Cryptocurrencies have come a long way since their 2009 debut, growing from digital novelties to trillion-dollar technologies that can be used to purchase a broad spectrum of goods and services. Yet despite their growing popularity, many consumers remain unclear on what exactly cryptocurrencies are and how they work, underscoring the need for better understanding of this new technology.
Unlike traditional currencies that are linked to national governments, cryptocurrencies are decentralized. This allows them to be transferred between parties quickly and anonymously, regardless of location. In addition, the blockchain technology that enables cryptocurrencies to function eliminates the need for centralized intermediaries like banks and monetary institutions to validate and police transactions between two parties. This feature has made cryptocurrencies popular among dissidents in authoritarian countries and investors seeking to circumvent government sanctions.
However, the rapid rise of cryptocurrencies has also given rise to concerns about their use in illicit activities. The case of the Dread Pirate Roberts, who operated a marketplace for illegal drugs on the dark web using bitcoin, is one example. Cryptocurrencies have also become a favorite for ransomware attacks, whereby hackers demand cryptocurrency payments in order to release data or unlock a computer system. Additionally, the volatile nature of cryptocurrencies can lead to large price fluctuations that can make them difficult to store as a medium of exchange.
In light of these concerns, our research suggests that a heightened level of consumer awareness is a prerequisite for the acceptance of cryptocurrencies. Specifically, consumers are more likely to embrace these technologies if they perceive them as useful (Kim et al., 2022). This finding is in line with previous research that underscores the central role of usefulness in TAM and demonstrates that consumers are more willing to adopt novel technologies if they see them as beneficial to their lives.
To increase awareness, financial institutions and education systems can collaborate to create educational modules or other campaigns that provide a foundational understanding of what cryptocurrencies are and how they work. This can demystify the concept for potential users and accelerate its mainstream adoption.
While cryptocurrencies have their advantages, it is important to remember that they are highly volatile and not suitable for all investors. To protect against the loss of value, it is recommended that you diversify your investment portfolio by holding a variety of different coins. In addition, you should be aware of how your cryptocurrency is being created and distributed, as some are generated through mining processes that can be energy intensive and have a significant impact on the environment. Lastly, before investing in cryptocurrencies, it is essential to have a backup plan for your investments in the event that your device or wallet is lost or stolen. This is especially true for those who have invested in ICOs, which are often untested and not subject to rigorous financial reporting requirements. For these reasons, we recommend that you seek the guidance of a qualified financial advisor before making any investment decisions.