Bitcoin: a generational phenomenon – The capital

When you think of the generational phenomenon, what usually comes to mind? Well, for me, I think of things like Microsoft and Bill Gates putting a computer in every house or Jeff Bezos transforming the retail sale of brick and mortar to essentially on-demand delivery at the click of a mouse. We view them as a generational phenomenon because these types of changes in the way we communicate, work, live and buy only happen every 20 to 30 years. However, with the increasing pace of technological progress, these phenomena are occurring at a much faster rate. What used to take decades only takes 5 years. Look at Uber for example. If you had told me in 2011 that in 2016 taxis would be basically obsolete, I would have told you that you were crazy. However, it turns out that because of the way we are all connected, this type of change happens incredibly quickly.

Although Bitcoin is inherently a generational phenomenon as described above, this article aims to show you that the real phenomenon regarding Bitcoin is just beginning, and it is in fact generational, just in a different context the word. Warren Buffet was recently on CNBC and when asked about Bitcoin and cryptocurrency, he commented “Cryptocurrencies are basically worthless” and “I don’t have any crypto -currency, I will never do it … except sell it to someone else. “Another famous skeptic in Bitcoin and cryptocurrency is Mark Cuban. He recently said,” I would rather have bananas than Bitcoin. ” If you are a financial follower, you will certainly know and respect what Mr. Buffet and Mr. Cuban have accomplished in their respective financial lives. Their opinions matter on this kind of thing. So why are they so negative about Bitcoin, what do they see that we don’t do? Well, the answer to this question can be answered in a very simple statement: They don’t care.

Warren Buffet is a member of the silent generation, while Mark Cuban is a member of the baby boomer generation. The two men benefited from a government policy allowing individuals to borrow money at an increasingly low interest rate for their entire professional career. Until 2008, in fact, most people could go to a bank and get a loan, assuming they had a heart rate. If you wanted to start a business or buy real estate, it was relatively easy to make money. The reason why it was easy is too long a topic for this article, know that compared to the readers of generation Y and generation Z, obtaining a loan was exponentially easier for the silent generation and baby boomers. (I want to be clear here, Mr. Buffet and Mr. Cuban have both worked hard and deserve all the success they have earned, their success depended much more than being able to get easy money.) The ability to ‘Obtaining a loan and access to capital are one of the main obstacles that people face when starting a business or investing. From Mr. Buffet’s and Mr. Cuban’s point of view, the system has worked very well. Why would we want to change it?

The answer for most successful people in the silent generation and the baby boomer generation is that we would not change that. Most of their wealth is denominated in the US currency, and it has worked very well. Here’s where things get interesting and why I think Mr. Buffet and Mr. Cuban are wrong Bitcoin. If we zoom out, we see that since 1971, the US dollar has been removed from the gold standard. This has resulted in an impression of money unprecedented in the past 50 years, which is just beginning to catch up with the economy. Who does this affect? Certainly not the silent generation and the baby boomers who have been the direct beneficiaries of the billions of dollars injected into the system. Until recently, politicians and governments have been successful in paying down the debt on the way ahead. The problem with this is that at some point, the can turn into an anvil. At some point, this problem must be resolved.

What have we learned from Generation Y by observing our parents’ behaviors toward money over the past 20 to 35 years? We have learned to go into debt. Rough figures suggest that 60% of millennials have an average debt of around $ 30,000, excluding mortgages. Not a big deal right? Well, unfortunately for us, getting a loan is no longer as simple as it used to be. Ask any millennial who has attempted to apply for a home loan with student loan debt or who has attempted to start a business while carrying this debt. They will tell you categorically that the banks are horrible to work with. Basically, it comes down to a bank giving you all the money you have as collateral. Essentially, you borrow your own money and pay interest to the bank. So going back to Mr. Buffet and Mr. Cuban, they have no problem getting capital, the system works for them because, in essence, they already have the money. They have absolutely no incentive to change anything. Millennials, however, are starting to realize that this system is not working for us.

Now what is going on from here, are we starting a generational warfare and are we starting to blame each other for the financial problems we face as a nation? We certainly could, but we won’t, and here’s why Bitcoin is a generational phenomenon. I don’t know the numbers, but I would bet 99% of the silent generation have retired. With 47% of baby boomers already ready and almost 10,000 a day continuing to retire, we can begin to notice something interesting. First, all baby boomers who retire at around the same time potentially pose a potential problem for the stock market, as they are all cashing in their $ 401,000 and assets to live their golden years. (This is actually an entire theory that deserves to be examined and that could potentially cause a very real problem, we just don’t care about it for the purposes of this article.) Second, when baby boomers retire and pass their savings and businesses on to their children, the millennials, we notice that the landscape in which these potential dollars are invested has changed.

The silent generation and the baby boom generation did not develop around computers. Their wealth was generated mainly at a time when email was the most revolutionary breakthrough since color television. Investing in Bitcoin, or any other digital asset for that matter, from their perspective, isn’t even something on their radar. Just like 20 years ago, jumping into an unknown car and paying for it via your phone would never have occurred to you. So, not only are Mr. Buffet and Mr. Cuban not encouraged to change things, but they do not understand what is really going on. (I’m going to put a caveat here, I’m not saying they don’t understand Bitcoin, I would bet they most certainly understand it, especially Cuban, what I’m saying they don’t understand, it’s generational change in investment and the emergence of digital assets as an investment class.) What’s really going on?

We are in the midst of the greatest transfer of wealth that humanity has ever experienced. Baby boomers are expected to transfer $ 68 trillion in wealth over the next 30 years. Yes, you read this real Trillion with a T. Where does this money go? This money goes to Generation Y, Generation Z, Generation Y, etc. These generations have spent the majority of their lives on a computer. This is where we learned to work, socialize, play, learn and connect. For us, having our money on a computer or a phone is second nature. Why should our money not live on the Internet? This is where we live. What Mr. Buffet and Mr. Cuban don’t understand is that if Bitcoin and Cryptocurrency may not have value for them, this represents an entirely new financial opportunity for the rest of us who don’t haven’t “done”. Don’t believe me, let’s take a look at Square’s recent numbers relative to its total revenue.

For those of you who don’t know, Square launched an app called Cash App in 2013. Cash App is a mobile transfer service that allows users to transfer money between themselves using a mobile app. Just connect your bank account and find your friends and you can transfer money instantly. While there are similar apps like Venmo that let you do the same, there is a major difference that makes Square interesting to us for this article. You guessed it, Bitcoin. In November 2017, Square announced that it would start allowing users to buy Bitcoin through the app. Are you ready to have fun? Let’s take a look at the average demographics of Venmo users. (Unfortunately, I couldn’t find this for Cash App, but we can assume it’s pretty similar.) Venmo has around 40 million users each month, Cash App approaching 15 million. (These numbers are likely higher at the time of this writing.) More than 50% of Venmo users are in the 18 to 34 age group. In the first quarter of 2016, Venmo payments amounted to 3.9 billion. In the fourth quarter of 2019, Venmo payments totaled $ 29 billion. Remember how long it took to kill the taxi? For millennials, sending money over the Internet makes perfect sense. Now let’s see Bitcoin purchases on the Cash app.