60% of North Americans Invest in Crypto Without Doing Due Diligence: Study

According to a study by Bybit and Toluna, 64% of North Americans spend less than two hours or don’t research at all before investing in cryptocurrencies.

Boomers (those aged 56-64) tend to be more cautious, focusing on technical factors and inspecting the market a few days before diving into it.

Jumping on the Bandwagon Without Proper Analysis

The cryptocurrency exchange – Bybit – and the consumer intelligence platform – Toluna – surveyed over 10,000 individuals to determine whether they follow appropriate due diligence procedures prior to allocating funds in digital currencies.

Nearly 50% of the North American respondents admitted becoming HODLers after evaluating the pros and cons for just a couple of hours, while 15% said they rely entirely on social media and advice from friends.

Younger generations are more likely to neglect the due diligence process than the older. 33% of Gen X and 47% of Boomers spend at least a few days before investing in a cryptocurrency project.

The study further revealed that over 1,700 of the participants have already bought digital assets. 50% don’t view stricter regulatory standards as a concern, while 25% would support enhanced supervision on centralized exchanges to get additional protection.

Know Your Customer verification seems to have little effect on users when choosing a platform, with 50% saying they don’t have any preference on the type of requirements. On the other hand, 21% would pick a trading venue that does not impose such validation.

“In an ideal world, it is understandable why some might oppose KYC verifications. However, in reality, the abuse of the system by malicious individuals needs to be prevented. Thus giving rise to the need for such forms of protection, not just for the exchanges but for the users,” the report explained.

Bybit and Toluna also outlined that KYC requirements are useful tools that could prevent cybercrime and hacks, which “ultimately contribute largely to the safety and security of the ecosystem.”

CEXs Are More Trusted Than Banks

The analysis showed that cryptocurrency investors have more faith in centralized exchanges than traditional banks, Internet providers, local governments, and NFTs. It is worth noting that even DeFi believers put high trust scores on CEXs.

Such platforms have been in the spotlight after the collapse of FTX. Many presented proof-of-reserves to customers to display they have no liquidity issues. Despite that, a significant number of investors transferred their holdings to self-custody wallets or cashed out in the weeks after the infamous crash.

The world’s leading crypto exchange – Binance – processed over $8 billion in daily withdrawals in mid-December. CEO Changpeng Zhao seemed unconcerned, viewing it as a “stress test” that could show the trading venue could honor a large number of requests at any time.

He argued that the withdrawal wave resulted from a FUD, saying users should feel free to store their crypto holdings in cold wallets if they have concerns. “Otherwise, we are here,” he assured.