Canada’s Central Bank Suggests Crypto-Fans are Financially Illiterate

Canada’s Central Bank recently released a report suggesting that a huge chunk of Canadian cryptocurrency users do not possess a high level of financial literacy. According to the report, those Canadians with a low understanding of finance are twice as likely tow own cryptos than those who are “financially literate.”

When it comes to those Canucks who are knowledgeable about finance, not many of them actually own any crypto assets. Only about 4% of the Canadians who are labeled financially literate actually own any cryptocurrencies.

“A large part of the cryptocurrency market [is made up] of unsophisticated investors with lower financial literacy skills. These investors are likely to overestimate the reward prospects in cryptocurrencies and underestimate the risk involved in related investment.”

Although at face value, the report seems to be suggesting that most cryptocurrency enthusiasts from Canada do not know much about basic finance, the real truth might be slightly different. They might not know much about traditional means of payment, but Canadian crypto fans are very aware of the modern tech.

Main Takeaways From Canada’s “Cash Alternative Survey”

The report in question comes from a 2019 survey conducted on thousands of Canadians. The 2019 Cash Alternative Survey took more than a year to conclude before being published only a few weeks ago.

Most responders were labeled financially literate, with 47% of them getting the highest mark for having a high level of financial literacy. About 18% of all the people surveyed were deemed to have a low level of financial literacy by the researchers.

The main takeaway of the research is that financially literate Canadians are more careful when it comes to investing. The reason why they haven’t been investing a lot of money in cryptocurrencies is that they’re worried concerned about the volatility of the crypto world.

Those with a lower level of understanding of finance seem more open to embracing the crypto technology, with about 8% of them owning crypto assets.  

What Makes You Crypto Literate?

The researchers asked the participants a number of finance-related questions to estimate their level of financial literacy. Those questions included everything from basic economic terms to elaborate investment strategies. The questions, however, did not include anything that delves deeply into the world of digital currencies.

What this practically means is that those who were deemed financially literate by the researchers do not necessarily fall into the category of cryptocurrency literate people. In fact, a survey conducted by eToro in 2019 suggests otherwise – a majority of people who are considered knowledgeable about cryptos do own cryptocurrencies.

This research also points out another factor in whether a person is financially/cryptocurrency literate. That factor is their age, with a high percentage of millennials being more likely to invest in cryptocurrencies than on the stock market.

The final piece of evidence showing that cryptocurrency fans are not financially illiterate is the fact that some of the world’s biggest financial experts have been moving their funds to cryptos. As per the research from the Fidelity Digital Assets, nearly 40% of 800 institutional investors polled said they own cryptos, while 80% of them had a positive opinion about cryptocurrencies.