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6 Reasons Why Young Adults Invest in Bitcoin

Young Adults Invest in Bitcoin

Since the birth of Bitcoin (BTC) in 2009, young adults have become more invested in cryptocurrencies. It’s even proven as a study published in August 2021 showed the upward trend of young adults’ crypto involvement. 26% of investors ages 18 to 34 are more likely to buy and own crypto than 12% experienced investors.

But what’s causing this imbalance? Why are young adults more likely to invest? Well, the answers are more straightforward than you may think. From being more involved with social media to being more willing to take more risks, young adults have a different mentality towards money. If you’re curious to learn more, we’ll break it all down. We’ll even give you a few tips on how to invest in crypto safely along the way.

The reasons young adults invest in BTC

There are a handful of reasons why young adults are more interested in crypto investing. Most of them are related to the environment they grew up in. Keep reading to see our top list of reasons.

Social media

Social media has a more significant effect on young investors than people may realize. A CNBC study proved that investors ages 18 to 34 are 17% more likely to use social media to research investment ideas than the rest of the population. This study shows that social media plays a massive role in how younger adults look and study crypto.

We can also see how the Millenials and Gen Z (also known as “Zoomers”) use social media in their everyday lives. Rice University’s marketing professor, Utpal Dholakia, said that people tend to have more risk-seeing investment behaviors when they talk about their investments in an online social setting.

This means that people are more likely to invest in crypto with the use of social media. After all, 84% of adults ages 18 to 29 use social media. Meanwhile, 73% of adults ages 50 to 64 say they use social media sites.

FOMO (Fear of Missing Out)

Whether a young adult is more of an Instagram fan or into the Twitter-sphere, any social media outlet is a direct way to feel FOMO—an acronym that many crypto enthusiasts, young and old, know about.

The “fear of missing out” in the crypto world is the feeling that you may be missing out on an investment. You invest based on your emotions because you don’t want to be left out of the potential earnings. This is something that many crypto investors feel. Still, due to the nature of social media, young adults may be more privy to feelings of FOMO.

These young adults may see viral stories of successful BTC owners, like the story of the Dutch family that risked it all for BTC in 2017. In return, they may see these stories as an inspiration to get into the crypto game.

Technological fluency

It’s no secret that investing in crypto takes some technological savviness. After all, the whole BTC system is built on the blockchain that’s housed on the internet. The older generations didn’t grow up with the Internet as many Millenials and Zoomers did. The technological advantage that many younger generations have makes buying and selling crypto on the internet more accessible.

There is no need to learn how to use the internet, a smartphone, or a new app to invest in since most young adults already know the basics from a young age. The learning curve means that older adults are at a disadvantage when trying to break into digital currencies.

Familiar with economic instability

Since the start of the Millennial generation in 1980, there has been economic instability every few years. In 1987, there was a stock market crash, now known as Black Monday. In 1997, there was another financial crisis, and from 2007 to 2009 the housing market crashed, causing the Great Recession. Then more recently, in 2020, with COVID-19, the global economy and supply-chains have taken an enormous hit.

Millennials and Zoomers grew up with economic instability and are now no strangers to risk. Since they were raised on economic changes, they may not be afraid to take the more associated risks with crypto. Experiencing a lifetime of financial instability has also led to a lack of faith in the centralized banking system, which we’ll discuss next.

Belief in decentralization

After growing up in constant economic instability, many younger adults no longer trust the centralized banking system. They may have simply had enough of the traditional banking methods that have caused generational and global issues.

This distrust for government-run, centralized banking systems is exactly what led many of them to a decentralized system. Millennials and Zoomers see the problems with government bonds and the traditional stock market. Some no longer want to uphold a system that hasn’t been beneficial to them from the start.

Wishing for hope

We briefly discussed the idea of a decentralized system. Still, in order to understand this idea better, we need to dive into the last reason young adults invest in BTC. This reason is hope.

Many younger generations believe in a new financial system that’s founded on equality. After all, many young adults feel that they are unable to attain assets that would help them gain wealth. The Federal Reserve even said in 2020 that Millennials born from 1981 to 1996 only owned 4.6% of the wealth in the US.

This is really disheartening news for young adults to hear, and in turn, they may feel that they now have nothing to lose. It may feel as though the centralized system has failed many younger generations. As a result, they are rallying around change.

Tips on buying crypto

Whether you’re a Millennial, Zoomer, or from a different generation, it’s essential to stay away from scammers and follow these helpful tips for buying crypto.

  • Don’t overspend

As with any investment, it’s wise to not put more than you can afford into crypto. Some financial advisors advise using around 5% to 10% of your portfolio on more risky investments, which can include BTC and other cryptos. They say the rest of your investment should be in more stable investments such as exchange-traded funds (ETFs) and these investments should be a longer-term investment—think about 10 years. This is because you can gain a great deal of money, or you won’t think of the money you lost.

Also, be sure to check your BTC wallet. If you’re not sure how to get a free BTC wallet, look at peer-to-peer exchanges. There are several exchanges, like Paxful, that will give you a free one when signing up.

  • Do your research

As with anything you purchase, it’s crucial to do your research when buying any type of crypto. Look into both the positive and negative reasons for buying BTC, how to buy BTC, and from there, gather expert opinions on the topic if possible. Research is vital because it can help you understand what to avoid or how much to invest in crypto. It can really help you ensure that you’re making the right decisions and not falling into emotional impulses.

  • Be aware of the different scams

There are many scams when it comes to crypto, so it’s essential to be aware of the different ones and how you can avoid them. From fake investments to malicious emails, stay vigilant of these scams and what they look like. This is where doing your due research comes in handy.

  • Avoid FOMO

Now that we’ve discussed in depth what FOMO is, it’s important to note that you should avoid investing when you’re feeling it. Emotional impulses may feel great at the moment, but they’re not always the right decision to make. As mentioned before, be sure to complete your research and ask questions so you can avoid any emotional, financial decisions.

  • Question your “why”

Before spending your life savings on crypto, ensure that you’re asking yourself why you want to invest. Is it to make a stand against centralized currency? Is it to avoid FOMO? Or, is it because you genuinely believe that it’s a good investment. Get comfortable with knowing why you’re deciding to invest.

Understanding is key

At the end of the day, whether you’re a seasoned investor or a younger one, it’s important to understand your investments to some degree. Keep in mind that doing your due diligence and completing some form of crypto research is an easy way to help avoid any overly risky investments.

It’s also essential to understand the other people who are investing. While this part isn’t as detrimental to making an investment, it’s always nice to better understand what all the excitement around crypto is about. Whatever you decide to do, crypto is one way to potentially make money.

*Sponsored by Paxful

*The content is for informational purposes only. You should not construe any such information as legal, tax, investment, financial, or other advice. 

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