The rich are rushing onto the Bitcoin train without knowing it

The world's richest people are putting more and more of their money into cryptocurrencies, even though they don't quite understand them, a new report shows. According to their advisers, terms like "distributed ledger" and "blockchain" are not particularly familiar to the wealthy. However, widespread misunderstanding of the technology behind Bitcoin doesn't seem to have much of an impact on the appeal of cryptocurrency investing.

Cryptocurrency has caught the attention of wealthy people around the world, but that doesn't mean they understand it well. In an annual survey of wealth advisors and private bankers, about 21% of respondents confirmed that their clients increased their investment in cryptocurrencies last year. However, Knight Frnk's latest wealth report points out that the wealthy lack understanding of the technology behind Bitcoin's distributed ledger.

“We asked them about their understanding of blockchain and there is still a lot of misunderstanding around it,” Nicholas Holt, head of research for Asia Pacific at Knight Frank, told CNBC this week. “While they are on board the cryptocurrency train, they perhaps don’t fully understand what it means for their wealth portfolio.”

The report said that although the rich have shown great enthusiasm for cryptocurrency investment, their interest in traditional industry investment (such as stocks and real estate) is still high and remains their first choice. Experts are not surprised by this phenomenon, because the stock market performance in 2017 was indeed satisfactory.

At the same time, real estate remains the cornerstone of most investment portfolios, accounting for 50% of total investment in the Asia-Pacific region. Globally, 34% of respondents said they intend to invest in overseas real estate in 2018. Nicholas Holt said the United States and the United Kingdom are the largest markets. With tax reform, the commercial and residential markets in the United States are expected to grow.

Authors from the property consultancy said its annual Wealth Report includes performance data for 100 major luxury property markets, providing a global perspective on prime property and wealth. The report also includes data from the Attitudes Survey and Knight Frank's Global Cities Index.

The survey was conducted late last year as the cryptocurrency market continued to rise, spurring interest in crypto assets. Bitcoin prices reached an all-time high in 2017, approaching the $20,000 mark in December.

Interest in cryptocurrency investments varies according to different markets and periods. In general, it seems to rely more on positive or negative views on future market developments and the risks of regulation, and less on factors such as knowledge and understanding levels.

Recent surveys show growing awareness of Bitcoin and other cryptocurrencies in some countries, including the United States and Russia. However, understanding of the underlying technology and related terminology remains superficial.