In today’s digital landscape, it has become essential to grasp the concept of cryptocurrencies. But what exactly does ‘crypto literacy’ entail? How does it differ from traditional financial literacy? Many individuals often merge crypto literacy with financial literacy. However, we should view it as a subset of financial literacy.
It refers to the knowledge and understanding of cryptocurrencies and their associated technologies. Cryptocurrencies or other monetary products may appear similar at first glance. But, the nature and mechanism underlying cryptocurrencies are distinctive and divergent.
The decentralized nature of Cryptocurrencies hinders users to compare it to conventional financial products. Without the understanding of crypto literacy, users can not make informed decisions.
A group of scholars from Cincinnati University have discovered an important gap in the field. Their paper titled “Measuring Crypto Literacy” brings attention to the absence of a suitable scale for evaluating one’s knowledge in CL. This finding highlights a current limitation within the academic discourse.
The recognition of the importance of addressing the need for crypto literacy led to the development of a scale. This scale encompasses fundamental blockchain knowledge, cryptocurrencies economics, security, and regulation.
Current State of Financial And Crypto Literacy
CNBC is an American basic news channel in the US. They released a report on financial literacy in 2018. According to this report, 57% of participants show skill in understanding the traditional financial system. According to the CNBC+ Acorns Momentive survey, many parents have neglected to provide their children with financial literacy education.
In contrast, in 2021, CryptoLiteracy.org conducted a study on crypto literacy. It revealed that only four percent of the participants from the US were aware of this concept. This significant finding emphasizes the globally low level of crypto literacy.
Scholars have emphasized the many advantages of Crypto literacy. For instance, it protects consumers from engaging in illicit activities. It provides confidence to users in making informed and rational monetary decisions. Professionals can use CLS to develop effective strategies to improve crypto literacy.
The world is shifting toward digital finance. It necessitates the significance of tools like the CLS. These tools ensure that people have the knowledge required to navigate this new financial frontier.
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“The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.”
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