The current stage of global crypto adoption can be attributed to the growth of internet users in the late 90s. At the time, many had trouble understanding its value and potential uses. Clifford Stoll, in his article for Newsweek in 1995, famously wrote “the truth is, no online database will replace your daily newspaper”. That same year, Robert Metcalfe, the co-inventor of Ethernet, predicted that the internet would “catastrophically collapse”. A few years later, Nobel prize-winning economist Paul Krugman predicted that “by 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machines’”. With every new adoption of technology, there are those who try to stamp it out and refute its value. Today, Bitcoin faces a generational divide similar to the early days of the internet.
Millennials have grown up with the development of the internet, interacting with the rise of social media platforms in their teenage years and early twenties. Generation Zs, however, are internet native – they are born into it. This generation of 12-27 years old Zoomers are fully accustomed to the idea of digital value. Platforms like Instagram, TikTok and YouTube have facilitated an entirely new form of wealth generation, largely through content creation and e-commerce. According to Influencer Marketing Factory, over 97% of Gen Z uses social media as their primary source of shopping, spending an average of 3 hours a day browsing through social media sites. The ability to instantaneously post and share content across borders has revolutionised the way younger generations interact, and it’s becoming more digital by the day.
Social gatherings among Gen Z and Gen Alpha have never been more incomparable to those of Boomers. What was once a bike ride with friends is now often replaced through headphones and gaming consoles. Remote socialising is quickly becoming normalised, drastically accelerated by the interruptions Covid brought. Games like Fortnite have created a unique internet culture where social status is influenced by the skins (outfits) that characters unlock as rewards. Spending money to access gaming tokens and digital currencies are elevating the social status of friends online. It is no surprise that these generations are more comfortable with digital ownership, which likely explains why young people are the dominant demographic in crypto adoption.
One of the most difficult concepts to grasp about crypto is that it provides investors with intangible assets, or digital property. This new ability to own something on the internet – that only exists on the internet – is a ludicrous thought for many, but has been a reality for over 14 years thanks to the invention of the blockchain in 2008. It involves a cryptographic process that provides a transparent and secure way to record and verify financial transactions; giving proof of ownership without the need for a central authority, sparking the birth of 1000s of other cryptocurrencies trying to occupy a share in this new digital marketplace.
Commonly referred to as Web3, or the third generation of the internet, this new asset class is likely to be met with open arms to those already familiar with digital value. But there are more fundamental shifts in young people’s habits that are having a greater effect on their financial decision-making. Rising government debt and the subsequent debasement of currency is greatly affecting their ability to afford homes, leading to a higher risk tolerance for speculation in financial markets. Surges in GameStop and AMC Entertainment are prime examples, but this behaviour is far more common within the crypto landscape, largely thanks to the global and permissionless nature of digital assets.
It has been fascinating to see the development of crypto regulation evolve this year. The Gary Gensler-led regulation-by-enforcement approach is fading as crypto becomes politicised in the US. The leading presidential candidate, Donald Trump, along with his running mate J.D Vance, are both signalling to their voters that Bitcoin will play a key role domestically. Financial giants like Blackrock have capitalised on the SEC’s position on Bitcoin, launching their Bitcoin ETF in January, along with 8 other asset managers, becoming the fastest ETF in history to acquire $20 billion in AUM. These ETFs, which offer a familiar investment vehicle to boomers, are easing the transition into digital assets, as they continue to roll out robust marketing strategies targeted at older demographics.
It’s this kind of comprehensive approach – regulatory clarity, high-level security and a non-crypto native target audience – that could finally bridge the generational gap in Bitcoin and crypto as a whole.
