Cryptocurrency:
The gateway drug for financial literacy?
Cryptocurrencies such as bitcoin have captured the attention of individuals, investors and governments around the globe. However, millennials have embraced the currency like no other demographic.
A bitcoin sur vey conducted by venture capital firm Blockchain Capital in fall 2017 calculated that four per cent of millennials have owned bitcoin — twice as many as the general population. The survey also revealed a lot about millennial attitudes toward traditional investing: 30 per cent said they would prefer to own $ 1,000 of bitcoin over the same value in government bonds. More than a quarter ( 27 per cent) said they considered bitcoin more trustworthy than big banks.
Financial companies are taking notice. Fintech leader Mogo Finance Technology Inc., for example, is embracing that shift among its core millennial base with the upcoming launch of their sixth product, MogoCrypto, which will allow members to buy and sell bitcoin as well as other cryptocurrencies directly into their Mogo app.
But the advent of bitcoin and other cryptocurrencies has also created a significant side benefit, says Mogo’s financial fitness coach, Chantel Chapman. By immersing themselves in the world of cryptocurrency, millennials are also learning a lot about investing, the behaviour of markets and personal finances in general.
“Millennials are finding cryptocurrencies a little bit sexier than mutual funds and that’s an exciting opportunity for education,” she says. “The topic is so fascinating that I think of cryptocurrencies as a gateway drug to financial literacy. The best way to start learning about markets is to be part of a market.”
She notes that media reports of teenagers who have become cryptocurrency millionaires provide plenty of exciting press. However, mil- lennials also embrace the fact that cryptocurrencies are decentralized and separate from established institutions. The volatility of that market and a wild-west environment where all the rules have yet to be written also make bitcoin trading more exciting than traditional investment vehicles.
“The cryptocurrency market is like the stock market, only it’s a global market that moves much faster and is active 24/ 7,” says Chapman. “But the laws of the market still apply, so what they’re learning while investing in bitcoin or other cryptocurrencies provides valuable insight into the way other markets operate. The recent volatility of the cryptocurrency market is a lesson in itself for new investors on the highs and lows of investing.”
One millennial who’s embraced the intrigue of the cryptocurrency market is Haley Sacks, a podcaster and finance blogger who reports on all things financial as Mrs. Dow Jones on channels that include YouTube and Instagram.
She was encouraged to make her first bitcoin purchase in 2013 after hearing rumblings about it in San Francisco. Her friends on Wall Street urged her not to.
“I went ahead anyway,” she says. “And I did quite well on the investment. That first i nvestment also i nspired me to learn as much as I could and has led to a career in financial education for me. The lesson here is that you can educate yourself to achieve financial literacy. The resources are out there.”
Sacks loves to tell the story about a teenager who used bitcoin to buy a fake ID when she was underage.
“She f orgot about the transaction,” Sacks says. “Some time later, a friend reminded her to look into her digital wallet and lo and behold there was $ 8,000 in there. She was inspired to immerse herself in that world and through the simple will to learn has since become an expert. It’s been very inspirational to a lot of young women who have also found the confidence to invest in a very volatile market.”
Fintech companies such as Mogo are realizing that they can leverage the booming interest in bitcoin trading by offering additional opportunities to promote financial literacy and build wealth.
“Members will see their monthly credit score updates on the same online app where they can manage and monitor their bitcoin holdings,” says Chapman. “Interest in cryptocurrencies represents an opportunity to bring even more financial literacy into this space.”