You may have seen studies claiming that the vast majority of Americans have heard about bitcoin. But a new study reveals another crucial point: while most Americans have heard about bitcoin, most Americans also fail to understand what ‘bitcoin’ is.
The report comes from The Knowledge Academy, a UK-based provider of training courses. The company recently completed a survey of 1,135 Americans to measure their understanding of financial terms.
Participants were asked to rank their familiarity with different financial terms. Bitcoin came in last place, behind terms like “amortization” and “Roth IRA”.
The low level of confidence about bitcoin is unsurprising considering the recency of bitcoin. Americans have had savings accounts for decades, which is why it’s unsurprising to see the term ‘savings accounts’ at the top of the list with respondents reporting 88% certainty at knowing what a savings account is.
Overall, however, Americans had a “generally poor grasp of financial terms in general,” researchers concluded by the end of the survey.
Researchers found the term ‘savings account’ was one with which respondents were most familiar. 88% of respondents expressed confidence in the term. 76% of respondents also expressed confidence in knowing what ‘credit union’ was, followed by ‘net worth’ at 72%. Assets and liabilities – the two key elements of net worth – garnered only 70% confidence ratings, however.
Other terms featured in the study included ‘index fund’ (49% of respondents expressed certainty of knowing what an index fund is), ‘asset allocation’ (44%), ‘stock options (43%)’, ‘endowment’ (42%), ‘annuity’ (41%), ‘capital gains and losses’ (40%), ‘Roth IRA’ (39%), ‘mutual fund’ (39%), ‘liquidity’ (37%), ‘amortization (36%), and ‘premium’ (36%).
Bitcoin, meanwhile, was ranked as the least-understood financial term, with only one in four Americans reporting confidence in what bitcoin means.
Overall, researchers seemed unimpressed with the financial literacy of Americans during the study. As reported by CCN.com, another similar study found that “only 16% of Americans demonstrate a high level of financial literacy” according to research from the Teachers Insurance and Annuity Association.
Other studies have emphasized the idea that a growing number of Americans have heard about bitcoin. However, there’s a big difference between hearing about something and being able to describe it. Your grandparents may have heard about bitcoin, for example, but that doesn’t mean they know how it works, how the software runs, or any other information about bitcoin.
A study from YouGov Omnibus in late August, for example, found that 79% of Americans are aware of at least one type of cryptocurrency, with most respondents reporting hearing about bitcoin.
The studies showing awareness of bitcoin, for example, frequently show that most respondents don’t actually use bitcoin: they’ve only heard of it.
Nevertheless, bitcoin is the newest financial term on the list of terms in the latest study by far. It’s unsurprising to see respondents express a lack of confidence in what bitcoin means. Optimists, meanwhile, will point to the fact that 1 in 4 respondents did report confidence in knowing what bitcoin is and how it works. That number can only go up as bitcoin continues to go mainstream.