BTC Investors Have Low Financial Literacy, Research Says

A survey conducted by Bank of Canada, the country’s central bank, concluded that Canadian people who invest in BTC tend to have low levels of financial literacy while being exposed to high levels of financial risk.

The survey also found that cryptocurrency investors also tend to have a greater understanding of how BTC technology works than non-owners, as might be expected.

However, when asked to answer general financial knowledge questions, the “bitcoiners” scored lower.

Cryptocurrencies in Canada

As reported by Canadian newspaper The Globe and Mail, between 2018 and 2020, around 5% of Canadians owned BTC. The profile of investors was predominantly young, educated men with high family incomes. Despite this, the new study found that these people also have low financial literacy.

On the other hand, the study showed that “Canadians who are financially literate are more likely to know about BTC. But less likely to have it,” the researchers said.

According to the survey, about half of BTC owners who responded to surveys reported being affected by negative events such as a price drop, a scam or a data breach.

More precisely, 18% said they experienced a price drop; 14% said they lost access to their digital wallets; and 12% said they participated in an initial coin offering that turned out to be a hoax.

Cryptocurrency adoption and financial risk

The Bank of Canada reported in the report that has tracked the adoption of cryptocurrencies since 2016. Its objective is to verify how they are being used and if they represent a challenge for the current financial system.

The findings indicate that most Canadians treat cryptocurrencies as an investment rather than a means of payment.

Only about 15% of BTC owners who responded to one of the surveys said their main reason for owning the asset was to make payments.

On the other hand, the volatility of cryptocurrency prices coupled with the industry’s history of fraud – notably the collapse of Canadian exchange QuadrigaCX – has raised some financial stability concerns.