Three researchers at the University of Cincinnati recently developed The Crypto Literacy Scale (CLS) helps standardize and measure economic and financial literacy as it relates to consumers’ and policymakers’ understanding of cryptocurrencies and related technologies.
The team’s research paper, “Measuring Crypto Literacy,” details the gap between traditional financial literacy and crypto literacy, and the need for a crypto literacy scale and policies to support crypto education and literacy efforts around the world.
According to the paper:
“Measuring financial literacy encourages policy makers and educators to develop programs to improve financial decision-making and enhance financial empowerment. However, there is no comparable equivalent scale for measuring crypto literacy.”
The researchers note that financial literacy “also plays a vital role in fraud prevention by providing individuals with the knowledge, skills and confidence to make informed financial decisions.”
To develop CLS, the team separated cryptocurrency knowledge from overall financial knowledge. “On the surface, cryptocurrencies may look like more traditional financial products,” the researchers wrote, but due to the centralized nature of traditional finance, the decision-making processes learned through normal financial literacy courses often do not apply in the world of cryptocurrencies.
related: New U.S. Cryptocurrency Tax Rules: Legal Decoded
The researchers studied various aspects of cryptocurrencies and distilled what they believe to be the basic knowledge requirements necessary to demonstrate a fundamental understanding of 10 issues. While the questions were not shared in the paper, the attached image shows respondents being asked about their experiences with cryptocurrencies.
The history of the popularization of financial literacy in the United States has stories.Benjamin Franklin is often credited as the first Wealth Advocate and one of his most famous (and misquoted) lines of all time written“A penny saved is two pennies cleared” appears to be one of the first American pundits to refer to consumers’ fiscal responsibility.
However, the term “financial literacy” seems to have emerged relatively recently, having first become popular in the U.S. Dating Back in time to 1990. As the concept spread, the US government began adopting standards and practices for educating the population in the early 2000s.
Over the next few years, the number of millionaires in the United States Rose From approximately 63,642 in 1990 to About 25,000,000 in 2021 – an increase of approximately 37,800% in three decades.
As the world of cryptocurrencies and blockchain technology matures, the number of “informed” investors continues to increase. However, the level of crypto literacy in the overall global population remains relatively low.
CNBC 2022 coverage claim 57% of U.S. adults are considered conventionally financially literate.In contrast, a non-scientific survey implement “CryptoLiteracy.org” claimed in 2021 that only 4% of U.S. respondents exhibited cryptocurrency literacy.
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