With financial markets enjoying record highs at the end of 2013, more Americans are considering investing as a means of obtaining additional income. Young people, however, seem to have been ahead of the trend. They haven’t been trading stocks though. Instead, they’re buying and selling virtual currencies. Virtual currencies, such as Bitcoin, are getting more attention due to their total market cap and global recognition. Even renowned economists and Wall Street have taken notice.
So what do Bitcoins do? It’s pretty simple: Bitcoins allow users to engage in financial transactions anonymously. Instead of charging your credit card online, you can buy those Gucci loafers you wanted with some Bitcoin.
For evidence that young people are leading the charge with Cryptocurrency, look no further than the latest entrant into the market, a Kanye West-themed currency is still in the planning stages. The last big crypto-craze was a currency based on internet meme Doge called Dogecoin.
But why do young people seem to be the ones so hooked?
Bitcoin is entirely decentralized, so there’s no major financial institution or central bank that can manipulate its value. Young people can, and do, trust an algorithm more than a shady central bank. While Paul Krugman
In addition, cryptocurrencies take out the middleman, creating a sense of independence. When you’re trading equities, you have a plethora of options in diversifying your portfolio. Bitcoin, however, has remained the gold standard of all virtual currencies and nothing really comes close to its total market share.
For young people, this limits the confusion of having to constantly pick and choose how and when to invest. Young people don’t want to be concerned with shorting stocks, setting limits, and having to monitor factors that ultimately decide whether or not they make ten percent on their three hundred dollar investment. After all, making trades through an online broker already costs around ten dollars.
Millennials can afford to take bigger risks by virtue of being young, and they certainly want the possible large returns. The volatility of Bitcoin draws them in, especially when it’s being traded around the world every second of the day. Young people see a financial opportunity. It’s not common to see something rise over six thousand percent in value over the course of a year.
At the end of the day, the one feature of Bitcoin that makes it so appealing to Generation Y is that it functions entirely online. Social media has allowed students, among others, to learn about and trade Bitcoin in the matter of minutes. All they need is the same smartphone that they use consistently on a daily basis. Having the potential to garner twenty percent in one day by using your smartphone couldn’t be more attractive.
Whether or not Bitcoin is a secure investment, however, is a totally different topic that is heavily debated among economists and private investment firms. However, one thing is certain. Having young people actively engaged with global financial markets and risk assessment shouldn’t be undermined.