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Teaching Financial Literacy In The Age of Bitcoin
Learning about how the world of finance works is increasingly important as technology like Bitcoin advances.
Recently I met with a group of high school seniors transitioning into college to ask how we can improve our education system. One thing they mentioned is that they did not feel prepared for the real world. I started asking them questions to try to figure out what they meant. When we got to the topic of financial literacy, I was stunned by their lack of knowledge. They did not know the difference between a debit and credit card. One student did not even know they were responsible for paying back money charged to a credit card.
As some members of Congress think about banning bitcoin, they are missing what the real problem is. The federal government should not be in the business of banning innovative new technologies, but the government does have a role in funding age-appropriate financial literacy courses from kindergarten through twelfth grade. As an educator and candidate running to serve California’s 30th congressional district in 2022, I believe this is a moral imperative. We are allowing our youth to leave high school ill-prepared, and set up for failure.
Financial literacy courses are essential to instill principles of saving, budgeting, and investing, which leads to financial responsibility. These classes provide students with concrete skills they can apply in the real world. Current California state standards mandate that public school students take a semester-long economics class that teaches big picture economics but fails to address the practical skills people need to handle their money. Students learn about international trade and monetary policy, but they do not learn how to find an apartment to rent or how to calculate credit card interest. Students need dedicated classes on personal finance. They need to leave high school knowing the difference between a debit and credit card. They need to understand that credit cards are inherently high interest and that companies want people to get themselves stuck in debt traps by making minimum payments that leave the principle largely untouched. They need to know how to make smart investments for themselves by balancing risk with potential reward while factoring in inflation and fees.
Every student deserves to be taught financial literacy but there is a deep inequality in which students actually receive the opportunity. A federally-funded program ensures that every student receives a quality education regardless of family income. In the absence of these classes, young people usually learn finance from family members or are forced to figure everything out on their own. For children raised in affluent families, this may not be an issue, but kids from disadvantaged backgrounds may not have mentors or family members who are knowledgeable in finance. Young people who lack these skills are set up to fail. They are vulnerable to predatory lending. They risk falling for check-cashing services and payday-loan companies promising service fees and rates that sound low, but never are. They are likely to be surprised by minimum account balance fees and penalties incurred for accidental overdrafts. Financial literacy gives kids growing up in poverty a fighting chance.
As the economy changes with Bitcoin and blockchain technologies, a solid grounding in financial literacy is more important than ever to navigate an increasingly complex world. Bitcoin is already changing finance and investment, and it has the potential to revolutionize the entire economy. If the federal government banned bitcoin, it would not destroy the technology, but it would help ensure that the American economy will lose out to foreign markets and investors. Stifling innovation is never good for economic prosperity. This is a technology that is here to stay and any properly-run financial literacy class should teach students about Bitcoin and cryptocurrencies to empower them to make their own decisions. A teacher should never counsel a student to make or not make any kind of investment, whether the investments are stocks, bonds, or bitcoin. The teacher’s job is to help students educate themselves so they can make their own informed decisions.
Calls to ban bitcoin are bad for the economy and ignore the rights of individual Americans to handle their own money as they see fit. These calls also ignore what the real problem is. More than half of Americans live paycheck to paycheck. The government needs to fulfill its obligation to give every kid an education that prepares them for financial responsibility. Tens of millions of everyday Americans have bought into bitcoin as a chance to build real wealth. It is hard enough for regular people to get ahead. It is unconscionable to think that the government could or would pass a ban that would, with the stroke of a pen, destroy all of that wealth. In Congress, I will fight for federal dollars to support financial literacy programs and I will stand with the bitcoin community against any ban attempts. We need to act together. Where do your representatives stand on Bitcoin? Is personal finance included in your state’s educational standards? Find out. Write letters. Support candidates who reflect your values and who will fight for your interests and make your voice heard.
This is a guest post by Aarika Rhodes. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
The Next Generation of Attorneys: Three Reasons Why Law Schools Should Be Teaching Bitcoin To Students
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As the COVID-19 pandemic forced many lawyers to work remotely, more law school students are signing up for legal tech courses to enhance their abilities in a rapidly evolving job market.
The pandemic certainly presented a new challenge for the legal landscape, as courtrooms and firms just weren’t prepared to go remote and were forced to adopt new digital technologies as basic as Zoom and Microsoft Teams. With more law students feeling comfortable leveraging video conferencing platforms, there seems to be a bigger focus on how technologies like Bitcoin can help solve legal challenges, but with little execution by many law schools.
Having conversations about blockchain helps students explore more fundamental questions about finance and transactions both in the U.S. and abroad. These are questions that help us understand what Bitcoin is about.
Here are three reasons why, in our post-pandemic world, law schools should be teaching their students about the world of Bitcoin.
#1 – Stop Teaching To The Bar Exam And Start Preparing Students For The Real World
When it comes to preparing students for the bar exam, law schools and academics need to step it up. As it stands today, there just aren’t enough academics that are currently engaged in research on Bitcoin and other digital currencies.
Law schools have an obligation to their students to not only prepare them for the bar exam, but to also be competent to sit for job interviews, whether you take a traditional or non-traditional legal route. Often what we see is that when a student graduates law school, they have only been trained to take the bar exam — nothing more. There is very little real world experience, even with an internship, clerkship or externship under their belt.
Universities such as Massachusetts Institute of Technology, Cornell, Stanford, Harvard, Columbia, New York University, University of Southern California, Duke, University of Texas at Austin, Vanderbilt and Georgetown have all implemented their own curricula, teaching students about the world of Bitcoin, digital currency and blockchain technologies.But are they teaching it in a way that is of value to students as they prepare to graduate and apply for jobs?
Probably not, but it’s a start in comparison to those lower-ranked universities that seem to be setting law and graduate students up for failure. I can tell you that when I graduated law school in 2015, I was not prepared for these newer technologies. I had to teach myself and ended up returning as an adjunct law professor to teach Bitcoin and Blockchain 101 to my Cyberspace Law students at the end of the semester, hoping to give them an advantage over their classmates.
#2 – Understanding Regulatory Bodies Helps Provide For A More Competent Lawyer
While attorneys are a self-governing trade, it is equally as important to understand the regulatory bodies and institutions that attorneys may come across in practice (though hopefully not as a defendant).
Institutions like the U.S. Department of the Treasury, the U.S. Securities and Exchange Commission (SEC) and the U.S. Congress play a very big role in the future of Bitcoin and the expansion of our traditional finance system.
Let’s explore some of the more relevant governing bodies as they relate to Bitcoin governance.
U.S. Securities and Exchange Commission
Since as early as 1934, the SEC has been tasked with overseeing the trading of various assets on the market, previously focused on stocks and bonds.
In recent years, the SEC added cryptocurrency, including Bitcoin, to its purview, helping to regulate U.S. exchanges. The SEC has an extensive jurisdictional reach, with the power to introduce less- or more-stringent laws regarding cryptocurrencies, take legal action against fraudulent individuals or companies and prevent launches of dubious initial coin offerings (ICOs).
The “regulation holdup” so to speak, from the eyes of the SEC, comes from its hesitation to avoid over-regulating cryptocurrencies, given how new the technology is in mainstream commerce. While many consider the SEC to be opposed to the technology, it has expressed numerous times its optimism for digital currency, indicating its desire to apply the entire spectrum of securities laws to both the physical and virtual aspects of the crypto market.
In the eyes of the SEC and the Commodity Futures Trading Commission (CFTC), bitcoin is considered to be a “commodity” with respect to the Howey Test.
Commodity Futures Trading Commission
Whereas the SEC is focused on various securities traded in the U.S., the CFTC is an independent agency of the U.S. government that regulates the U.S derivatives markets, which includes futures, swaps and certain kinds of options.
In March 2018, a federal judge ruled that digital assets such as Bitcoin should be viewed as “commodities” and can be regulated by the CFTC. Since the groundbreaking ruling, the agency has provided instructions to cryptocurrency exchanges and similar entities launching cryptocurrency derivatives.
The approval of bitcoin-backed futures and derivatives remains the CFTC’s biggest decision in the U.S. as it pertains to the crypto space. Recently, the CFTC along with the SEC have warned investors of the risks of investing in funds with exposure to bitcoin futures.
“Investors should consider the volatility of bitcoin and the bitcoin futures market, as well as the lack of regulation and potential for fraud or manipulation in the underlying bitcoin market,” according to the SEC’s June 10, 2021 investor alert.
U.S. Department of the Treasury
As the Treasury is responsible for the country’s flow of money, its policies and decisions regarding bitcoin have started to make sweeping changes for purposes of tax collection and reporting.
The Financial Crimes Enforcement Network (FinCEN), a smaller division of the Treasury, also issued a statement setting forth its approach to enforcing rules and regulations under the Bank Secrecy Act, in efforts of minimizing and preventing money laundering. made crypto exchanges subject to the Bank Secrecy Act in order to prevent money laundering and other criminal dealings.
On July 6, 2021, FinCEN announced it recruited Michele Korver, formerly of the U.S. Department of Justice, to serve as the agency’s first chief digital currency advisor. Michael Mosier, FinCEN’s acting director, commented on Korver’s vast experience in helping craft digital currency legislation:
“Michele brings a wealth of digital currency expertise, and will be a tremendous leader in coordinated efforts to maximize FinCEN’s contribution to the innovative potential for financial expansion of opportunity while minimizing illicit financial risk.”
This is helpful for those students taking securities law courses or who intend to practice in the world of corporate law.
Internal Revenue Service (IRS)
The IRS previously stated in 2014 that digital assets like Bitcoin don’t fall under the umbrella of “real currencies” and should instead be considered “property” for tax purposes. It has not changed its position on Bitcoin’s categorization since its initial 2014 statement.
Consumers were shocked when the IRS indicated its intention to learn more about the “property” after it ordered Coinbase to hand over the details of 14,000 of its users in February 2018 in order to check the tax records for tax evasion.
The Office of the Comptroller of the Currency (OCC)
Back in March 2020, former Coinbase Chief Legal Officer Brian Brooks was appointed as the then-acting comptroller of the currency, serving from May 29, 2020 to January 14, 2021. This signified the Treasury’s seriousness toward understanding Bitcoin and that any subsequent legal and compliance programs would be tailored towards these technologies.
One major body to follow is a subsidiary of U.S. Congress. The U.S. House Financial Services Committee, which helps oversee why and how other agencies like the IRS and FinCEN will continue addressing bitcoin and its counterparts.
This is just a hand-selected number of agencies that are involved in the world of Bitcoin and digital money. This is not an exclusive list. For a quick review, here is a list of the regulatory bodies and their leaders under the current Biden Administration:
- Treasury – Janet Yellen
- SEC – Gary Gensler
- CFTC – Rostin Behnam (acting leader)
- OCC – Michael Hsu (acting leader)
- FinCEN – Michael Mosier (acting leader)
- Office of Foreign Assets Control (OFAC) – Andrea Gacki (incumbent from Trump Administration)
- Federal Reserve – Jerome Powell (incumbent from Trump Administration)
- Federal Deposit Insurance Corporation (FDIC) – Jelena McWilliams (incumbent from Trump Administration)
- Consumer Financial Protection Bureau (CFPB) – Dave Uejio (acting leader)
No matter the trade you are in, attorneys should understand the concept of regulation on bitcoin by bodies such as the SEC or the U.S. House Financial Services Committee.
Understanding the importance and distinction between an IPO and an ICO makes a difference.
#3 – Your Ethical Obligations May One Day Depend Upon It
Regardless of what area of law you are practicing, you are bound to come across a client who mentions the words “cryptocurrency,” “digital assets” or “Bitcoin.” And according to the ethical rules, “a lawyer shall provide competent representation to a client.” What this means is that attorneys are required to have the legal knowledge, skill, thoroughness and preparation reasonably necessary for adequately representing their client.
In other words, if you aren’t familiar with the concept of Bitcoin and why it’s important in areas involving criminal law, real estate, contracts, entertainment, securities and every other legal landscape it touches, you better make sure your malpractice insurance is up to date, because those are the waters you’re headed if you aren’t prepared.
And it’s more than just saying the word “Bitcoin”; you need to be prepared to have a real conversation about it, because an answer of “I’m not familiar with that” or “I don’t believe that comes into play” just won’t cut it when it comes to ensuring that you are holding up your ethical obligations to your client.
Take corporate law where, traditionally speaking, the stock market and mainstream financial instruments were the centers of conversation — but not necessarily any more. In applying concepts of Bitcoin and other digital money, this is already transforming how investors trade, changing discussions around liability and historical ownership of shares.
Diving a bit deeper into securities law, understanding how bitcoin is viewed, regulated, and monitored by the SEC is imperative in competently practicing in this area of law. In the past five years, the SEC has taken some serious steps in its efforts to clarify the digital currency space by focusing on how Bitcoin impacts our global economy.
At the end of the day, it is our academia that will serve to shape the future of consumer finance and the role Bitcoin, blockchain and other digital asset technologies will play in our everyday lives.
This is a guest post by Andrew Rossow. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
Find The Best Books About Bitcoin
We’re excited to announce that we’re expanding our online store to include educational books for all ages. For young children we offer “Bitcoin Money: A Tale Of Bitville Discovering Good Money,” while for teenage and adult beginners we offer “The Little Bitcoin Book: Why Bitcoin Matters For Your Freedom, Finances, And Future,” among many other offerings.
These titles include the 20 best books about bitcoin.
This children’s book offers a simple and easy way to learn about bitcoin.
Are you a developer who wants to learn more about software and the Bitcoin network? Look no further than “Programming Bitcoin: Learn How To Program Bitcoin From Scratch.” An experienced Bitcoin user who is passionate about the history of decentralized money? For you, we offer “The Blocksize War: The Battle Over Who Controls Bitcoin’s Protocol Rules” and “Layered Money: From Gold and Dollars to Bitcoin and Central Bank Digital Currencies.”
This book covers everything from gold to cryptocurrency.
What about if you are looking for a gift for a friend, wife or daughter who just doesn’t understand what is so cool about Bitcoin? We even have a book for that, “Cypherpunk Women,” which covers both Bitcoin and broader social movements. It’s the perfect book for nocoiners who aren’t attracted to the hard money narrative. There will be a limited supply of this anthology available for pickup this June at the conference in Miami, so be sure to reserve your copy in advance. All the rest of our books are available for purchase either online or in person in Miami, so everyone can enjoy our collection of books about Bitcoin.
Even a complete beginner who is not tech-savvy can use this curriculum to go from understanding bitcoin basics, with beginner books like “Bitcoin Clarity: The Complete Beginners Guide to Understanding” and “Inventing Bitcoin: The Technology Behind the First Truly Scarce and Decentralized Money Explained,” to experienced bitcoin users with a comprehensive understanding of how inflation, supply and demand all impact the economy.
This educational book about bitcoin is perfect for beginners.
You can basically give yourself a PhD in Bitcoin just by reading our whole curriculum with the best 20 books about bitcoin. In terms of economics text books, we recommend “The Sovereign Individual: Mastering The Transition To The Information Age” and “Economics In One Lesson: The Shortest And Surest Way To Understand Basic Economics.” And, of course, no Bitcoin curriculum would be complete without “The Bitcoin Standard: The Decentralized Alternative To Central Banking.” Prioritize your own self-sovereignty by getting the educational resources you need to learn all about Bitcoin.
This book includes economic history and broader context about how bitcoin is a perfect example of hard money.
For more tools for your bitcoin journey, everything from hardware wallets to Bitcoin swag, it’s all available in our store.