‘Crypto Can Be the Gateway to Better Financial Literacy’ Say Researchers

Which private key storage method is most vulnerable to a cyber-attack that will steal user funds?

This is one of ten survey questions that aim to become part of setting a new crypto literacy standard. 

Researchers from the University of Connecticut have published a new research paper titled “Measuring Crypto Literacy.” With it, their goal is to create and validate a scale that measures an individual’s knowledge in what the researchers call cryptoeconomics.

“We want to create a rigorous tool that gives researchers, policymakers, and the industry a baseline of crypto literacy,” says co-author Michael Jones, a professor of economics at the University of Cincinnati. 

Jones told Decrypt they conducted a campus survey of 300 students that had interacted with crypto. The results showed that 10-15% had lost crypto, due to scams or bad private key management, among other reasons.

Those numbers “are unacceptable if crypto is to go mainstream,” he said, highlighting the need for the crypto literacy scale. 

When developing what they dubbed the Crypto Literacy Scale (CLS), the researchers focused on three core aspects: technology, economics, and policy. 

The comprehensive crypto literacy scale presents ten questions.  These include: Who confirms that a Bitcoin transfer is valid? What is a seed phrase in the context of a hardware wallet? Which of the following statements is true about Bitcoin and Ethereum? 

Individuals are then scored from 0 to 10, and placed in the corresponding category. A score of 0-4 lands them in the low crypto literacy category, medium is for a score of 5-7, and high scores are for those who received 8-10.  

“This tool will help the industry understand how well it’s doing,” in matters of education, said Jones, who runs the Cryptoeconomics Lab at the University of Cincinnati. 

He told Decrypt that they also created a “Quick 5” list of questions. This subset is for other researchers and organizations to embed them in other domains across finance and hopefully expand on what Jones calls “The start.” 

Jones also considers crypto literacy to be fundamental to helping navigate the regulatory landscape of cryptocurrencies. He pointed to the need for policymakers to take this type of technology seriously. 

“The leaders of tomorrow are buying crypto,” he concluded, so “policymakers have to see that they need to increase education on the subject matter.”