Is it more likely that cryptocurrency investors have manipulative, narcissistic, or psychopathic traits? The psychological profiles of cryptocurrency investors are a widely debated topic. The dark aspects of their personality traits or habits have been examined, and more light is being shed on how these individuals act while making investment decisions.
According to a 2022 study performed by researchers, which was published in the Personality and Individual Differences journal, those that are owners of cryptos have more tendencies with Machiavellianism, narcissism, psychopathy as well as sadism. Considering these factors impact risky behavior and investment choices in the dizzying cryptocurrency space, one may start questioning what drives people towards investing in crypto.
“First, crypto has extreme price volatility, their high-risk nature making crypto trading akin to gambling (Delfabbro, King, & Williams, 2021) with crypto trading appealing to gamblers (Mills & Nower, 2019). Second, crypto is decentralized and global. They are not backed by governments. We propose that the price volatility (i.e., potential gain) and independence from government regulation of cryptocurrencies attract buyers inclined towards gambling and distrustful of the government.” read the research.
What are Dark Tetrad Traits?
Dark Tetrad or Machiavellian traits include manipulation, exploitation of others, and a focus on self-interest and deception.
For instance, grandiosity, entitlement, and dominance point toward narcissism. The boldness factor includes impulsivity, empathy deficit, and unpleasantness to others, detectable by our informants but not by us. Sadism, finding pleasure in others’ suffering, cruelty, and loving to hurt someone else for your benefit, is also one of the ‘dark tetrad traits.’
Challenging the Dark Tetrad narrative
The study also reveals that people will likely invest in cryptocurrency, share anti-government sentiment, feel FOMO (fear of missing out), and show positive signs of speculative bets. This suggests that these psychological traits interact with external influences on investment decisions. The study has come out with results that the dark tetrad traits may be the real drivers behind individuals who like to invest in cryptocurrencies.
According to GlobalData Thematic Intelligence, it is estimated that 40% of Bitcoin is owned by governments, which refutes the narrative that only ‘psychopaths’ use crypto. As of April 2024, Governments hold over $36bn in Bitcoin. If all the government’s worldwide data on Bitcoin are combined, it comes to 567k BTC. This level of government participation reiterates that cryptocurrencies’ wider acceptance and relevance go beyond personal psychological tendencies.
While the study on dark tetrad traits and cryptocurrency ownership may appear to be stand-alone research, broader research on personality traits and investment behavior has found quite the opposite result. While personality traits do, to some extent, define how people invest, they are not a determinant factor in the broader scope.
A psychology expert from the University of Otago has claimed the link between psychopathy and owning cryptocurrencies to be ‘weak and meaningless.’ Critics have also criticized the 2022 study’s authors for their methodology, which relied on a brief Dark Triad (SD-3) test to assess participants’ personalities, not providing a comprehensive understanding of these disorders. More importantly, as the researchers noted in their report, many people may purchase actual Bitcoin with more altruistic intentions than demonstrated, highlighting the disconnect between what these studies consider ‘altruism’ and adversarial attacks on networks.
What weak claims can do to the crypto industry?
These weak claims about investors’ personalities harm the entire crypto industry. In recent years, the crypto industry has more or less defined the financial era, driving innovation and enticing investors to make huge profits from new investments.
However, spreading horror stories or suggesting that many crypto investors are psychologically broken can discourage would-be contributors. This will not create any room for the industry to grow and would also cause a great loss of the benefits and potential that investors can get out of cryptocurrencies. Industry criticism needs to be based on solid research and not just driven by biases designed to scare the public.
Among other considerations, researchers must always ensure they refine their methodologies and do not just speculate. At the end of the day, as they say in crypto, it is vital to DYOR – do your own research!
The final verdict
Future research must understand the potential interactions between context-dependent investment behaviors and personality traits. It will be fascinating to see future longitudinal studies investigating how these traits might affect investment decisions. More broadly, it is also helpful to consider the role of financial literacy in characterizing how each type responds under high impulse control conditions; that way, we can identify effective investor education strategies.