Are we dumb? Financial illiterates ‘twice as likely to own crypto’

A report from Canada’s central bank shows that while most Canadians are knowledgeable about basic finance and Bitcoin, few actually hold any crypto assets.

According to the results of Bank of Canada’s 2019 Cash Alternative Survey published in August 2020, financial literacy is positively associated with the awareness of cryptocurrencies but negatively associated with ownership.

The bank considers financial literacy as a basic understanding of investing and saving for retirement, with 47% of respondents from August to September 2019 estimated to have a high level of financial literacy and 18% a low level. The results suggest that Canadians with a lower level of understanding of finance could be twice as likely to invest in crypto assets.

“93 percent of Canadians with high financial literacy are aware of cryptocurrencies, as opposed to only 72 percent of those with low financial literacy,” the survey results stated.

“Conversely, 8 percent of those with low financial literacy reported they own cryptocurrencies compared with 4 percent of Canadians with high financial literacy.”

Based on the survey, the bank estimated that roughly 84% of Canadians overall have at least heard of cryptocurrencies, with 5% owning Bitcoin (BTC) or altcoins.

“Awareness and ownership tend to be highest among young, male, university-educated or high-income Canadians,” the bank stated.

This data is supported by a Feb. 2020 report from financial group ING’s Think Forward Initiative, which is based on a 2018 survey of people from 15 different countries including the United States, Australia, the United Kingdom, and members of the European Union.

“Our estimates reveal that the more financially literate are less likely to own cryptocurrencies,” the report stated. “They are more likely not to intend to own them in the future.”

Specifically, the group estimated that a “one standard-deviation increase” in a participant’s financial literacy score — based on knowledge of…

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