If you were a teenager or young adult during the financial crisis of 2008, you witnessed the implosion of major banks during your formative years. You were powerless to launch your career. You developed a permanent distrust of financial institutions. You were probably also an early smartphone adopter, or grew up with one. Imagine finding a new form of currency that offered you security, transparency, and anonymous, networked transactions that could be performed through your device without involving a central bank. Wouldn’t you buy it?
If you’re reading this, you don’t have to imagine. You’re already familiar with Bitcoin. You may be an older investor or a younger one, but chances are that you’re between 18 and 35 years old, which places you in the generational cohort defined as millennials. This generation’s life experiences dramatically shaped their perceptions of finance and technology. Sociological factors, along with unique habits and preferences, reveal why millennials are the core of Bitcoin’s rapidly growing user base.
Demographics of Bitcoin Users
Part of Bitcoin’s appeal is its privacy. Because Bitcoin users are anonymous, it’s difficult to obtain demographic information about them. Studies over the past few years have struggled to find metrics by which to accurately measure the number of users. The total number of wallets is up to 12 million as of spring 2017, but some users may own multiple wallets. Transactions cannot predict the number because some users conduct more transactions than others.
The available data can’t show us how many people use Bitcoin. We do know, however, that most users are millennials. A 2014 poll by technology research firm Accenture showed that millennials were heavier users of Bitcoin than the general population, with 13% of millennials reporting using digital currencies and 26% saying they were likely to use them one day. Another 2014 study, by the University of Illinois Urbana-Champaign, found the age of the average Bitcoin user to be 33. Meanwhile, a self-reporting poll on Bitcointalk showed that the majority of users were between 22 and 30 years old. It’s evident that millennials are driving Bitcoin’s increasing popularity.
Effects of the Recession
Millennials are drawn to Bitcoin for both sociological and psychological reasons. For those who were young adults in 2008, the Great Recession created an effect that can only be described as having the financial rug pulled out from under your feet. As big banks folded and the economy crashed, older millennials were left struggling with large amounts of student loan debt and an anemic job market. Most desirable (or available) jobs were located in urban areas with skyrocketing housing costs.
This situation left behind a bitter taste. It was a betrayal of expectations. Millennials found that traditional paths to financial and career stability had been either blocked or destroyed. The aftermath of recovery added to the disillusionment, as big banks were bailed out without being held accountable for the damage caused. Studies have shown that the cumulative effect of graduating in a bad economy can persist for decades, resulting in incalculable amounts of lost wages. Millennials felt the full brunt of these effects.
For millennials who came of age during the recession, Bitcoin offers an antidote to the corruption and unreliability of the old financial system. Bitcoin is decentralized and fully transparent, allowing users to verify transactions without relying on a bank or other central authority. Fees are low, and transactions can occur easily across national borders, allowing for global reach. The lack of government or bank involvement means that Bitcoin users feel a sense of control over their investments – the sense of control that millennials wanted, but never got. Millennials view Bitcoin as a hedge against future instability in the traditional market and a better way to save for loan repayment or retirement.
Millennials, especially those on the younger side of the curve, are tech-savvy. Many of them grew up with smartphones and thrive in the internet landscape. For them, Bitcoin — an internet of money – needs no explanation. It’s a natural development in line with the rest of technological progress.
Unlike big banking, the internet is a system that most millennials instinctively trust and understand. Bitcoin’s internet-native structure appeals to them. Because of this, millennials are more willing than older generations to put their funds into cryptocurrency, even when volatility is a given. Some are openly speculating on cryptocurrency markets, hoping for a moonshot that makes them millionaires, while others are more patiently waiting for their investments to develop. Still others are taking the initiative to found their own cryptocurrencies.
The tech boom of the past ten years has made most millennials enthusiastic about technology and its potential. Young tech entrepreneurs like Snapchat co-founder Evan Spiegel have already made Forbes’ billionaire list. Bitcoin investors believe that a similar boom in cryptocurrency is about to happen, and invest accordingly. As the internet’s influence on society and culture grows, so does Bitcoin’s influence.
The cashless convenience of Bitcoin is another appealing factor for millennials, who tend not to carry cash and use their phones for transactions. Credit card companies also dominate millennial transactions, but rising fees, interest rates, and debt may cause more millennials to choose Bitcoin over cards in the near future.
Bitcoin’s Sociopolitical Impact
Millennials are a socially-aware generation. While some invest in Bitcoin for simple profit, others do so because Bitcoin’s platform appeals to their political and economic views. Surveys from 2013-2015 show that 37% of Bitcoin users considered themselves to be Libertarian or anarcho-capitalist. These users prefer Bitcoin because it offers value based on a free market and is not regulated by banking or government authorities. If Bitcoin takes the place of traditional financial systems, the Libertarian economic ideal may become a global reality.
Some cryptocurrency advocates are driven by utopian visions for the future of economics. These users see Bitcoin as a revolution in finance that will globalize and reshape the meaning of economic value. With its open, public ledger system, blockchain could change the entire paradigm of business. Millennials who are entrepreneurial and looking towards the future view cryptocurrency as a tool for transforming the financial world into a more ideal, fair, and streamlined space.
The true influence of Bitcoin is yet to be seen. As more investors and businesses adopt cryptocurrency, the financial landscape is changing dramatically. Technological progress is driving the expansion of Bitcoin and Bitcoin’s price. Millennials, society’s greatest technology users, are leading this charge. Their shared historical experience, coupled with their natural instinct for the internet, makes them a key demographic for Bitcoin’s widespread adoption.
As new technology pervades more aspects of life, digital currency will become a mainstream reality. General adoption of Bitcoin will pull a diverse demographic of users. Until then, millennials will continue to drive the cryptocurrency’s evolution.