Home Finance Gen Z Investors: How This Generation is Cautiously Embracing Cryptocurrency

Gen Z Investors: How This Generation is Cautiously Embracing Cryptocurrency

Gen Z Investors: How This Generation is Cautiously Embracing Cryptocurrency
Photo by Shopify Partners from Burst

When cryptocurrency first debuted in the mainstream market, many investors were wary about investing in the new fad, which was too new and unpredictable compared to typical, go-to investment products like stocks and bonds. Out came a flurry of news platforms and business edits trying to help consumers make sense out of words like “blockchain” and “crypto.” Millennials were the first to bite the bullet, some of who saw an opportunity in Bitcoin, Ethereum, and many other top dogs that dominate the charts today. But the ride wasn’t smooth-sailing. Many suffered losses from bad trading decisions and panic selling woes; some missed out on the opportunity at its prime, while others remained wary until the very end.

However, a new generational cohort is changing the crypto game. Meet Gen Z: the first generation of youth to spend more time online than their predecessors. These individuals grew up under the guidance of Google and the internet. They are now entering the workforce with financial literacy and an interest in investments on their backs. And for these iced latte-infused twenty-somethings, cryptocurrency is the way to go—but investors were cautiously and tactfully.

A Modern Rebellion Against The Prehistoric Financial Economy

Stocks, bonds, and mutual funds: these three big investment assets were all the rage among boomers and older millennials. But with dwindling interest rates and platforms that don’t speak to youth, teens and young adults today are never going to benefit from these products the same way their parents did. That puts Gen Z in a difficult situation, as saving for retirement is no longer as straightforward as it used to be.

On top of that, young people are also more prominently rebelling against institutionalized ideas, from gender inequality to the concept of nine-to-five jobs. And that includes a rejection of the old financial ecosystem, which has become extremely inconvenient and backward in a world where instant gratification takes precedence in consumers’ minds. Despite massive tech innovations, even in the financial space, it still takes three to five business days to clear cheques or process a supposedly quick bank transfer.

As a result, Gen Zers investors naturally gravitated toward cryptocurrency, which boasts impressive technology and solves problems that overflow in traditional financial institutions. Who’s going to wait three days to send money to a family member halfway across the globe when anchored coins like The People’s Reserve (TPR) can do it in two seconds? And why put money in an HYSA with a 0.5% interest rate when staking Cardano (ADA) can yield 5% in rewards annually?

Financial Literacy Through Social Media

Social media plays an important role in influencing youth with ideas—and that includes financial literacy. It’s hard to imagine how spaces like YouTube and Tiktok can promote anything but sponsored content. Still, there has been a surge in content surrounding business, investments, budgeting, and cryptocurrency in the past few years.

Two factors contributed to the heightened interest in these kinds of content. One was COVID-19, which impacted teens and young adults just as much as the seasoned working force. This cohort suffered the most from the collapse of an already dwindling job market, so thrift flips, Depop and Etsy shops, and small businesses became their bread and butter.

The second was the recent bull market, which brought hundreds of trading channels to life, offering newcomers information and crypto trading tips. Before then, very few people delved into Bitcoin, Ethereum, and all other altcoins that followed. But after these names became a part of the mainstream vocabulary, Gen Zers found an investment opportunity that spoke to them—fast and easy to use and understand.

Deriving Social Value From Meaningful Technology

Photo by Shopify Partners from Burst

Cryptocurrency’s ultimate goal is to be the primary medium for peer-to-peer, borderless transactions. It’s already made waves in helping impoverished nations suffering from unstable national currencies and have a large population of unbanked individuals, from El Salvador to Venezuela. Some developers, like Dogecoin, also do plenty of charity work with the community’s support. All these contribute to cryptocurrency’s social value, giving it plenty of leverage in young people’s minds.

Traditional financial institutions have existed for decades, yet they haven’t been able to do anything to solve national money-related crises or help unbanked people make online transactions. Cryptocurrency changes that game by solving all these issues that have been left in the shadows, attracting Gen Zers along the way. 

Community-Driven Interest

Being part of a community is extremely important to Gen Zers, who are used to being connected through social media. Traditional investment products tend to be extremely intimidating to youth because many of their supporters are older individuals—and they can’t relate to a 19-year-old who’s just getting started.

In contrast, cryptocurrency communities are young and fun. They connect through platforms like Reddit and Discord, where the technicalities of cryptocurrency and blockchain technology are simplified through memes and open, freeform, and discrimination-free discussions. The GameStop saga earlier this year, which was pushed primarily by the WallStreetBets subreddit, is a testament to the power of community effort. No one would have confidently invested in the most unsuspecting retail company—not without a community to make the venture feel a lot less intimidating.

But Gen Zers aren’t reckless about their investments, either. Unlike millennials, whose early cryptocurrency experiences have become lessons for new investors, younger traders are approaching the market with just as much caution and enthusiasm. They’re doing a lot more research and consulting friends and communities before putting money into a coin.

At the same time, they’re also more open to testing new trends, like taking a gamble at the NFT wave or investing in digital land. While older investors still outspend them, it’s only a matter of time before Gen Zers turn the financial world upside down.

Featured Photo by Shopify Partners from Burst