Financial literacy and attitudes to cryptocurrencies

Abstract

We examine the relationship between financial literacy and attitudes to cryptocurrencies, using microdata from 15 countries. Our financial-literacy proxy exerts a large negative effect on the probability of currently owning cryptocurrencies. The financially literate are also more likely to be aware, but not to intend to own cryptocurrencies. We show that the relationships are explained by a different perception of the financial risk involved in cryptocurrencies, vis-à-vis alternative instruments, by the more financially literate. Our findings shed light on the demand for cryptocurrencies and suggest that, apart from parties interested in illegal transactions, and ‘cryptofunds’, it also largely comprises of unsophisticated investors.

The previous version of this paper is available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3482083

Georgios Panos is Professor of Finance at the Adam Smith Business School, University of Glasgow