Bitcoin is a type of cryptocurrency that has sometimes been referred to as being Gold for Millennials. It is an interesting concept that an increasing number of young adults go into when making some of their earliest investments. In this demographic, it is often seen as more attractive than even gold!
So, this begs the question: Why do millennials find Bitcoin so attractive as an investment option? Are we seeing little more than a short-term trend driven by relatively inexperienced investors, or is it a legitimate long-term trend that will carry on into the future?
To really find the answer to this interesting question, we are going to need to take a closer look at some very important factors.
The Millennial’s Experience Of The Great Recession
Children of the Great Depression carried with them some distinctive investment characteristics and an eye for frugalness throughout their lives. The current Millennial generation also experienced a hearty portion of their childhood in the worst recession since the Great Depression.
A high percentage of Millennials grew up being taught the importance of investing early. Yet they also saw firsthand the economic distress that occurred when markets, stocks, and funds that had been strong for decades, suffered massive losses.
A small percentage of Millennials already had investments, largely guided by their parents, and then watched them vanish, seemingly overnight. For these individuals, the Recession left them feeling gun-shy about making significant investments, especially when those investments were recommended to them by parents and older mentors.
Instead, the experience seems to have fostered in them a sense of going it alone. To seek out what they thought was the wisest course for their present and especially their own investment future. This drives many Millennial investors to look for innovative options, which includes investing in Bitcoin and other cryptocurrencies.
Low Interest Rates Contributing To Low Returns
Now that the stock market is in full recovery from the Recession, many people’s returns have been very good. However, it also means that interest rates seem mired at historic lows, which means Millennials are seeing a very small return on their investment from their savings accounts.
The expectations ingrained in them by their parents was to expect something near a 5% return on their savings each year. The idea was that by saving year after year, could prepare them for a comfortable retirement.
Yet the current low-interest rates mean that instead of getting a 5% return each year, most Millennials are seeing returns near or even below 1%. Of course, this also extends beyond savings accounts to Bonds and other seemingly safe investments. The trend has gone on for so long that Millennials have grown apathetic toward the value of saving their hard earned money, as a way to insulate their retirement years.
Bitcoin Has Seen Significant Returns
Today the Millennial generation is facing a difficult economic future projection. Student loan debt is at an all-time high, many career paths have a maxed out earning potential, and there are less working options that help them get ahead quickly. The growing sense of disillusionment has many individuals in the Millennial generation looking for some type of “Big Payday” windfall. Yet they are more than a little specious of investing or saving.
Bitcoin has emerged on the scene at just the right time for the conflux of these economic conditions and the psychographics of Millennials. It is also rife with anecdotes of seemingly ordinary investors who scored a large profit in a short amount of time. This endears it to them, as the Millennials are also a generation that values content through storytelling.
Bitcoin’s Rising Value Trend
By the end of the fourth quarter of 2016, a single Bitcoin was worth around $700. Then by November of 2017, Bitcoin was pushing on an all-time high of $8,000. This type of growth is astonishing when you consider that in 2009, a single Bitcoin was worth just a few cents!
It’s also worth noting, that by design Bitcoin also has a capped supply. There are only 21 million bitcoins and there will never be more than that. This is in stark contrast to gold, which has a limited supply, yet more can still be mined and recycled each year.
Bitcoin’s Perceived Value
Gold has a long and storied history that spans from the dawn of civilization, where it was used for ornamentation as well as currency, straight through to the modern era where it has even found a place in many consumer electronics.
Yet statistical data published by reputable sources still report that a large percentage of Millennials perceive Bitcoin as being more valuable than even physical gold. The data also shines a light on psychographic and demographic aspects of Bitcoin’s appeal to the Millennial generation.
Many of the individuals polled stated to some degree that they believed Bitcoin’s success would extend far beyond 2019 and that it’s increased demand will drive an even higher increase in its value. It’s also worth noting that Bitcoin is used by certain less-reputable industries and black markets. This along with feared dilution of fiat currency has driven some nations to consider placing a ban on Bitcoin.
Gold’s Projected Value For This Year
Millennials tend to take a more skeptical view of gold and its ability to maintain its value in the future. Some even feel that gold will start to show a significant decline before the end of 2019. This type of speculation often occurs in conjunction with the belief that Bitcoin will continue to grow in strength.
At the same time, there is also the concern that today’s fiat currencies are not backed by gold or gold reserves. This means gold plays a more limited role than in the past, as it is largely used for jewelry and small consumer electronics.
Millennials See Fiat Currencies As Outdated
As the Millennial generation becomes more and more savvy with the stage of global investing and economics, they look to make their own mark on it. Since they have already been conditioned to see past investment strategies as outdated and ineffective, they also tend to transfer that perception over to the fiat currencies that essentially back them.
As more and more Millennials start to take the helm in determining the direction of the global economy, we see them looking to imprint the value of cryptocurrencies on the future they make for themselves.
It’s true that the war between the value of gold and Bitcoin have many battles yet ahead. Still one can only wonder if perhaps we are seeing a functional model for the future, or a trend lingering from the aftershocks of Recession.