More people believe cryptocurrencies are a Ponzi scheme than are willing to trust them despite the backing of Hollywood stars like Matt Damon and Kim Kardashian, according to new research
In a poll of 2,000 adults commissioned by Tally Money, 36% of people said they considered cryptocurrencies to be a Ponzi scheme while just 29% believed them to be a trustworthy investment. More than a third (35%) said they didn’t know.
A Ponzi scheme is an investment scam in which early investors are paid off with money put up by later ones in order to encourage further investment and greater risk.
The poll’s findings follow the spectacular collapse in the value of cryptocurrencies in recent months. Bitcoin has now lost more than two thirds of its value since its peak last year, leaving millions of investors globally nursing heavy losses.
Meanwhile, more traditional asset classes like gold and property have enjoyed double digit growth during the same time period. Tally Money offers a savings app and Debit Mastercard anchored to the wholesale price of gold bullion allowing users to park their spare cash in gold as they save for their future. Gold prices have jumped 19% since Bitcoin peaked in April last year.
The subsequent crypto crash came despite a large number of celebrities urging fans to invest. Hollywood A-listers like Gwyneth Paltrow, Matt Damon and Kim Kardashian now face a growing tide of criticism for allegedly fuelling the bubble.
With many investors now fleeing, researchers found women are less likely to trust crypto than men (23% v 35%) according to the poll.
Attitudes toward crypto differed markedly between young and old. Despite the crash, nearly half (48%) of 18-24 year-olds said they trusted crypto, while scepticism spiked significantly among older age brackets. Just 1 in 6 of 55-64-year-olds said they trusted crypto with 2 in 5 branding it a Ponzi scheme.
Despite mounting losses, many of those who previously invested in crypto are keeping the faith. More than half of crypto buyers polled (58%) still believe digital currencies are a trustworthy investment, compared with just 11% of those who had stayed clear.
More than a third (36%) said they would prefer to invest in gold, with that number rising to 41% among female respondents.
Tally Money CEO Cameron Parry said: “It’s not surprising that so many people think cryptocurrencies are a Ponzi scheme, because that’s exactly what most of them are.
“They artificially generate a return by creating a new currency from thin air to give the perception of increasing wealth when really there’s no inherent value to begin with.
“Some however, like bitcoin, do have inherent functional and operational value. But ultimately no one knows how far it will rise or fall in the future.
“Gold on the other hand has been around for millennia and is a trusted, safe store of value, particularly in times of uncertainty and high inflation.”
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