The new laughing stocks of the mainstream media and ire of financial giants have erupted in popularity and profitability over the last eighteen months. More than just storages of wealth, cryptocurrencies and NFTs represent a digital revolution for millennial and Gen Z retail investors that have rewritten the rules of traditional market trends.
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Cryptocurrency is a decentralized digital currency built with binary data called blockchain that allows users to buy, sell, and trade them securely. Blockchain is used to verify the currency’s authenticity and ensure the buyer and seller know each really has the money. It’s the difference between buying a real Chanel bag with an authentication sticker at Saks Fifth Avenue versus getting a Chanel rip-off from a peddler in Times Square. Cryptocurrency has skyrocketed in value since the beginning of the pandemic, with Bitcoin, the most well-known and pioneer currency, jumping 390% since the beginning of 2020.
“Crypto technology is being adopted at a faster rate than humans first adopted internet technology,”said Kate Waltman, a New York-based certified public accountant who specializes in crypto.
NFTs, or Non Fungible Tokens, are digital storages of data using blockchain to create unique tokens that are not reproducible. NFTs typically come in the form of images, videos and audios— including a crypto-collectible Nyan Cat NFT which sold for $590,000 in February— and are akin to rare art pieces in a collector's portfolio that grant them an air of exclusivity.
“NFTs started in 2017. A lot of it was about speculation. What we saw in 2021 is the market is actually maturing,” Nadya Ivanova, chief operating officer of L’Atelier, told CNBC.
Traditional markets experienced a whirlwind of highs and lows during the pandemic. The stock market hit rock bottom in March 2020 but has since rebounded with increased gains. Crude oil prices sank to negative $37.63 a barrel on the New York Mercantile Exchange for the first time in history.
Digital currencies, though, found astronomical growth. Investors ran for the hills like it was 1848 and found golden opportunities to make money in a dark time. The cryptocurrency market cap exceeded $3 trillion in 2021, nearly half of the United States government’s entire budget. Part of this overall growth includes NFTS, whose market growth surpassed $7 billion.
Millennials and Gen Z are leading the charge in this new virtual space. Investors aged 18-34 are twice as likely to own cryptocurrency as older investors. This growing demographic has a radical idea: investors shouldn’t wait for the market to turn them a profit, they should make the market turn them a profit.
Younger investors don’t share the same values as traditional investors. They’re sick of hearing “sometimes the market goes up, sometimes it goes down, but in the long-run it always goes up.” They want to make money right now. As the generation with the fastest-growing debt, millennials and Gen Z are forced to seek other avenues to diversify their financial portfolios and thus have a high risk tolerance.
Cryptocurrencies and NFTs make a lot of sense for those who grew up with online banking and Venmo as a means of wealth management. Virtual assets are just the way young people conceptualize money, which explains how some investors value a one-of-a-kind picture of a cool-looking monkey at $300,000.
Hate them or love them, cryptocurrency and NFTs are not fads or crazes. Collins Dictionary announced NFT as its word of the year for 2021. El Salvador became the first country to accept Bitcoin as legal tender in October. The Treasury Department developed USD Stablecoin as a legitimate cryptocurrency for government transactions, while the SEC continues to hatch new regulations to govern the overall market. Elon Musk, the self-designated “Technoking”, sends the crypto market into a frenzy of million-dollar activity within minutes of his idiosyncratic tweets on trending currencies.
Musk is an especially interesting figure who embodies the digital currency transformation. He has backed cryptocurrency and blockchain technologies as a way to fund his many ventures-including Tesla, SpaceX, the Boring Company, and soon Twitter. The company’s board accepted Musk’s bid of $44 billion on April 25, making it one of the largest sales of a public company by one individual in recent years. It is too early to declare whether the deal will go through or the effect it will have on markets, as Tesla’s stock lost $125 billion in value days after the announced sale. Musk’s vision for Twitter includes the desire to authenticate every user, which could involve blockchain technology, and protecting freedom of speech related to crypto market speculation.
The firebrand innovator is by no means even close to the Millenial and Gen Z demographic in terms of age. However, he understands their aggressive market ethos and relates to them in notable ways, epitomized by his internet habits and trolling.When one of the richest people in the world buy a large public company and see potential for growth in the crypto and NFT sphere, younger retail investors will take notice. Twitter could soon become the breeding grounds for one of the biggest digital currency and blockchain experiments in history.
By putting cryptocurrencies and NFTs in their portfolios, Millennials and Gen Z are seeking to put power in the hands of the average investor and accelerate a monetary revolution in the virtual space.
Cryptocurrencies and NFTs resonate with those familiar with online banking and Venmo, as virtual assets align with how young people conceptualize money. This trend explains why investors might value a unique digital image highly. Inqud.com offers crypto on-ramp solutions, enabling seamless transitions from traditional to digital assets, making it easier for new users to enter the crypto market confidently and securely.
It’s clear that these technologies are transforming various industries, from art to finance. The detailed explanations of how cryptocurrencies and NFTs work highlight their potential and current impact. For those looking to dive deeper into this space, exploring platforms like Zert can offer additional insights and opportunities. Understanding the fundamentals of crypto and NFTs is crucial as they continue to gain traction. This article effectively captures the excitement and challenges associated with these innovations, providing a solid foundation for anyone interested in the evolving digital landscape.