What Is Cryptocurrency? The Benefits of Teaching About Cryptocurrency in A Financial Literacy Program for Kids.

Financial illiteracy is a sure pathway to a low standard of living. Data shows that low financial literacy is the most significant reason many American adults have extensive financial challenges. The transition from physical cash payments to credit cards dealt a deadly blow to millions of financially uneducated consumers, leading them to the deepest depths of high-interest bad debt cycles.

Today, 45% of American households have credit card debt. Over 55 million households hold an average of $14,241 of bad debt with interest rates as high as 17%. Should these breadwinners pay off their high interest credit cards, the $787 billion debt that they collectively owe, they will have paid credit card companies $134 billion in interest.

High levels of financial illiteracy lead to poor investment, saving and spending decisions, and ludicrous credit card use. These financial errors will eventually result in financial insecurity, whose effects manifest in generations of economically depressed communities.

Risks of financial illiteracy in the digital currency age

Cryptocurrencies and the decentralized finance sector are slowly taking over the world of finance. The financially illiterate will have a much more difficult time staying afloat in the digital era. They will not only sink into deeper financial insecurity but will miss this new technology's investment benefits.

To illustrate this point, there are six new cryptocurrency billionaires on the Forbes latest billionaires list. As per CBS News research, there are now over 100,000 bitcoin accounts that hold over $1 million worth of the crypto asset. A year ago, these accounts were in the 15,000 range.

This data illustrates the wealth generation potential that lies within these nascent assets. In that same breath, data shows that Americans have lost over $80 million of their wealth to cryptocurrency scams in the last 6 months.

Crypto scams have risen by 1000% as bitcoin, ether, and dogecoin values increase, attracting more financially illiterate investors to the cryptocurrency market. A financial literacy program for kids can prepare them for a digital currency future.

A digital currency awareness program will help children stake their claim in the growing industry, and encourage blockchain comprehension and innovation for future success.

What is cryptocurrency?

Cryptocurrencies are digital money that are widely accepted as a medium of exchange. Unlike fiat currencies such as the USD, cryptocurrencies are neither issued nor regulated by central banks, such as the US Federal Reserve.

Their function and security are in the hands of a decentralized community of peer-to-peer validators, also known as nodes. Nodes are computers that track, verify, and validate all cryptocurrency transactions. After they have performed this feat, all validated data is cryptographically secured and stored on a blockchain in block format.

The blockchain protocols will then distribute these immutable data records to the peer-to-peer community of nodes to keep them free of central control. To this end, when you purchase a digital currency such as BTC, you will not receive a coin or paper.

A cryptocurrency is simply digital financial data stored on blockchain technology. When you purchase a BTC coin, peer-to-peer nodes will validate your transaction data on the Bitcoin blockchain, behind the scenes. You will only receive a cryptographic private key that gives you access to the value held within your bitcoin data records.

What are the benefits of teaching about cryptocurrency in a financial literacy program for kids?

Cryptocurrencies are only a small part of the blockchain technology movement. When you expose to blockchain technology and cryptocurrency literacy programs, they will have benefits such as:

An exciting and holistic approach to financial literacy

Cryptocurrencies are an exciting technological advancement for the young generation. Children are growing up in a tech-centric culture and digital currencies are as tech as financial instruments can get. As an illustration, children earn virtual in-game assets from their favorite gaming applications.

Consequently, they already understand the meaning of virtual currencies. Cryptocurrency programs are therefore a relevant path to financial, savings, and investment literacy for kids. A combination of financial education and gamification is a holistic approach to financial literacy that will drive the message home.

First-mover advantages in cryptocurrency investment and applications

The world is changing and education should develop along with it. As an illustration, millennials are now buying their dream homes using crypto currencies, such as DOGE, ETH, and BTC.

The investment landscape is changing and kids will benefit immensely from exposure to concepts such as mining, staking, yield farming, stable coins, non-fungible tokens (NFTs), and liquidity mining. Such knowledge will give them first-mover advantages, setting the stage for a brighter financial future.

Safety in the crypto-sphere

Cryptocurrencies are so-called because they heavily depend on cryptography. Cryptography secures digital currency ownership. On top of that, it guarantees the independence of operations and the security of participants.

Most cryptocurrency holders lose their crypto assets because they do not understand the tenets of cryptography. Cryptocurrency private and public keys are all that stand between investor assets and the dark web. Learning cryptocurrency concepts, such as cryptography, will lower the rampant case of crypto scams and fraud in the future.

Inspiration and preparation for innovation and careers in the blockchain space

Blockchain technology applications go far beyond payments. Smart contracts and distributed ledger technology will disrupt every industry whose functions are reliant on agreements and trust. Decentralization could do away with third-party players and introduce trustless business mechanisms.

Cryptocurrency education programs will introduce kids to the virtues of decentralized governance and the power of community-led decentralized governance organizations. This knowledge will prepare them for a changing business landscape and encourage innovation at a young age.

Protection against future shocks in the financial industry

High levels of inflation in the current financial system are constantly eating away at the financial prospects of future generations. Kids that save and invest in deflationary currencies will learn to hedge their savings against inflation at an early age.