Wealthy Australians are at risk of falling victim to cryptocurrency scams, with “over-confidence” and the sway of social media influencers being key factors, an Australian study has found.

The peer-reviewed survey of 745 Australians who had purchased cryptocurrencies or non-fungible tokens (NFTs) found financially literate and socioeconomically advantaged people who were non-Indigenous, university-educated and worked full time or owned their own home were at risk of being over-confident in their investments.

Researchers from The University of Queensland (UQ), Griffith University and Queensland University of Technology found this group of capital-rich Australians understood cryptocurrencies and NFTs, but may have assumed they would not fall victim to a scam.

“You might assume that they might not be victims of crypto investment scams, because they have that overconfidence,” UQ Associate Professor Dr Levon Blue told Information Age.

“But that does actually expose them to a little bit of risk and that overconfidence has been shown previously in research about financial literacy to put an individual at greater risk.”

The new study found socioeconomically disadvantaged people with limited financial or technological literacy were also vulnerable to cryptocurrency scams.

These people were “more likely to be female, Indigenous, casual or part-time workers, renters, a high school or below education or with English as a second language”, researchers said.

The value of cryptocurrencies Australians paid to scammers rose by 6.5 per cent between 2022 and 2023, totalling $171.1 million in reported loses last year, according to the Australian Competition and Consumer Commission.

The latest study, published in the Australian Journal of Social Issues, found consumers were most vulnerable when they lacked knowledge about how to store cryptocurrencies and NFTs, were not financially literate, received unsolicited advice, and had limited options for learning.

Some were found to not understand how to calculate tax or interest on their investments.

Social media a key influencer

Social media was the most common place Australians learned about cryptocurrencies, and women were more likely to be swayed by social media influencers, the research found.

“We did see that females were found to be more likely to purchase crypto because of all the hype on social media,” Dr Blue said.

“And they tended not to answer any of the crypto literacy questions correctly, so you can see vulnerabilities there that were specific to females.

“That was a bit of a surprising finding to me.

“Because buying crypto — it’s not a regulated space — and our research is showing that the participants certainly weren't learning about it in formal education spaces.

“So it tended to be friends and family as well as social media where they were learning about crypto and NFTs.”

The researchers said that because social media influencers continued to be “the source of truth when it comes to alternative financial products”, there was a need for more education “to critically unpack social media influencer messaging, especially for young adults”.


Researchers say Australians most often get their information about cryptocurrencies from social media. Photo: Shutterstock

Consumers should ‘think more critically’

Dr Blue urged consumers to be wary, and said online financial education from trusted independent sources was “urgently needed to help combat scams and to keep Australians and their crypto assets safe”.

“We recommend that education about alternative forms of financial products is offered to in schools, vocational settings and university,” she said.

"… Consumers really need to be thinking more critically about what they're seeing being promoted or spruiked on social media platforms.

"So really looking and thinking about who is pushing this and what's behind it, and then doing a bit of your own research before you jump straight into purchasing what's being suggested.”

Dr Blue said the secure storage of cryptocurrencies was also a key issue for some people, due to its intricacies.

While only a minority of participants in the study reported losing their cryptocurrencies or NFTs because of storage issues, more than half who did said they lost more than $1,000.

“I do think if people are going to invest in this space that they should look into how to store it safely, and what the secure options are,” she said.

“If they lose their crypto there's no one they can fall back on to help them out there, so they really need to research that space.”