Building digital literacy: Why understanding crypto and blockchain matters

When asked about crypto, people usually fall into one of two camps: they either support it wholeheartedly or hate it with a passion. Of course, there are also those who are rather ambivalent about it or have never cared enough to form an opinion on digital currencies. Not everyone is hooked on the crypto news machine or checks the BTC price prediction data every time they get the chance.  

But no matter what you think or how you feel about cryptocurrencies, the fact remains that this technology exists and cannot be ignored. And you know what they say: if you can’t beat them, join them, or at least learn about them. Now we’re not saying that you should turn into a crypto fan overnight just because most people have already warmed up to it. We’re also not suggesting that crypto and blockchain study should be integrated into the school curriculum as a compulsory subject.

Nevertheless, educating yourself on crypto in the context of enhancing digital literacy is important for various reasons that we’re going to discuss below.

A viable option for portfolio diversification

Investing has become much easier these days due to tech advances and new trading models that have lowered barriers to entry, so more and more people are now exploring different financial markets, looking for opportunities to enhance or preserve their wealth.

If you’ve already built a portfolio, you surely know how important diversification is for risk management purposes. A more varied holding lowers the likelihood of major losses and protects your portfolio against a collapse in case any of the markets you’ve invested in plummets.

There are many types of assets you can include in a portfolio to keep it balanced, and one of them is crypto. But since you can’t invest in an asset class without knowing anything about it, learning about digital currencies, how they function, and how they could help with diversification makes perfect sense.

Crypto behaves differently than established investments like stocks and bonds. That means it has a distinct risk profile and earning potential. While many traditional markets tend to move in tandem for the most part, digital currencies are known to have a lower correlation to these markets, and that makes them a good option for portfolios that mostly contain conventional assets. Even so, if you do decide to invest in crypto at one point, you have to familiarize yourself with the ins and outs of the market before you make a move.  

Increasing integration into mainstream finance

Crypto has had a pretty interesting and unpredictable evolution over the years. It started out as a fringe and largely frowned-upon invention that by all accounts was meant to serve as an alternative medium of exchange. However, it gained popularity as a store of value and investment avenue instead. Then, after earning widespread acceptance in the investment space, it somehow made its way back to its initial purpose and started gaining ground as a payment solution.

Gradually and almost imperceptibly, crypto managed to weave itself into the very fabric of modern finance. More and more businesses across all industries have started accepting crypto payments for their goods and services.

Institutions have also opened their doors to digital currencies by integrating them into established frameworks. The approval of crypto exchange-traded funds (ETFs) is one of the most relevant examples in this respect. These products allow institutional investors to gain exposure to crypto through well-known and trusted channels, such as traditional brokerage accounts and regulated exchanges, which make the process significantly easier.

At the same time, regulators have made a lot of progress towards developing dedicated frameworks to accommodate crypto into financial systems and offer users the protections they need when engaging with these instruments.

All of these developments prove that crypto is making its way into conventional finance as we speak. So, by learning about crypto and blockchain, you’re basically preparing yourself for a future where these assets are not just a nice-to-have or an alternative to fiat that you can easily ignore, but a permanent component of the economic infrastructure. 

Use cases beyond finance

Finance is not the only area where crypto and blockchain are making their mark. Blockchain technology has proven particularly useful in logistics, where it can help improve traceability due to its ability to function as an immutable ledger where transactions and the movement of goods are permanently recorded.  

Healthcare is another industry that benefits considerably from these innovations. Here, blockchain can assist with securing health records and ensuring interoperability, allowing providers to share patient data safely.

Voting and governance leverage blockchain to create more transparent systems that create verifiable records and rule out the possibility of tampering with election results by removing the risk of central authority manipulation.

Although less talked about, identity management is also an area where blockchain can make a difference. The technology allows users to take control over their personal data and makes it easier for them to manage and protect their credentials.

It’s therefore definitely worth learning about a technology that has so many practical use cases and whose applicability continues to expand so fast.

Career booster  

With crypto and blockchain already having such a notable influence in today’s society, it stands to reason that staying up to date with these innovations and understanding the advantages they offer could make you a more attractive candidate for employers.  

Just as it happened with other technologies in the past, crypto-related knowledge may become a differentiator in the job market in the not-so-distant future. Judging from this perspective, working on your crypto literacy could improve employment prospects and help you develop skills that will be relevant for career advancement.

Whether you view them as useful or unnecessary, crypto and blockchain continue to influence the world we live in through their use cases, and that is a good enough reason to start learning about them.