- A new survey finds that crypto mistrust is waning.
- The crypto landscape has welcomed multiple developments and events that have contributed to improved public perception.
- Lingering issues that tarnish the industry remain, and no easy answers exist.
Cryptocurrencies remain a divisive topic, with advocates and skeptics firmly rooted in their opposing views. The advocates maintain that digital assets represent a revolutionary alternative to a broken financial system capable of democratizing money and fostering greater financial inclusion. In contrast, naysayers attack the industry as nothing more than a Ponzi scheme enabling illicit activity and environmental destruction.
However, a recent survey conducted by Deutsche Bank suggested that the tide may be turning. The findings reveal a notable decline in public crypto mistrust, suggesting that the naysayers may be coming around to digital assets as a bonafide investment vehicle and medium of exchange.
Crypto Mistrust Tailing Off
A recent survey conducted by Deutsche Bank revealed a notable shift in public sentiment towards cryptocurrencies. The survey of 3,600 customers found that 52% of respondents now believe crypto will be an important asset class and payment method in the future. This is a significant increase from less than 40% when the same question was posed in September 2023, suggesting crypto mistrust is declining.
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One of the factors fueling this shift in perception is the US Securities Exchange Commission’s (SEC) approval of Bitcoin ETFs in January. Launching these regulated investment vehicles has brought Bitcoin into a highly controlled environment, giving a nod of legitimacy while paving the way for massive institutional inflows.
David Carlisle, policy advisor at Elliptic, explained that while the SEC remains concerned about conduct in the crypto industry, the approval of Bitcoin ETFs is a catalyst for building trust, as these funds trade on regulated national securities exchanges that adhere to surveillance policies designed to mitigate risk and fraud.
Additionally, high-profile criminal cases such as the downfall of Do Kwon and Sam Bankman-Fried have demonstrated to the public that crypto scammers will face consequences for their actions. This has helped dampen concerns that the cryptocurrency industry is a Wild West of unchecked fraud and misconduct.
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Furthermore, the emergence of proof-of-reserves (PoR), a method for crypto exchanges to verify the assets they claim to hold, has also contributed to declining mistrust, providing greater transparency and assurance around exchange solvency.
However, PoR is not an infallible practice, with critics arguing that exchanges often do not disclose their liabilities, leaving an incomplete picture of their financial position. Moreover, the auditors who sign off on reserve balances can be mistaken or tricked, adding another layer of uncertainty that continues to fuel skepticism around crypto’s trustworthiness.
Lingering Doubts Remain
While the Deutsche Bank survey suggested a decline in overall public mistrust towards cryptocurrencies, the data also revealed lingering skepticism and crypto mistrust among those surveyed, including a third of respondents expecting Bitcoin to fall below $20,000 by the end of 2024.
While this response marked a notable improvement from the 35% and 36% figures recorded in February and January, respectively, of individuals anticipating BTC to dip below $20,000 by year-end, it still underscored the persistent challenge of volatility and downside risk in shaping public perception of cryptocurrency.
Anthony Pompliano stated in a recent interview that Bitcoin is historically a highly volatile asset, with it being common for the coin to experience five or more 30% pullbacks during a bull cycle. This rollercoaster of price swings adds to poor public perception, which becomes particularly pronounced during market downturns.
Similarly, on security, although crypto hacks fell from $3.7 billion in 2022 to $1.7 billion in 2023, per Chainalysis data, this figure is still staggeringly high, adding to the narrative that crypto is an unsafe and untrustworthy industry.
The issue is further compounded by the lack of an FDIC-style scheme to compensate victims of hacks and scams. This leaves users to either swallow the loss or rely on associated service providers to stump up for losses, neither of which are ideal scenarios and point to a lack of fail-safes within the industry.
On the Flipside
- New technologies can take time to reach mass adoption.
- Crypto complexity can put individuals off learning and experiencing the ecosystem.
Why This Matters
The changing public perception of cryptocurrencies is pivotal in the asset class’s maturation. As skepticism gives way to acceptance, the doors open for deeper integration of crypto technologies into the mainstream financial system.
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