The study concluded that the high ownership of encrypted currencies is linked to 75% to the bias of financial knowledge – Tradingview News

Crossed currencies have changed the financial scene, and have acquired the interest of technology lovers, investors and organizers all over the world. However, with the acquisition of digital assets of great importance, decisive questions arise about the role of financial culture and cognitive biases in forming investment behaviors.

Experimental evidence confirms that financial knowledge greatly affects financial stability by strengthening the process of individual decision -making. People who have financial knowledge take the highest wise options, such as the budget mode effectively, savings for emergency situations, and understanding borrowing costs.

On the contrary, the low financial culture often leads to poor decisions, excessive borrowing, and the susceptibility to distorted expectations, which leads to exaggeration of regular risks.

Understanding the risk of cryptocurrencies requires financial knowledge

Why does financial knowledge play a pivotal role in the ecosystem of encrypted currencies? The inherent complexity of digital assets such as cryptocurrencies requires accurate financial knowledge to deal with their risks. Understanding Blockchain technology, digital portfolios and trading platforms – all of which are important components to invest in encrypted currencies – requires a level of digital and financial knowledge that many investors lack.

Curricula themselves are varied, starting from well -known names like Bitcoin, ethereum to alternative speculative currencies. Without the ability to conduct a critical assessment of technology and market trends, investors may fall prey to speculation bubbles or projects of small fundamental value.

The lack of financial knowledge exacerbates these challenges, which makes it difficult to understand the potential consequences of market fluctuations, and thus increase exposure to shocks. The relationship between financial knowledge and the ownership of encrypted currencies is of particular importance due to the complexity of these assets compared to the traditional financial tools and the risks they constitute on financial stability.

A study linking excessive confidence and cryptocurrency investments

A recent study entitled ownership of cryptocurrencies and cognitive biases in perceived financial knowledge, which was conducted in Spain, Santiago Carbo, and Pedro J. Kadros, Francisco Rodriguez, funded by Fonkas, highlights this issue. Research is looking at how to influence the financial knowledge bias – the gap between perceived and actual financial knowledge – on the ownership of the encrypted currency.

Based on a survey that included more than 2000 participants, the study determines the bias of financial knowledge as a decisive determinant of the ownership of the encrypted currency, even after controlling variables such as age, income and digital activity.

Automated learning highlights the factors of encrypted currencies

Using advanced machine learning techniques, the study reveals that individuals who exaggerate their financial knowledge are more likely to invest in encrypted currencies. Specifically, those who exaggerated their financial knowledge were 75 % more likely to possess digital assets compared to those who have accurate self -assessments. For every increase in the bias of financial knowledge, the possibilities of possession of cryptocurrencies increased by 4.37 times.