A lack of understanding and trust is holding consumers back from using cryptocurrencies.
A new Kaspersky report, “Uncharted territory: why consumers are still wary about adopting cryptocurrency”, reveals that whilst 34% of South Africans have some knowledge of cryptocurrencies and there is a demand among many to use the technology, just 19% fully comprehend how they work.
The rate at 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, 70% of South Africans 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 what they are dealing with, later decided against using cryptocurrency. Nearly a fifth (14%) 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, 35% of South African 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. Seventeen percent locally believe cryptocurrencies are a fad that is not worth bothering about.
While widespread interest in cryptocurrencies may have already peaked, there is still a demand to use the technology. Twenty-two percent of those surveyed in South Africa 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 around 5% of those surveyed locally saying they have experienced hacking attacks on exchanges. Criminals also create fake e-wallets to attract people to unwisely invest their money, and 16% of local consumers have been victims of cryptocurrency fraud.
Following several years of cybersecurity research into crypto start-ups, Kaspersky recommends crypto businesses adopt best security practices for smart contract developers, use proven frameworks for smart contracts 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,” says Vitaly Mzokov, head of commercialisation at Kaspersky. “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. 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.”