Credit: Rawpixels
Bitcoin allows us to study and comprehend money on a level that most people have never experienced.
Over the last decade, bitcoin has progressed from a niche asset to a sought-after financial tool. Today, it's impossible to ignore news about bitcoin.
How is bitcoin changing the financial landscape?
A decade after its inception, bitcoin has gradually evolved into a reliable store of wealth. The benefits of bitcoin have been well known throughout the years. Some of these traits are worth emphasizing:
- It is disinflationary because bitcoin has a finite maximum supply and there can only ever be 21 million coins in existence. This contrasts with fiat currencies where governments may create as much as they want.
- It is decentralized, which means that no central body has control over the issuance of new bitcoin nor the transfer of value across its network.
- It ensures absolute ownership; the asymmetric cryptography used to protect it mathematically guarantees that only the private key owner can access and spend their bitcoin.
- It removes third parties. Bitcoin is a genuine peer-to-peer network with no middlemen.
- Bitcoin are digital and are kept on the blockchain, making them simple to keep and transfer. Furthermore, transactions are speedy when compared to the conventional banking system.
- It is unfalsifiable. Bitcoin consists of transaction records on the blockchain that cannot be changed or counterfeited.
Bitcoin will continue to push the global economy to evolve; a solid financial literacy foundation is more essential than ever for navigating this increasingly complex environment. Bitcoin is already transforming banking and investment, and it can completely transform the economy.
If the federal government were to try to prohibit bitcoin, it would not be able to kill the technology. But it would guarantee that the American economy would lose out to international markets and investors. Suffocating innovation is never a good thing for economic success. This technology will be around for a long time and any well-organized financial literacy program should educate students about bitcoin to empower them to make their own choices. A teacher should never advise a student on whether or not to invest, whether it is in stocks, bonds, or bitcoin. The teacher's role is to assist pupils in self-education to make their own educated choices.
Bans on bitcoin are harmful to the economy and disregard individual Americans' rights to manage their own money as they see appropriate. These calls also fail to address the underlying issue: over half of all Americans live paycheck to paycheck. The government must fulfill its duty to provide every child with an education for financial responsibility. Tens of millions of ordinary Americans have invested in bitcoin as a means of accumulating real wealth. It is difficult enough for ordinary individuals to advance. It is inconceivable to believe that the government could adopt a law that would destroy all of those gains with the stroke of a pen.
Why Is Bitcoin Attracting The Youth?
Cryptocurrency is clearly drawing individuals from all walks of life. Some nations have even attempted to develop their own cryptocurrency. There is no question that digital currencies are here to stay, but one thing is certain: young people are really interested in them. Take a brief glance at the cryptocurrency market and you'll see that a significant portion of the investors fueling that economy are young individuals.
Back to the million dollar question: why are so many young people ready to spend so much on bitcoin? The following are some possible explanations for this.
Inflationary Pressures
Generation Z and Millennials have experienced significant financial insecurity.
The Great Recession happened just as Millennials were reaching maturity. Everything fell apart before these young people's eyes. They saw their parents lose their houses, jobs and sometimes marriages during the mortgage crisis. Things began to improve, but they continued to bear the wounds as the economy slowly recovered.
The issue is that the tale did not stop there. A few years later the epidemic struck and the economy collapsed once again. This time, it was not just Millennials who were affected, but also the emerging Gen Z population that was approaching maturity. Worse, the economies of many nations have been badly harmed.
Bitcoin is not linked to any one nation’s prosperity or money-printing whims, and the global economic ruin that precedes bitcoin is an example of what happens when the state controls monetary policy. This is why many young people are becoming increasingly interested in this kind of cash.
Government Mistrust
The government of a nation is in control of its economy. People put their money into administrations because they think they will receive something in return.
The reality is that people are receiving a lot in return, such as protection, state programs, infrastructure and more, but these economic crises continue to demonstrate to people — particularly young people — that the government seems hesitant to assist its people when they are struggling. The government controls the people's money purse and when circumstances become tough, only a small amount of economic stimulus was sent directly to the people.
This is a reality that young people are coming to terms with and they aren't happy about it. Many people view bitcoin as a means of bringing about freedom for everyone through its equally accessible, decentralized monetary network, and it brings about a feeling of economic justice that seems to be lacking in nations such as the United States.
In essence, young people continue to see the American financial system as one that fails them. Why should you continue to support something that continues to fail you?
The Impact Of Financial Literacy On Bitcoin Market Participation
Georgios Panos, Tatja Karkkainen and Adele Atkinson examined the impact of financial literacy on bitcoin market participation. Their key result showed that financial knowledge reduces the likelihood of owning bitcoin right now. Second, those who are financially knowledgeable are less likely to plan to acquire cryptocurrencies. Third, financially-educated people are less likely to plan to acquire cryptocurrencies in the future yet are more likely to have heard of cryptocurrencies and understand what they are.
Furthermore, they discover that people who prefer risk are more inclined to invest in bitcoin. A market must have a mix of knowledgeable investors and speculators to price effectively. This combination is critical for newly formed alternative markets, such as the bitcoin market, now open to the public.
Prices in emerging alternative marketplaces are often disconnected from their fundamentals. These markets pose an even greater danger to illiterate investors since they are unaware of the additional hazards. One example is that some financially-ignorant market players borrow to fund their bets. The researchers note that in certain instances, this may potentially jeopardize their household's financial security in the event of a bitcoin collapse . Regulators are worried about the dangers associated with hazardous investments and the risks that inexperienced investors incur. Inexperienced investors currently drive cryptocurrency markets. These investors' actions make a lot of noise. Fortunately, this is becoming increasingly relevant on the global agenda of improving financial literacy.
Conclusion
Bitcoin is causing an increase in the number of individuals to educate themselves about money, while those previously “educated” continue to ignore its progress. Investors who want to be a part of this financial revolution are learning about the flaws of present monetary policies and how to overcome them by diversifying their assets.
This is a guest post by Rachita Nayar. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.