Younger investors choose crypto
According to a recent study of wealthy Americans by Bank of America, younger investors are choosing to allocate significantly more of their portfolios to crypto and are more likely to believe that crypto offers the greatest opportunities for growth.
In the over-42 age group, 41% of respondents chose domestic stocks as the best opportunities for growth, and only 7% chose cryptocurrencies and digital assets. In the 21-42 age group, only 12% chose domestic stocks, while 29% chose cryptocurrencies and digital assets.
In terms of allocation, the older age group has an average of only 2% of their portfolios in crypto, while the younger group allocates an average of 15%. These generational differences were also clearly reflected in questions about the understanding of cryptocurrencies and the belief that cryptocurrencies will become mainstream in the next three to five years.
This should come as no surprise to anyone who has been following crypto developments, and at the same time, the results should act as a wake-up call to anyone who still rejects blockchain-based financial technology.
Why might younger generations choose crypto?
The most obvious answer is the possibility of outsized returns, and the likelihood of, at the very least, continued growth. This is a potent combination resulting in the birth of an entirely new industry linked to basic social necessities: money and transactions.
Viewed from this perspective, crypto, if carefully considered, may begin to appear as the less risky alternative, in the sense that it is in a recognizable expansionary phase.
But that said, even if crypto were viewed as uncertain, younger investors are simply less likely to be risk-averse. The result is that this actually makes crypto less risky. Essentially, the more people who support and adopt a new development, the more stable the development becomes, thus attracting new investors, becoming even more stable, and so on.
Then there is the question of crypto comprehension. Generations are coming of age that are, if not quite crypto-native yet, certainly moving in that direction. The ideas of setting up multiple crypto wallets, switching between tokens and networks, trading NFTs or experimenting with DeFi are for a growing number of users neither intimidating nor intimidating.
In fact, a noticeable trend in crypto-related applications is gamification, where diving into crypto feels like unwrapping a retro gaming console.
This crypto knowledge is connected to the meme knowledge. Crypto-hype runs on memes and in-jokes, and at the same time entire online social media operate in the same way. For those who grew up online, crypto can easily begin to make intuitive sense.
Another element to keep in mind is the countercultural aspect of cryptocurrencies. This began with Bitcoin, which was partly a product of, and fueled by, the cypherpunk/hacker mentality, and its stated goals were noble: to peacefully disrupt and replace traditional banking, transactions and money creation.
This kind of well-meaning outsider disruption can be traced back to the rise, recently, of NFTs, which combine art, gaming, commerce, technology and exotic currencies, all operating, for the most part, outside mainstream, established arenas. .
In the Bank of America survey, younger correspondents showed a belief that crypto would become mainstream, and this ties in with the trajectory that alternative movements can sometimes follow.
Take a look at previous eras and we can find countercultures that fall by the wayside or remain obscure, but a few that take off spectacularly, and either combine with or completely replace the mainstream standard, which over time ceases to oppose anything.
This happens in music and art, and it also happens in technology. Through crypto, which takes in everything from Bitcoin to Ethereum to NFTs, it’s happening with money and the web.
Broken institutions and cyclical changes
There is an uneasy feeling, recognizable on social media and in content that deviates from orthodox lines, that current financial and monetary institutions are palpably broken, untrustworthy or unfit for purpose.
One view is that money has been printed ruthlessly and degraded, while the only official corrective is an organized attack on the economy. It’s debatable, but if enough people have such a belief, and a working crypto-alternative emerges organically, why wouldn’t younger generations with no habitual preference for known institutions take an interest in the newer alternative?
Additionally, we are in an era of cyclical change, as evidenced by relentless geopolitical tensions and domestic cultural clashes. Turbulent relationships occur in times of dissatisfaction with the status quo, perhaps indicating underlying dysfunction, and signaling that change of some kind is likely to occur.
A consequence of large-scale upheavals is that when the storm passes, new structures will have been founded. Could such incoming shifts include a move toward cryptocurrencies and decentralized networks?
It is said by cynics that crypto is a Ponzi scheme, but as a counter to that, it is also argued that each new generation creates its own Ponzi scheme while rejecting that of the previous cohort.
This is a tongue-in-cheek interpretation of history, but there is truth in it. Old routines play out, and new entrants are required to maintain growth, but returns diminish.
Consequently, as existing structures become less profitable and outcomes appear increasingly inflexible, newer alternatives will emerge, sometimes generationally, to emerge, expand and attract new investors.
According to a recent study of wealthy Americans by Bank of America, younger investors are choosing to allocate significantly more of their portfolios to crypto and are more likely to believe that crypto offers the greatest opportunities for growth.
In the over-42 age group, 41% of respondents chose domestic stocks as the best opportunities for growth, and only 7% chose cryptocurrencies and digital assets. In the 21-42 age group, only 12% chose domestic stocks, while 29% chose cryptocurrencies and digital assets.
In terms of allocation, the older age group has an average of only 2% of their portfolios in crypto, while the younger group allocates an average of 15%. These generational differences were also clearly reflected in questions about the understanding of cryptocurrencies and the belief that cryptocurrencies will become mainstream in the next three to five years.
This should come as no surprise to anyone who has been following crypto developments, and at the same time, the results should act as a wake-up call to anyone who still rejects blockchain-based financial technology.
Why might younger generations choose crypto?
The most obvious answer is the possibility of outsized returns, and the likelihood of, at the very least, continued growth. This is a potent combination resulting in the birth of an entirely new industry linked to basic social necessities: money and transactions.
Viewed from this perspective, crypto, if carefully considered, may begin to appear as the less risky alternative, in the sense that it is in a recognizable expansionary phase.
But that said, even if crypto were viewed as uncertain, younger investors are simply less likely to be risk-averse. The result is that this actually makes crypto less risky. Essentially, the more people who support and adopt a new development, the more stable the development becomes, thus attracting new investors, becoming even more stable, and so on.
Then there is the question of crypto comprehension. Generations are coming of age that are, if not quite crypto-native yet, certainly moving in that direction. The ideas of setting up multiple crypto wallets, switching between tokens and networks, trading NFTs or experimenting with DeFi are for a growing number of users neither intimidating nor intimidating.
In fact, a noticeable trend in crypto-related applications is gamification, where diving into crypto feels like unwrapping a retro gaming console.
This crypto knowledge is connected to the meme knowledge. Crypto-hype runs on memes and in-jokes, and at the same time entire online social media operate in the same way. For those who grew up online, crypto can easily begin to make intuitive sense.
Another element to keep in mind is the countercultural aspect of cryptocurrencies. This began with Bitcoin, which was partly a product of, and fueled by, the cypherpunk/hacker mentality, and its stated goals were noble: to peacefully disrupt and replace traditional banking, transactions and money creation.
This kind of well-meaning outsider disruption can be traced back to the rise, recently, of NFTs, which combine art, gaming, commerce, technology and exotic currencies, all operating, for the most part, outside mainstream, established arenas. .
In the Bank of America survey, younger correspondents showed a belief that crypto would become mainstream, and this ties in with the trajectory that alternative movements can sometimes follow.
Take a look at previous eras and we can find countercultures that fall by the wayside or remain obscure, but a few that take off spectacularly, and either combine with or completely replace the mainstream standard, which over time ceases to oppose anything.
This happens in music and art, and it also happens in technology. Through crypto, which takes in everything from Bitcoin to Ethereum to NFTs, it’s happening with money and the web.
Broken institutions and cyclical changes
There is an uneasy feeling, recognizable on social media and in content that deviates from orthodox lines, that current financial and monetary institutions are palpably broken, untrustworthy or unfit for purpose.
One view is that money has been printed ruthlessly and degraded, while the only official corrective is an organized attack on the economy. It’s debatable, but if enough people have such a belief, and a working crypto-alternative emerges organically, why wouldn’t younger generations with no habitual preference for known institutions take an interest in the newer alternative?
Additionally, we are in an era of cyclical change, as evidenced by relentless geopolitical tensions and domestic cultural clashes. Turbulent relationships occur in times of dissatisfaction with the status quo, perhaps indicating underlying dysfunction, and signaling that change of some kind is likely to occur.
A consequence of large-scale upheavals is that when the storm passes, new structures will have been founded. Could such incoming shifts include a move toward cryptocurrencies and decentralized networks?
It is said by cynics that crypto is a Ponzi scheme, but as a counter to that, it is also argued that each new generation creates its own Ponzi scheme while rejecting that of the previous cohort.
This is a tongue-in-cheek interpretation of history, but there is truth in it. Old routines play out, and new entrants are required to maintain growth, but returns diminish.
Consequently, as existing structures become less profitable and outcomes appear increasingly inflexible, newer alternatives will emerge, sometimes generationally, to emerge, expand and attract new investors.
