Canadians who have bought into Bitcoin tend to be younger high earners with poor financial literacy, according to new research from the Bank of Canada.
Based on a series of surveys, the central bank reported that awareness of Bitcoin remains high at about 88%, but that only around 5% have owned the cryptoasset. That ownership is “concentrated among young, educated men with high household income and low financial literacy.”
Conversely, the research noted that “Canadians who are financially literate are more likely to be aware of Bitcoin but less likely to own it.”
In addition to poor overall financial literacy, the research also found that while Bitcoin owners are, on average, more knowledgeable about the technology than non-owners, more than 20% of those who owned Bitcoin had low knowledge of how Bitcoin works.
“Given that investment was the most common reason owners cited for owning Bitcoin, we see that many owners may be trying to profit from cryptocurrencies without fully understanding the technology,” the research said.
Additionally, it noted that poor knowledge of the underlying technology by Bitcoin investors “is of concern given the risks associated with cryptocurrency — about half of past and current owners in 2019 stated [that] they had been affected by events such as price crashes, losing access to funds, scams or data breaches.”
The most commonly cited issue was price volatility, affecting 18% of Bitcoin owners.
The research also found that 14% of Bitcoin owners stated they lost access to their personal crypto wallets; 6% said that an exchange holding their assets had been hacked; and 5% reported their personal data had been compromised.
In terms of crypto fraud, the research said that 12% had participated in an initial coin offering that ended up being a scam, and 7% had their funds stolen by an exchange.