America’s youth has long been in a bad relationship with banks. Their predatory, self-serving practices have left a bad taste in the mouths of many young consumers, who have historically acclimated and resigned themselves to the system as they aged. Millennials have been accused of killing almost every industry, from golf to napkins, but now they’re on the cusp of the biggest breakup yet – with banks. Millennials might finally be the generation to leave their deadbeat ex and have the passion and optimism to envision a new way of doing things financially.
Breaking up With Banks
During the 2008 financial collapse, the Fed had to lower interest rates to 0 percent, right around when millennials were graduating from college (in debt from bank loans) and trying to build up their finances. Millennials could barely earn interest on their deposits, while banks continued to use those same deposits to charge consumers 25 percent interest on credit cards and keep over 90 percent of the value to themselves. Bank executives have had record earnings and bonuses since 2009, while most Americans struggle to finish the month in the green.
This is a completely one-sided relationship, with millennials giving and banks taking. Besides, healthy relationships are based on trust, and millennials just don’t trust banks. According to a 2018 study by Edelman, 77 percent of affluent millennials feel the traditional financial system is “designed to favor the rich and powerful.” 75 percent worry about the global financial system being hacked and losing their personal information, and 77 percent think it’s a matter of time before finance’s “bad behavior” leads to “another global financial crisis.”
So banks are bad news, and they don’t even pretend not to be. 70 percent of affluent millennials feel that financial service companies “make the purchasing process unnecessarily confusing/frustrating” and 71 percent say these companies leave them feeling “unsure” and “out of their depth.” This is a recipe for an unstable, manipulative relationship. Luckily, millennials have the sense to realize that and pull the plug.
The millennial disruption index slates banking as the most ripe industry for disruption, and reports that 71 percent of millennials would rather go to the dentist than “listen to what their banks have to say.”
The index also reports that all four of the leading banks are among the 10 brands millennials love least.
On top of all of that, banks have historically proved to be ageist, racist, and classist institutions that disfavor minorities in lending practices, fail to provide services to minority neighborhoods, and provide predatory rates to populations most in need. This is no pesky lovers’ quarrel. This is a breakup.
The Cryptocurrency Crush
Luckily, cryptocurrency is waiting to be that shoulder for millennials when banks break their hearts … and their wallets. It didn’t take long for millennials to notice – 17.2 percent of millennials own crypto already. And that number is higher for wealthy millennials: According to Edelman’s study, 25 percent of wealthy millennials own cryptocurrencies, a further 31 percent are interested in crypto, and a whopping 74 percent say technical innovations like blockchain make the global financial system more secure.
Crypto might have started out as the nerdy rebound, but it’s quickly prompting the friend-zoning of its jockey, broad-shouldered big name competitor banks. A Sustany Capital study found that 88 percent of millennials “want to own cryptocurrencies as an investment,” and 42 percent want to “use cryptocurrency as savings.”
The interest is there; we just need some good reliable friends to play matchmaker. Many millennials feel held back from diving into crypto only because of lack of education, but 97 percent of surveyed millennials and generation X said they’d like to learn more. 73 percent of millennials would be significantly more likely to invest in crypto if advised by a financial adviser. Crypto just needs a few good wingmen to help people understand how useful, safe, and fair it really is.
A Romance Built on Values
Lots of people are saying that crypto is a passing fad, like that time you were really into the double-popped collar look, especially as the market has declined in the last few months. But recent reporting by Bloomberg shows that although the price of bitcoin dropped by 80 percent during 2018, the total number of accounts opened has doubled to over 35 million during that same period, indicating that crypto’s popularity is just getting started.
Relationships that last through tough times are based on more than just attraction or novelty, but on deeper shared values. Crypto makes practical, financial sense for millennials: there are lower fees for using and transferring it since there are no middlemen involved, blockchain keeps a consistent and incorruptible record that means bankers can’t steal their money, and it’s impersonal, so there are no worries about discrimination based on previous student loans or social status. More than that, crypto also makes sense in principle to a generation that is moving away from exploitative business practices and buying with their consciences.
Values persist regardless of market highs and lows, as Charles Hoskinson, founder of Cardano, recently tweeted: “The headlines and carnival barking from the media about the current state of Bitcoin and recent losses show they have never gotten our movement. $150 billion in value has been liberated from the banking system and now exists in a parallel economy. Our growth remains unchallenged.” It’s about liberating the economy from the banking system, and that is true in bear and bull markets alike.
Millennials are looking for a new generation of services that will act in their best interest and help society in general by supporting the unbanked and under served. Crypto is the perfect mix of practical and passionate, paying the bills and fighting for a cause. For a generation toeing this balance like never before, crypto is a keeper – one that you can hopefully bring home to mom and dad.
Do you think millennials are breaking up with the banks? What will it take to help millennials get more involved in crypto? Will all generations begin to accept and adopt crypto?
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This article was written by Alex Mashinsky. He is CEO of Celsius Network. He is one of the inventors of VOIP (Voice Over Internet Protocol) and is now working on MOIP (Money Over Internet Protocol) technology. Over 35 patents have been issued to Alex, relating to exchanges, VOIP protocols, messaging and communication. As a serial entrepreneur and founder of seven New York City-based startups, Alex has raised more than $1 billion and exited over $3 billion. Alex founded two of New York City’s top 10 venture-backed exits since 2000. Alex has received numerous awards for innovation, including being nominated twice by E&Y as entrepreneur of the year; Crain’s 2010 Top Entrepreneur; the prestigious 2000 Albert Einstein Technology medal; and the Technology Foresight Award for Innovation.