Millennials – a population cohort born in the 80s and 90s – have embraced bitcoin and crypto in a way that Gen X and the post-war Baby Boom generation have not. Growing up with the web helps, for sure, though even many Millennials lack the lifelong full immersion in web culture of those born in the 21st century. But familiarity with tech isn’t the only reason for their willingness to embrace this emerging class of assets. Millennials’ appetite for crypto has clearly been driven by the diminishing presence of alternatives for return on investment.
It probably won’t come as any surprise that Millennials are more likely to have invested and become involved in cryptocurrency. They’re most likely in the position to encompass the perfect combination of being tech-savvy and having the desire to diversify their finances beyond traditional currency. Survey after survey demonstrates just how strong the interest is with this key demographic.
Crypto as a potential investment
Take, for example, a very recent (July 2018) survey by blockchain technology investment firm Sustany Capital. The company asked 1,000 Americans ‘familiar with cryptocurrency’ about their perceptions and sentiment. The results were surprising.
A remarkable 88 percent of Millennials said they wanted to purchase crypto because they viewed it as a good investment, with three quarters stating that banking and finance were the ‘most relevant applications’ for blockchain. Even with their vocalized interest in these emerging assets over three-quarters of all respondents voiced their apprehension and concern around security.
For those who had not yet ventured into the world of crypto, there were some interesting generational differences. Overall, more than half said they did not know enough about crypto, and a quarter even stated they did not know what blockchain technology was, even though they were familiar with the idea of cryptocurrency. Significantly, the proportion of Gen Xers, Boomers, and Millennials waiting for clearer regulation before they invested were about the same, at just over 20 percent; only 9 percent of Gen Z respondents, on the other hand, cared about regulation.
And, while the chance of high profits was a motivating factor for three-quarters of crypto investors, the older generations are more likely to view crypto as a means of payment than Millennials, for whom it is overwhelmingly an investment.
The search for ROI
It’s clearly not just Millennials’ familiarity with technology that is driving interest in crypto. There is a growing body of evidence that suggests they are buying crypto because there are no other opportunities for good returns to be found. And that is a key difference between Millennials and Boomers/Xers.
Bitcoin was born out of the Global Financial Crisis – in fact, a reference to the fragility and injustice of the current monetary-economic system is embedded in the Genesis Block: ‘The Times 03/Jan/2009 Chancellor on brink of the second bailout for banks’.
Millennials are the ones most impacted by the GFC, despite being too young to have played any role in causing it. Deregulation and loose monetary policy mean they have been priced out of the property market. Stock markets are at all-time highs and the returns enjoyed by their parents’ generation, who invested in the early 80s, are no longer available. With interest rates at an unprecedented low, there is nothing to be gained from keeping money in a savings account. Worse still, the legacy of the boom years is a hangover of epic proportions and a public sector spending squeeze. Austerity has left more and more paying for services previous generations received for free. Americans and now Brits are typically heavily indebted by the costs of their education before they even claim their first paycheck.
And so it’s hardly surprising that Millennials have seized the possibility of returns offered by this new technology and asset class. They are disillusioned and disenfranchised by the mainstream financial system and the political-economic status quo, which has failed to deliver for them what it has for previous generations. This is confirmed by another survey, this one polling 700 global crypto investors, undertaken by the Waves Platform at the end of 2017. Bitcoin proved the most popular crypto investment and has offered the best returns, with two-thirds believing that crypto coins would be integrated into the mainstream economy within five years. Remarkably, though, most of those who took part in the survey had invested in no other asset class. It was crypto or nothing.
The Trifecta: Means, motive, opportunity
Millennials sit in a sweet spot of overlapping factors. They are old enough to have some disposable income, but have no other place to invest it: there is a perception that the returns have already been taken by their parents’ generation. At the same time, they are squeezed by their debts, economic stagnation, and public spending cuts. What they do have is the technical background to seize this opportunity, as well as a willingness to accept the idea of digital money – something their parents, who grew up handling coins and notes for almost every transaction, find it harder to get their heads around.
Journalist Andrew Gillick notes that Millennials will outnumber Baby Boomers by next year, comprising 36 percent of the US population. Boomers are progressively exiting the workforce as they retire; Millennials are entering their peak earning years. A whole host of demographic factors is coming into play, as the Boomer cohort is set to become a net recipient rather than a contributor to public finances, while also in some cases holding onto their generous pensions and thick share portfolios. All of this has and will arguably occur at the expense of Millennials, who are paying for the mistakes and excesses of previous generations. Is it any wonder that Millennials are opting out and looking for their own way?
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