Financial Literacy of Cryptocurrency Users in Indonesia and Factors Affecting The Investment Decision

DOI

10.2991/978-94-6463-525-6_51How to use a DOI?

Keywords

Digital currency; Cryptocurrency; Financial literacy; Herd behavior

Abstract

Cryptocurrency has raised its popularity in the past five years including its entrance in Indonesia. With the characteristics of a highly populous country and the highest internet penetration within the region, the enthusiasm for cryptocurrency usage cannot be separated from the influence of internet traffic and social media usage. The cryptocurrency investment comes from various factors encouraging the transaction including social media influencers, fast information exchange through the internet, and public figure aspiration. These collective factors have been the main idea to be evaluated in this research to deliver the motif behind cryptocurrency investment. Furthermore, the phenomenon of instant investors gaining significant profit and in contrast to the severe failure experienced by cryptocurrency investors becomes a motivation to assess the financial literacy of the cryptocurrency investor in Indonesia whether there is a potential for herd investment behavior using Lusardi Financial Literacy Theoretical Framework. This research aims to investigate the financial literacy level of cryptocurrency investors. Furthermore, the secondary purpose of this research is to explore cryptocurrency investment factors in Indonesia. The cross-sectional study conducted in this research is used for analytical and descriptive purposes. The descriptive nature of this study measured the financial literacy and risk awareness towards cryptocurrency in Indonesia, whereas the analytical nature of the study answered what motifs underlying investment decisions concerning social media influence and speculation motifs. The questionnaire was designed to gather data through a survey consisting of quantitative data analysis questions where the respondent answers multiple choice questions and the statistical data gathered from the survey is analysed in the numerical rating and scoring describing an element of the measurement framework used by Lusardi Financial Literacy Matrix. The research concludes several hypotheses are confirmed through the findings, including that investors do not fully understand the mechanism and technology behind cryptocurrency but the hypothesis on the minor amount invested is not proven in this study. Secondly, there is a speculation motif in investing in cryptocurrency confirmed in this study. The third hypothesis also confirmed that social media influencers play an important role in giving the inspiration to invest in cryptocurrency. Furthermore, investors are somewhat aware of the risks of cryptocurrency investment. And lastly, some investors are aware of the chosen cryptocurrency using market observation, and some are following the trends from social media and news.

Copyright

© 2024 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Nur Imamah
AU  - Layyin Nafisa
PY  - 2024
DA  - 2024/10/29
TI  - Financial Literacy of Cryptocurrency Users in Indonesia and Factors Affecting The Investment Decision
BT  - Proceedings of the 2023 Brawijaya International Conference (BIC 2023)
PB  - Atlantis Press
SP  - 439
EP  - 452
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-525-6_51
DO  - 10.2991/978-94-6463-525-6_51
ID  - Imamah2024
ER  -