40% of cryptocurrency investors spend 2 hours on due diligence

In a new study on financial literacy, cryptocurrency exchange Bybit promotes the need to immerse themselves in the journey of retail investors in the wild west of the digital asset space.

While the level of investing awareness is slowly improving and there are signs that retail cryptocurrency investors are diversifying their portfolios, there is still a long way to go, the survey says.

In the process, Bybit introduces the industry’s first investment literacy framework and highlights key findings to educate existing and prospective crypto investors.

As part of their survey, Bybit and Toluna polled 10,500 unique participants across 19 markets about their knowledge and attitude towards cryptocurrencies with 1,748 identified as “cryptocurrency investors”.

The purpose of the joint study, launched in November 2022, was to provide an insight into how cryptocurrency investors perceive centralized exchanges, KYC. It also aims to explore whether there are significant differences across countries, markets and generations in terms of retail investment literacy.

For the purposes of this survey, the authors have identified three major milestones for the engagement of a typical cryptocurrency investor. First, their decision to invest in cryptocurrencies, second, their choice of a vendor or project, and finally, how they manage their portfolios.

While the KYC process is recognized as a useful tool for preventing cybercrimes and hacks, over 50% of participants have little or no preference when it comes to exchanges that use identity checks. However, 1 in 2 investors are calling for more centralized control for wider Web3 adoption.

CEX and DeFi are not mutually exclusive

When asked if they would prefer to trade to protect their cryptocurrency investments, 25% of correspondents said they are willing to accept CEX regulation for added security. As the survey pass rate shows, cryptocurrency investors score lower on NFTs and DeFi than most Web2 players, reflecting their security concerns in a decentralized environment.

Interestingly, however, the results indicate that DeFi advocates still attribute high trust scores to CEXs. About 90% of respondents gave at least 4 out of 5 trust scores, debunking the myth that centralization and decentralization cannot go hand in hand.

The report states that 40% of investors surveyed spend less than 2 hours due diligence on a project before investing. More worryingly, they prioritized reputational factors over other more fundamental factors.

Nearly one in three correspondents invest in cryptocurrencies due to its growth and wealth accumulation potential. However, 46% of cryptocurrency investors invest in it for the long term, with an investment horizon of 7 months to more than 2 years.

To sum up, the results represent brief cause for optimism with some promising upsides in an otherwise chaotic industry. Having gained deeper insight into the user journey of cryptocurrency investors, Bybit believes that the investment literacy of cryptocurrency investors is advancing with more room to mature. The study also highlights the need for accessible crypto education that everyone can grasp regardless of income, gender, race, or educational status.

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