Overall, millennials display cautious behavior when it comes to investing. A 2019 survey of affluent millennials by Investopedia showed that 40% believed that investment is risky and nearly a quarter said it was overwhelming. However, there is one area of investing where both millennials and Gen Z are taking a keen interest. More young people are investing in cryptocurrency than other age groups, with 31% of people aged 18-29 saying they’ve used it, compared to 21% of people aged 20-49, 8% of people 50-64, and just 3% of people ages 65 and over.
But why are young adults choosing cryptocurrencies such as bitcoin, rather than investing in more traditional investments? If they are more cautious of investing overall, what appeals to them about bitcoin and other crypto options?
Distrust of Central Banks
Many younger adults, particularly older millennials, vividly remember the financial crash in 2008. Some were just beginning their adult lives and entering employment at the time. Even those who may not have experienced the effects as an adult understand how others have been affected and see the events as a cautionary tale. This has led to a distrust in centralized banks and traditional investments or many. Millennials and Gen Z have begun to gravitate toward a variety of financial technologies, including digital banks and cryptocurrencies.
Familiarity with Technology
Younger adults are generally more comfortable and familiar with a range of technologies. Most have grown up using computers, while some don’t remember a time when the internet wasn’t readily available. Millennials are usually ahead of other generations in adopting new technologies, although Gen X is often not far behind them. Meanwhile, Gen Z has a high level of comfort with technology, which will lead to them being more digitally sophisticated than any previous generation. This comfort with technology has meant that many younger people are willing to explore digital investment vehicles such as bitcoin.
Positive Outlook
A positive outlook of cryptocurrencies is another shared trait among younger adults. Many people in the younger generations have a positive outlook of blockchain technology. Although some people feel that investing is risky, younger people tend to be willing to take the risk when it comes to cryptocurrency rather than sticking with the status quo of traditional investments. They see value in doing something different and making use of technology to do so instead of investing in stocks, shares, and other investments that they may distrust.
Community
For many millennials and members of Gen Z, investing in bitcoin and other cryptocurrencies also provides a sense of community. They often find investing in bitcoin fun and can find others who share their interests. They are looking for investments that they can connect with, which might be crypto for some people or stocks and shares for companies they care about for others. Millennials and Gen Z are even more likely to use social media to research their investments compared to others.
Young adults are drawn to bitcoin investment for a number of reasons. It offers a different path to traditional investments that appeals to those who want to shake things up.
