Why are most people afraid to enter the cryptocurrency world? In-depth analysis of the "high threshold fear" of cryptocurrency
The cryptocurrency market has attracted much attention in recent years. The skyrocketing and plummeting of Bitcoin, the sky-high price transactions of NFTs, and the wealth myth of DeFi have repeatedly made news headlines. However, despite the frequent stories of people getting rich in the cryptocurrency circle, the proportion of people in the world who actually participate in cryptocurrency investment is still less than 5%. Behind this seemingly contradictory "onlooker effect" lies a cognitive, risk and psychological gap that is difficult for ordinary people to cross. This article analyzes the public's "stay away from" the cryptocurrency world from multiple dimensions.
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#### **1. Extreme volatility: a 24-hour roller coaster**
The cryptocurrency market is known for its wild volatility. A 20% daily rise or fall in Bitcoin has become the norm, and it is not uncommon for altcoins to "return to zero" or double in value at any time.
- **Data support**: In 2021, Bitcoin plummeted from a high of $64,000 to $29,000 in just two months. The collapse of LUNA/UST in 2022 caused the evaporation of $40 billion in market value.
- **Psychological shock**: Ordinary investors cannot bear the pressure of "asset cut in half after a night's sleep", and the fluctuations in the traditional stock market are just "child's play" in the cryptocurrency world.
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#### **2. Security Black Hole: Hackers, Fraud and Self-custody Risks**
The security risks in the cryptocurrency world far exceed those in the traditional financial system, and technical loopholes and human weaknesses are intertwined into a deadly trap.
- **Exchange collapse**: Mt. Gox (850,000 bitcoins lost in 2014), FTX collapse (user funds were misappropriated in 2022) and other events have severely damaged trust.
- **Wallet Trap**: Loss of private keys, phishing attacks, and fake contracts lead to permanent loss of assets, and the irreversibility of blockchain amplifies the risk.
- **Fraud is rampant**: According to the Chainalysis report, the amount of global cryptocurrency fraud exceeded US$3.9 billion in 2023, with copycat platforms, fake airdrops, and pig-killing schemes emerging in an endless stream.
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#### **3. Regulatory fog: the sword of Damocles of policy uncertainty**
Global regulatory attitudes are divided, and the gray area of compliance makes ordinary investors walk on thin ice.
- **Regional differences**: China has completely banned transactions, the US SEC frequently sues project parties, and the EU is promoting the MiCA Act, and the policy direction is unpredictable.
- **Tax challenges**: Cryptocurrency taxation rules are complex (for example, the US IRS considers it as property), and ordinary users face compliance costs.
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