Despite Bitcoin losing more than 80% of its value in a little over a year, the cryptocurrency’s decline hasn’t put millennials off of investing in the blockchain-powered currency. In fact, almost half of all millennial traders admit that they have more trust in crypto exchanges than they do in the United States stock market.
Some 43% of millennial traders said they trust crypto exchanges more, compared to just 33% of Generation X traders.
That is based on a survey of more than 1,000 online traders conducted by investment platform eToro, which profiled a range of age groups to get an accurate idea of the views of different groups towards certain assets.
According to Guy Hirsch, Managing Director of eToro US, witnessing the 2008 stock market crash and the economic crisis that followed has seemingly lowered trust in tradition stock exchanges among the millennial generation, which is typically used to describe those born between the early 1980s and mid-1990s.
“We’re seeing the beginning of a generational shift in trust from traditional stock exchanges to crypto exchanges,” Hirsch said. “Younger investors’ experience with the stock market has seen a great deal of loss of trust, with the fall of Lehman Brothers because of irresponsible practices followed by the worst recession since the Great Depression.”
“Trust further eroded when Americans saw how hundreds of billions of dollars of taxpayers money are funneled to the largest financial institutions while their savings evaporated and how banks get free money through quantitative easing while their cost of living continued to rise,”
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Why are millennials so interested in crypto assets?
Blockchain technology is widely praised for the transparency that it provides. When using cryptocurrencies, all transactions are stored on the blockchain and are publicly listed, meaning anyone who wants to view any transactions to and from a particular account can do so.
The blockchain is also immutable, meaning that once data has been written to it, that data cannot be changed or deleted, even by those with administrative access to the blockchain. With the economic events of the past decade having lowered trust in financial institutions, it is easy to see why this would appeal to millennials.
“Immutability is native to blockchains and that makes real-time audit to be sensible and cost-effective and that is why Millennials and Gen X perceive crypto exchanges as less likely to be subject to manipulation and less likely to be a place where bad actors get rewarded with taxpayer money,” Hirsch said.
Trust in crypto, not crypto exchanges
While the study found that millennial traders are more inclined to trade through crypto exchanges rather than the stock exchange, it appears that they are more interested in the technology, rather than the platforms offering it.
More than 90% of millennial crypto traders said that they would consider investing more money in crypto assets like Bitcoin if they were to be offered by traditional financial institutions. Across all age groups, close to two thirds of traders would consider investments in crypto if this was the case.
Despite distrust in traditional financial institutions, traders also recognise the positives that they provide. Crypto exchanges are prone to hacks and exit scams that frequently result in millions of dollars worth of lost or stolen assets. Trading cryptocurrency through a traditional financial institution would undoubtedly provide a safer, more secure platform for crypto investors.
“While both crypto enthusiasts and millennials alike seem to distrust monolithic institutions like traditional exchanges and the largest investment banks that play in them, there’s a great deal of demand from younger investors for offerings from firms that are more recognizable, aren’t perceived to be bad actors and have an infrastructure that can provide personalized and tailored advice,” Hirsch said.