Blog: 13% of Canadians Own Crypto Yet Many Don’t Understand It
By Jeff Pollock
The Ontario Securities Commission published a survey earlier this week about cryptocurrencies.
Its findings weren’t particularly surprising. Too many people own it, and few understand it.
The results showed that 13% of Canadians own a crypto asset. At least that was the figure when the poll was conducted between April 26 to May 10, 2022. Ownership might be lower today as people tend to buy high and sell low. The most popular cryptocurrency, Bitcoin, which ranged from $30,000 to $40,000USD when the survey took place, now hovers around $19,000USD. That’s down between a third to a half in value.
Despite its ownership, only 51% of people surveyed could accurately define a crypto asset. Furthermore, respondents scored a mere 37% on the knowledge questionnaire and 38% believed crypto assets play a key role in our financial ecosystem.
Why would anyone buy something they don’t understand? Well, the survey said that the majority of purchases were due to word of mouth (41%) and social media influencers (21%).
Avoiding bad purchases can often be just as important – if not even more important – to your long-term performance then making savvy buys.
Crypto and money are two different things.
To be called “money”, the item must act as a medium of exchange. In other words, it must be able to facilitate a trade between multiple parties. Due to its exceptional price volatility – sometimes changing plus or minus 10% in a single day – one could never write a forward-looking contract or price a good or service for any reasonable length of time using a commodity like Bitcoin as its currency.
If it’s not money, then what it is? It’s nothing more than a speculation. As the “greater fool” theory rightly suggests, people will buy something strictly because they hope another person will be willing to pay a higher price for it later. While there is no actual value in Bitcoin because it is not backed by the government, its unregulated, and its price volatility makes it unsuitable to be used in the future as money. For these reasons, we’ve never traded any cryptocurrencies and watch from the sidelines.
Instead, we focus our efforts on stocks backed by profits, revenues, assets, and cash flow.
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