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The world’s richest people are putting more and more money into cryptocurrency, despite the fact they don’t understand it very well, a new report reveals. Terms like “distributed ledger” and “blockchain” are not especially familiar to the wealthy, according to their advisers. The widespread misunderstanding about the technology behind bitcoin seems to have little or no effect on the attractiveness of crypto investments however.   

Also read: More Belarusians Search “Crypto”, Question “Legalization”

Advisers Confirm Interest in Cryptocurrencies

Cryptocurrencies have caught the attention of rich people around the world, but that does not necessarily mean they understand very well what cryptos really are. About 21% of the respondents in an annual survey of wealth advisors and private bankers confirmed their clients increased investments in cryptocurrencies last year. The lack of understanding of the technology behind bitcoin – distributed ledger – is one of the findings of the latest Wealth Report by Knight Frank.

“We asked about their understanding of blockchain and there is still a huge amount of misunderstanding about it,” Knight Frank’s Head of Research for Asia-Pacific, Nicholas Holt, told CNBC this week. “Although people are getting on the train about investing in cryptocurrencies, perhaps there is not a full understanding of what this could mean to their wealth portfolio,” he noted.

The Wealthy Want Crypto but Don’t Understand It, Survey Shows

Despite the crypto craze, interest towards traditional investments, like stocks and properties, remains high and they are still preferred by the wealthy, according to the report. Experts are not surprised by that finding, as 2017 has been a good year for equities.

At the same time, property remains the cornerstone of most portfolios, accounting for up to 50% of investments in the Asia-Pacific region. 34% of the respondents globally have confirmed intentions to invest in property overseas in 2018. The US and UK are the top markets, Nicholas Holt said. American commercial and residential markets are expected to grow following tax reforms there.

Increased Exposure to Crypto Assets

The annual Wealth Report includes performance data for 100 key luxury property markets. It provides a global perspective on prime property and wealth, its authors from the property consultancy firm claim. The document also includes the results of the Attitudes Survey and Knight Frank’s Global Cities Index.

The Wealthy Want Crypto but Don’t Understand It, Survey ShowsThe survey was conducted at the end of last year, when rising prices on cryptocurrency markets catalyzed interest in exposure to crypto assets. The price of bitcoin reached all-time highs in 2017, approaching the $20,000 USD mark in December.

Interest in cryptocurrency investments vary according to different markets and periods. Generally, it seems much more dependent on positive and negative perceptions about future market developments and regulatory risks than on other factors such as the level of knowledge and understanding.

Recent surveys, including in countries like the US and Russia, have indicated increasing awareness of bitcoin and other cryptocurrencies. The comprehension of the underlying technology and the understanding of related terms, however, remains superficial.

Do you expect the wealthy’s share of cryptocurrencies in investment portfolios to increase in the near future? Share your thoughts in the comments section below.

Images courtesy of Shutterstock. 

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