Bitcoin’s Millennial Appeal
Advisors should understand how the cryptocurrency attracts a generation that believes in the power of networks.
The cryptocurrency attracts a generation that believes in the power of networks.
IT WASN’T BECAUSE I THOUGHT IT WAS GOLD. AND I doubted it could kill the dollar. So why did I buy bitcoin? The answer has more to do with the community than the currency, and may contain lessons for advisors working with millennial clients.
My introduction to bitcoin was a bit unusual. When I was reading “Digital Gold,” a book about bitcoin’s origins by Nathaniel Popper, I came upon the name of someone who had attended my high school: Erik Voorhees.
The founder of digital currency exchange Shapeshift, Voorhees was also one of the early advocates of bitcoin. I called him to see what I could learn.
Voorhees talked about the role of trust in fiat currencies, and how the purpose of blockchain was to replace trust networks. Much of this went over my head. But his enthusiasm stuck with me. I watched news reports about how the community navigated crises and weathered hacks. Each time the community found a path forward, the currency’s value rose.
If you advise millennial clients, it’s worth keeping in mind that we came of age in an era of ideas that live or die on networks. Companies such as Facebook and Netflix have adopted user growth, rather than just profit, as a key metric of success. From that vantage point, bitcoin’s vibrant and growing community is hugely valuable.
I bought a small amount of bitcoin over the summer with the thought that, if enough talented and dedicated people want an idea to become a reality, it’s probably inevitable that it will.
I wasn’t alone. Leading cryptocurrency exchange Coinbase now has over 10 million users. I’m also right in the crypto sweet spot, as 43% of millennial men would prefer to own $1,000 worth of bitcoin than government bonds, according to a 2017 survey by Harris Poll for Blockchain Capital.
I didn’t jump for joy when my investment doubled — then tripled. Like others, I found the price shocks frightening. What financial education I had centered on modern portfolio theory, and nothing about bitcoin seemed to fit into that model.
Still, I couldn’t ignore the optimism the crypto world had for this coin. As a 20-something who can only view my retirement through a telescope, I can afford to be patient. For now, I’ve resolved to leave my bitcoin stake alone for a decade. I don’t see my small stake in cryptocurrencies as an investment. Maybe it’s a gamble. But I prefer to think of it as something else: a few coins thrown into a fountain that might someday bring good luck.
Advisors may balk at clients who want to own bitcoin. Rather than fight them right away, advisors should listen to their clients’ reasons for wanting to own it. Do they want to ride the wave, or are they convinced it has a real future? Their answer could provide insight into their mindset. After engaging in this discussion, you might even decide that, if they invest in a small crypto stake, it may scratch their itch without endangering their portfolio.