Bitcoiners love to believe their complicated version of money will win hearts and minds. But they might be overlooking one crucial aspect – most people don’t even understand traditional finance, let alone the uber complicated digital finance of the future.
Almost two thirds of Americans can’t calculate interest payments. Yet, Bitcoiners believe their complicated digital currency, which incorporates encryption and deflation, will catch on and “revolutionize” finance.
A new study released today determined nearly two-thirds of Americans would fail a basic financial literacy test. They got less than four answers on a five-question quiz correct. How many people who could pass the test has declined since the financial crisis. Last year, just 37% could pass. So, good luck explaining to them SHA-256 and mining.
The FINRA Foundation’s National Capability Study surveyed 27,564 US Citizens from June through October of last year. FINRA regulates brokers on Wall Street.
Only 28% understood what happens to bond prices when interest rates decline; that is, they fall. Fewer than half of all American can answer rudimentary questions about financial risk.
Significant portions of the population – in particularly, African-Americans, Hispanics, women, Millennials, and those without high school education – are worse off than before the recession. More than one in five Americans have unpaid medical debt.
39% of blacks and 35% of Latinos have used high-cost forms of borrowing like pawn shops and payday loans. Just 21% of whites and 21% of Asians have done so. 29% of 18-34 year olds – Millennials – have been late on mortgages. 45% of respondents without college education said if they had an emergency requiring $2,000 within a month, they’d fail to do so. So, even if they did understand Bitcoin, it’s not clear they’d have the extra cash to speculate.
“This research underscores the critical need for innovative strategies to equip consumers with the tools and education required to effectively manage their financial lives,” according to FINRA Foundation Chairman Richard Ketchum. “My hope is that policymakers, researchers, and advocates will use these findings to make more informed decisions about how to best reach underserved populations.”
So while Bitcoiners debate scaling the software so that more people can transact with Bitcoin simultaneously, it might be in the so-called “Bitcoin Community’s” best interest to double down on education efforts before they take such risks.
Disclaimer: The views expressed in the article are solely that of the author and do not represent those of, nor should they be attributed to CCN.
Featured image from Shutterstock.