A team of researchers from the University of Cincinnati has created a crypto literacy scale (CLS) to measure economic and financial knowledge related to cryptocurrencies and technology. The researchers outlined the importance of a standardized scale and policies to support cryptocurrency education and literacy efforts globally. They noted the lack of a corresponding scale for crypto literacy, despite the existence of measures for financial literacy that have led to improvements in financial decision-making.
The researchers emphasized the role of financial literacy in preventing scams and enabling individuals to make informed financial decisions. They highlighted the need to differentiate crypto literacy from overall financial literacy because traditional financial education may not fully apply to the cryptocurrency world due to its decentralized nature.
To develop the CLS, the researchers identified the essential knowledge requirements for a basic understanding of cryptocurrencies. While the specific questions were not disclosed in the research paper, accompanying images showed that respondents were asked about their experience with cryptocurrency.
In the context of financial literacy, the United States has a long history, with Benjamin Franklin often credited as one of the first wealth advocates. The concept of “financial literacy” gained popularity in the US in the 1990s, leading to the adoption of standards and practices for educating the population in the early 2000s.
During the past three decades, the number of millionaires in the US skyrocketed from approximately 63,642 in 1990 to around 25 million in 2021, a staggering increase of about 37,800%. As the world of cryptocurrency and blockchain technology continues to grow, more investors are becoming knowledgeable about these subjects. However, the general global population still has relatively low levels of crypto literacy.
According to a CNBC report in 2022, 57% of US adults are considered financially literate in traditional finance. In contrast, a non-scientific survey conducted by CryptoLiteracy.org in 2021 claimed that only 4% of respondents in the US demonstrated cryptocurrency literacy.
The newly developed CLS aims to address this gap in knowledge by providing a standardized tool to measure and improve crypto literacy. By assessing individuals’ understanding of cryptocurrencies and related technology, policymakers and educators can develop targeted programs to enhance financial decision-making and empower individuals in the crypto space.
The researchers’ work highlights the growing importance of crypto literacy in an increasingly digital and decentralized financial landscape. With cryptocurrency becoming more mainstream, it is crucial for individuals and policymakers to have a solid understanding of the underlying concepts and risks involved. The CLS offers a valuable metric for measuring and improving crypto literacy, contributing to the overall financial education ecosystem.