said they had experienced hacking attacks on cryptocurrency exchanges. The value of cryptocurrency stolen in 2018 alone was pegged at a staggering $2 billion, the report adds.
Many users, of course, are still not well versed in the concept of digital currencies and cannot use them appropriately. Just 10% of the people surveyed in the report said they fully understood how cryptocurrencies worked, while 45% said they had heard of the concept but did not know how it actually works.
The 18 June announcement on Libra revived interest in cryptocurrencies. The addition of a proper digital wallet—dubbed Calibra—for this proposed digital currency makes things more intriguing. Many financial experts expect cryptocurrency values to soar yet again by the end of 2019.
But the Kaspersky report suggests that users are watching from the sidelines. Almost 14% of the people who do not use cryptocurrency currently would like to do so in the future. Nearly a third (30%) of consumers are still waiting to see what the future holds for digital currencies before investing.
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