Understanding the Technical Fluency of Indonesian Investors
Welcome to the second installment of Tokenomy’s 2021 Indonesia Cryptocurrency Investor Report!
While Part 1: The Growth in Adoption of Crypto Assets in Indonesia described the breakdown of respondents that informed our report and overall growth in the popularity of crypto assets, this section will dive into the technical adeptness of Indonesian investors.
Part 3, focused on the broader applications of cryptocurrency, will be published next!
- It is important to understand the technical fluency of a specific group of investors, as that should shape the way they make investment decisions, and help adoption of new technologies in the future
- More than one out of every three respondents expressed unfamiliarity with the concepts behind blockchain
- On average, Indonesian investors are part of 1–3 different online communities (Telegram, Facebook groups) — these communities are used for both unified marketing campaigns and educational purposes
- 37.2% of respondents are neutral on whether they plan to participate in mining in the next year; this shows a sense of uncertainty around the merits of mining
We asked on a scale of strongly disagree (1) to strongly agree (5), “How comfortable are you with the concepts and principles of crypto assets?” While it was up to the respondents to interpret what concepts and principles were relevant here, some examples may include: the ability to buy, sell, and trade crypto assets on a number of different exchanges, the 24/7 nature of crypto market hours, and differences between various crypto assets.
We asked the same question with blockchain, an oft-mentioned buzzword in the crypto sphere. Some examples of the concepts and principles behind blockchain may include: its similarities and differences to a traditional database, what a “block” is, and the decentralization and transparency inherent in blockchain.
Comparing the two, it is clear that blockchain stands out as a more opaque topic in many respondents’ minds.
Right pie chart: 36.8% of respondents were not very familiar with the principles behind blockchain (adding up those who were neutral, disagreed, and strongly disagreed)
While only 23.7% of respondents felt like they were unfamiliar with the concepts of crypto assets, a more notable 36.8% expressed a lack in familiarity with the concepts behind blockchain. This data point begs the question: how important is it that crypto investors understand the technical workings behind the assets that they invest in?
While investors may be able to get returns on speculative and marginally-informed investments, misunderstanding key concepts that power cryptocurrencies may contribute to higher volatility and slow the adoption of crypto in the future.
However, based on our data on social discussion communities it seems that many are actively involved in active dialogue around cryptocurrency — which seems to point to better education overall.
Over half (59.7%) of survey respondents say that they actively participate in crypto asset discussion groups/communities.
If we look at the number of groups that individuals are a part of, it seems that most respondents that are in discussion groups tend to choose 1–3 groups to focus on.
Respondents are typically part of 1–3 crypto discussion groups
What kind of information is shared and exchanged in these groups?
On one hand, some of these groups organize unified marketing campaigns of certain cryptocurrencies, intent on raising the prices through high demand, and then selling at a profit. On the other hand, many of these groups share and collate news across the crypto world, providing a convenient way to stay up to date on the latest.
Screenshots of a Telegram group. Left: a unified marketing campaign. Right: a piece of news about eToro going public via a SPAC.
While the promise of making a quick profit may draw many into actively trading crypto assets and joining crypto communities, it seems that these platforms offer educational opportunities as well — which may be good for the continual adoption of cryptocurrencies.
Crypto mining, the process of verifying transactions that have taken place and adding them to the blockchain, is important in maintaining the integrity of the network. It helps to prevent nefarious activity, such as copying a bitcoin and spending it twice, by confirming the legitimacy of each transaction.
Mining can be seen as a profitable activity as it rewards miners with coins (bitcoin, for example) as compensation for using their computing power to verify transactions. Recently, mining has become more and more competitive. The rising value of bitcoin and other cryptocurrencies has led many to invest in an even greater amount of computing power to have the best chance at mining a block and receiving the rewards for doing so.
While the profitability of mining is debatable, 61.4% of respondents agreed or strongly agreed that mining is still a profitable activity. This profitability depends on the cost of hardware and electricity to mine, and the price of BTC to be given as a reward.
While not all of those respondents have participated in mining before (only 55.5% have), many Indonesians still see potential for profit by mining bitcoin and other cryptocurrencies.
Future Participation in Crypto Mining
When asked if they will be actively participating in crypto mining in the next 12 months, 49% of respondents agreed or strongly agreed. Interestingly, there is a large proportion of these Indonesians that responded neutral to this question at 37.2%.
The key stat here: the number of individuals that responded “neutral.”
This large percentage of individuals that felt neutral about the survey points to an overall feeling of uncertainty around the merits of mining. Many individuals are undecided as to whether they plan to participate in it during the next year.
We are looking forward to releasing the last installment of Tokenomy’s Investor Report on The Broader Applications on Cryptocurrency soon.
Written by Jake Tennant, Data Analyst and Writer @ Tokenomy