Crypto linked to 'dark' personality
The volatile world of crypto currencies attracts a range of investors, but those with certain personality traits may be drawn in for reasons that allow them to be more comfortable with high levels of risk than others, according to research by Dr Jun Yao and his team.
The dark side of cryptocurrency
What kind of people are willing to take a chance on the highly volatile world of cryptocurrency speculation? Impulsive psychopaths are among those identified as interested in the wild world of highly speculative currencies – lured by the potential of strong returns.
Dr Jun Yao from the Department of Marketing found a connection between the ‘dark tetrad’ personality traits and enthusiasm for investment in digital currencies. Dark tetrad, a term used in psychology to refer to four personality traits, can also influence a person’s attitude to crypto currency investment.
These characteristics are Machiavellianism, narcissism and psychopathy, plus sadism, and are considered dark because of their ‘evil’ qualities that involve taking advantage of others without empathy.
“Some dark personalities like to take risk. And digital currencies involve risky behaviour,” Dr Yao says.
“People with dark personalities are trying to achieve a better outcome for themselves, and can be over confident. A strong motivation for a better life underpins purchases. It’s very similar to gambling.”
The research revealed two main areas of appeal for people with these characteristics. The high risks and high potential returns of crypto trading make it attractive to them. And because cryptocurrencies are not backed by governments, they’re attractive to those who distrust government and are more likely to believe conspiracy theories, including that government agencies closely watch their citizens.
While cryptocurrencies are perceived by many as mysterious and difficult to truly understand, ‘dark’ personalities might find this adds to the attraction of investing as their sense of confidence counters the risks that might deter others.
The study found narcissism was positively associated with crypto attitude, which was explained by a tendency to be positive or optimistic in attitude. Machiavellians were found to be more distrustful of government, associated with greater desire to buy crypto. Both psychopathy and sadism affected crypto judgments through Fear of Missing Out (FOMO) on investment rewards.
The interplay of these factors mean cryptocurrency investors may be more likely than others to take a calculated approach to achieving goals, and avoid impulsive decisions because of Machiavellian tendencies. Narcissism may fuel overconfidence and risk taking while those with psychopathic tendencies can amplify stimulation seeking behaviours.
“Studying cryptocurrency through the psychological lens of the dark tetrad offers insight into why people want to buy crypto, but more importantly, we are not suggesting all crypto buyers exhibit dark personalities because we studied only a subset of people interested in crypto who do have these traits,” Dr Yao says.
Dr Jun Yao is from the Department of Marketing at Macquarie University, and the other researchers on this project are from Queensland University of Technology, Aarhus University and Cardiff University.