The digital market seems to be attractive to millennials. According to a survey by eToro, in which 1,000 online traders from ages 20 to 65 participated, shows that approximately two-thirds of Millennials participate in online cryptocurrency trading and that they have more faith in such trading than stocks.
Comparatively, Generation X traders favor traditional stocks. About 77% of survey respondents in that group expressed that they prefer the traditional stock option over cryptocurrency and a majority stated that they have more faith in stocks.
According to the survey, one of the most influential factors in whether one chooses cryptocurrency or stocks as a form of investment is knowledge of cryptocurrency and investing. Over 50% of millennials surveyed expressed that they felt they were “knowledgeable” or “very knowledgeable” about digital currencies. In opposition, only 19% of baby boomers and 32% of Generation X expressed the same response.
Ultimately, it seems that millennials favor cryptocurrency because they view it differently.
According to Erica Ervin of Blockforce Capital,
“Millennials tend to trust what they use and understand. They’ve grown up with and understand Amazon, Google, etc. and now blockchain/crypto, and it makes sense they over-index in trust those investments/infrastructures. It also makes sense that those who’ve invested in crypto have an even higher trust level of those exchanges even though 2018’s bear market slide.”
Joe DiPasquale, the CEO of a cryptocurrency fund called Bitbill Capital, also discussed the issue.
“Digital markets are less mature, less regulated, and more vulnerable to hacking.”
Millennials prefer digital currency because of,
“the ease of use, low barrier to entry, high-profit potential, and hype around them.”
Sean Walsh of HyperBlock also pitched in, stating,
“Crypto markets may be less developed, but the younger generations seem to feel a greater affinity for them specifically because of the fact these markets are new.”
Of course, even though millennials seem to prefer cryptocurrency, there are some barriers to mass adoption. One such barrier is infrastructure. Many cryptocurrency exchanges have gone through some terrible hacks that have resulted in a total of $1.5 billion in losses. Claim analyst Sheila Warren expressed that digital currencies are often “impossible to dispute.” The hope though, is that cryptocurrency infrastructure will catch up quickly.
As Warren continued,
“I think crypto markets are (unsurprisingly) relatively immature, and the amounts/volumes running through them aren’t yet supported by the current infrastructure. [But] [t]here’s a lot of investigation and work focused on decentralized exchanges, etc, and I think the issues are largely known (and therefore en route to being solved).”
Interestingly enough, infrastructure is not only an issue in the cryptocurrency sector. The stock market has the same issue.
“Stock markets are by no means immune to hacking or other nefarious attacks. U.S. markets experienced a flash crash in 2010, Nasdaq was hacked in 2011, and then had a price reporting glitch in 2017. These occurrences are noted by millennial investors, many of whom are drawn to crypto investing for its eventual promise of immutability.”
Ervin is not the only one taking such a position. According to Tim Enneking of Digital Capital Management,
“Because one doesn’t hear about fiat hacks doesn’t mean they don’t occur. Banks are hacked much more frequently than generally published, for instance, but rarely report them publicly.”
Further, according to Matthew Unger of iComply Investor Services Inc.,
“In its current form, the stock market has seen little technological innovation since the 70s when the inefficiencies of paper trading created a crisis that nearly shut down the markets. People forget about that.”
“The migration of the stock market’s current infrastructure required a massive overhaul and forced firms to digitize their assets.”
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