Digital currencies like bitcoin have made headlines for the explosive jump in their values in the past year. People who identify themselves as Democrats are more likely than Republicans to own a cryptocurrency, 14 percent to 8 percent, according to a survey by researcher Zogby Analytics. Thirteen percent of independents have bought a cryptocurrency.
Still, the overwhelming majority of survey respondents, 82 percent, haven’t invested in bitcoin, ethereum or litecoin, leaving plenty of room for growth. One in five surveyed said they are likely to purchase cryptocurrencies in the next six months, compared with 70 percent who said they are unlikely to buy digital coins, Zogby said.
The survey comes amid a cryptocurrency investing craze, with startups raising hundreds of millions of dollars online to fund their projects. Oftentimes, the companies have little more than a few employees and an outline of a business plan.
“Although cryptocurrencies such as bitcoin exhibit characteristics of currency such as intrinsic value, exchangeability, and only a finite amount created, others have called it a mania and the biggest bubble since the Mississippi Company or the Tulips craze in Europe,” Zogby said in a statement.
Some supporters of digital currencies see them as a way to guard the value of their money, especially when fiat currencies lose value as central banks like the Federal Reserve flood the financial system with cash during economic slowdowns. The U.S. dollar index fell 10 percent in 2017, the most since 2003, and another 10 percent drop may be ahead this year, according to the Institute of International Finance.
Cryptocurrencies were most popular with men in the millennial generation, ages 18 to 34. About a third of adults who attend weekly religious services have already invested in a cryptocurrency, Zogby said.
Investors need to be cautious about putting their money into cryptocurrency, with more than 10 percent of funds raised through "initial coin offerings" lost or stolen in hacker attacks, accounting firm Ernst & Young said in a report.
The firm analyzed more than 372 ICOs, in which new digital currencies are distributed to buyers, and found that roughly $400 million of the total $3.7 billion funds raised to date had been stolen. Phishing was the most widely used hacking technique for ICOs, with hackers stealing up to $1.5 million in ICO proceeds a month.
The groups who are least likely to buy cryptocurrencies are older, white and who never attend religious services.
“There is definitely more interest in cryptocurrencies today than compared to last year,” Zogby said. “The value can easily increase in the next year, but can it sustain itself at this pace is the big question. When the bubble bursts, the technology will more than likely still be standing, but how much wealth will have been created and how many fortunes lost is the biggest question about bitcoin and other cryptocurrencies that cannot be answered right now.”
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