Discovering and understanding Bitcoin can be a catalyst for people to explore the origins of money and the financial world.Image Credit: Rawpixels
Bitcoin enables us to study and understand money at a level that most people have never experienced.
Over the past decade, Bitcoin has grown from a niche asset to a sought-after financial instrument. Today it is impossible to ignore news about Bitcoin.
How is Bitcoin changing the financial landscape?
A decade after its inception, Bitcoin has gradually become a reliable store of wealth. The benefits of Bitcoin have been known over the years. Some of these properties are worth highlighting:
- It is disinflationary because Bitcoin has a finite maximum supply and there can only be 21 million coins at a time. This is in contrast to fiat currencies, where governments can do as much as they want.
- It is decentralized, which means that no central body has control over the issuance of new bitcoins or the transfer of value over their network.
- It guarantees absolute ownership; The asymmetric cryptography used for its mathematical protection guarantees that only the owner of the private key can access and spend his bitcoins.
- It removes third parties. Bitcoin is a true peer-to-peer network with no intermediaries.
- Bitcoin are digital and are kept on the blockchain, which makes them easy to keep and transfer. In addition, transactions are fast compared to the traditional banking system.
- It is not falsifiable. Bitcoin consists of transaction records on the blockchain that cannot be changed or forged.
Bitcoin will continue to propel the global economy to evolve; A solid foundation of financial literacy is more important than ever for navigating this increasingly complex environment. Bitcoin is already changing banks and investments, and it can completely transform the economy.
If the federal government tried to ban Bitcoin, it wouldn’t be able to kill the technology. But it would guarantee that the American economy would lose to international markets and investors. Stifling innovation is never good for business success. This technology will be around for a long time, and any well-organized financial education program should educate students about Bitcoin so they can make their own decisions. A teacher should never advise a student whether or not to invest in stocks, bonds, or Bitcoin. The teacher’s role is to help students educate themselves to make their own educational decisions.
Bitcoin bans are detrimental to the economy and disregard the right of individual Americans to manage their own money as they see fit. These calls also fail to address the underlying problem: over half of Americans live from paycheck to paycheck. The state must fulfill its duty to enable every child to be brought up to be financially responsible. Ten million common Americans have invested in Bitcoin to amass real wealth. It is difficult enough for ordinary people to move forward. It is inconceivable that the government could pass a law that would undo all these achievements with the stroke of a pen.
Why does Bitcoin attract the youth?
Cryptocurrency clearly attracts individuals from all walks of life. Some nations have even tried to develop their own cryptocurrency. No question about it, digital currencies will stay, but one thing is certain: young people really care about them. Take a quick look at the cryptocurrency market and you will find that a significant portion of the investors who drive this economy are young people.
Back to the million dollar question: Why are so many young people willing to spend so much on Bitcoin? Below are some possible explanations for this.
Inflationary pressures
Generation Z and millennials have experienced significant financial uncertainty.
The Great Recession happened just as millennials were growing up. Everything fell apart in front of these young people. They saw their parents lose their home, job, and sometimes their marriage during the mortgage crisis. Things were starting to improve, but the wounds continued as the economy slowly recovered.
The problem is, the story didn’t stop there. A few years later the epidemic struck and the economy collapsed again. This time around, it wasn’t just millennials that were affected, but also the emerging Generation Z population, who were nearing maturity. Worse still, the economies of many nations have been badly damaged.
Bitcoin is not linked to any nation’s prosperity or whims, and the global economic ruin that preceded Bitcoin is an example of what happens when the state controls monetary policy. Because of this, many young people are becoming increasingly interested in this type of cash.
Government distrust
The government of a nation is in control of its economy. People put their money into administrations because they think they will get something for it.
The reality is that people are getting a lot in return, like shelter, government programs, infrastructure and more, but these economic crises continue to show people – especially the young – that the government seems reluctant to help their people when they face difficulties. The government controls the people’s wallets, and when circumstances become difficult, only a small amount of business support is sent directly to the people.
This is a reality that young people come to terms with and they are not happy about it. Many people view Bitcoin as a means of creating freedom for all through its equally accessible, decentralized currency network, and it creates a sense of economic justice that seems to be lacking in countries like the United States.
In essence, young people continue to view the American financial system as one that is failing them. Why should you keep supporting something that continues to let you down?
The influence of financial literacy on participation in the Bitcoin market
Georgios Panos, Tatja Karkkainen and Adele Atkinson examined the effects of financial literacy on participation in the Bitcoin market. Their main finding showed that financial literacy reduces the likelihood of owning Bitcoin now. Second, those with financial literacy are less likely to plan on acquiring cryptocurrencies. Third, people with a financial education are less likely to plan to purchase cryptocurrencies in the future, but are more likely to have heard of cryptocurrencies and understand what they are.
Additionally, they find that people who prefer risk are more inclined to invest in Bitcoin. A market must have a mix of knowledgeable investors and speculators to get an effective price. This combination is crucial for newly established alternative markets, such as the Bitcoin market, which is now open to the public.
Prices on emerging alternative marketplaces are often segregated from their fundamentals. These markets pose an even greater threat to illiterate people as they are unaware of the additional dangers. An example is that some financially ignorant market participants take out loans to fund their bets. The researchers note that in certain cases, doing so could potentially jeopardize the financial security of their household in the event of a Bitcoin collapse. Regulators are concerned about the dangers associated with dangerous investments and the risks that inexperienced investors take. Inexperienced investors are currently driving the cryptocurrency markets. The actions of these investors are making a lot of noise. Fortunately, this is becoming increasingly important on the global financial literacy agenda.
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Bitcoin is causing the number of people researching money to increase, while those previously “educated” continue to ignore its progress. Investors who want to be part of this financial revolution will learn about the shortcomings of current monetary policy and how to overcome them by diversifying their wealth.
This is a guest post by Rachita Nayar. The opinions expressed are solely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
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