Crypto crash is a wake-up call

Bitcoin, the largest cryptocurrency by market capitalization, has recently fallen more than 72 percent since its peak in November.

In a survey conducted by Crypto Literacy in November 2021, 98 percent of respondents lacked a basic understanding of crypto concepts. However, during the same period, the global crypto market capitalization rose to a record $3 trillion as both institutional and private investors allocated significant capital to cryptocurrency investments. Not only did big banks and full-time traders start investing, but so did our neighbors, co-workers and most importantly, young adults.

Simply put, while crypto has found a home in pop culture and the headlines, it has also evolved into an emerging asset class and investment tool for millions. Yet it remains unregulated and like all financial instruments it can present a risky proposition. Although political leaders participate in discussions about consumer protection efforts, crypto education for school-aged students is not part of the agenda – despite data showing that younger generations and black Americans are more likely to buy crypto.

Communities with low to moderate incomes are most at risk. Again

According to the National Financial Educators Council, only 68 percent of Americans are financially literate—up just eight percentage points since 2014. Consider this with the fact that 26 million Americans are credit-invisible, and a quarter are financially fragile. Not surprisingly, those from more affluent households understand the basics of saving, investing and money management better than those living in low- to moderate-income communities. We need to do better, and now we have a unique opportunity to promote and democratize crypto education for all.

At the school level, there are a growing number of unfunded mandates to educate students about the ever-changing financial system and to engage young students about topics related to personal finance. Twenty-seven states have introduced nearly 70 pieces of legislation this year, trying to add personal finance to the core curriculum. This is a move in the right direction, but when are we going to educate students, who can start investing in cryptocurrency as early as 18, on how to navigate this area safely and make informed decisions?

Complex and evolving financial systems are here to stay

Despite the recent volatility in crypto markets, cryptocurrency and the blockchain technology that powers these ecosystems will remain with us. They will continue to play a meaningful role in our lives, from job opportunities to investment vehicles, for decades to come.

The concepts and technology behind crypto are not only making their way into traditional banks and financial institutions. Major retailers such as Home Depot and Overstock.com have accepted cryptocurrency as payment; President Joe Biden has ordered the Treasury Department to explore the possibility of creating a digital dollar; and large companies such as IBM have even developed their own blockchain products and services.

In other words, just as the dot-com crash did not result in the end of the internet, the current volatility in the crypto market does not signal the end of the underlying ideas and technology.

Education is the answer and the equalizer

The rapid development and use of crypto and blockchain technology has created an urgent need for an engaging and interactive learning experience. Every student in our country requires and deserves this education to make better lifelong decisions. While the government debates legislation to create regulatory guardrails that protect investors and consumers from fraud and other harm, education remains the most powerful tool to help individuals protect themselves.

The crypto-economy can be the spark that excites and engages the next generation in their financial future: attracting those who have historically lacked access to, or interest in, the traditional financial system and ultimately allowing communities to grow wealth and build independence. It can also have the opposite effect: exposing communities and investors to exploitative practices or enticing them to take more risks than they should, with potentially serious consequences.

Just like the stock market, crypto may not be the right investment tool for everyone, but being an informed consumer is critical to both laying the foundation for financial independence and giving students the tools to make better financial decisions. Yet our country’s current deficit in comprehensive financial education perpetuates cycles of debt and poverty and reduces the opportunity for upward socioeconomic mobility and a secure future, especially for those living in low-resource communities.

Let’s use education to empower the next generation to protect themselves, participate in the digital economy and be better equipped for success in life. To do that, we can’t just focus on the lessons of yesterday or today. We also have to prepare the students for tomorrow’s lessons. As political leaders debate ways to protect consumers from potential cryptocurrency risks, education is the best place to start.

Ray Martinez is a financial education expert who serves on the board of the Jump$tart Coalition for Personal Financial Literacy and is the president and co-founder of EVERFI, an education technology company acquired by Blackbaud in December 2021.

The views expressed in this article are the author’s own.