This has arguably been the year for crypto, as growing institutionalisation and investment in the sector in 2021 have pushed it firmly into mainstream consciousness. Notwithstanding its breakout performance, a recent report suggests that up to 98 percent of people lack even a basic grasp of crypto.
Crypto Knowledge is Weak
According to the study published by cryptoliteracy.org, a rudimentary understanding of cryptocurrency fundamentals remains elusive for most, even in a bull market.
The study consisted of 17 questions pertaining to cryptocurrency, bitcoin, decentralised finance (DeFi), non-fungible tokens (NFTs), and general sentiment.
One of the key findings was that “ownership is the best teacher”. Those who owned a digital asset were more than twice as likely to outperform those who didn’t.
It also revealed that around a third of respondents felt purchasing crypto was easy, suggesting that for outsiders, the user experience and complexities in the space remain a significant barrier to entry.
Interestingly, ownership tended to skew towards the educated and wealthy, rather than the lower strata of society who stand to gain the most from digital asset ownership.
Use Cases Vary
The report found that a quarter of Brazilians and a third of Mexican respondents would use crypto to pay for goods and services, compared to only 13 percent of American respondents.
Fifty percent of Americans advised they would utilise crypto as a way to save for the future. Younger generations are nearly three times more likely to use crypto as a means of payment than older generations who see it more as an investment.
cryptoliteracy.org
What Can We Learn?
For those who spend a lot of time in the crypto space, it’s worth reflecting from time to time that it is still very early and that broader adoption hasn’t even begun. Despite global adoption increasing by 880 percent over the year, only 31 percent of Gen Z Aussies own crypto.
In a world of Bitcoin, altcoins, shitcoins, memecoins, tokens, smart contracts, DeFi, NFTs, DAOs, stablecoins, CBDCs and more, there is simply an overwhelming amount of new content for the average person to wrap their head around.
The lack of crypto literacy among those who haven’t invested is therefore completely understandable, particularly in light of the complexities in the space and the complete paradigm shift required to gain a proper understanding.
However, to those who are invested, it is always worth remembering the words of Warren Buffett, the sixth-richest person on Earth with a fortune in excess of US$100 billion:
Investment must be rational; if you can’t understand it, don’t do it.
Warren Buffett
To optimise the prospects of a successful investment, a solid understanding underpinned by strong research is imperative. That, and a bit of luck to boot.
Keen to see how your crypto knowledge stacks up? Take the test to see if you make the grade.
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