Cryptocurrencies have a great appeal to young people. Research from Nibud and Rabobank showed last week that more than a quarter of young people between the ages of eighteen and thirty have crypto. Where does the need come from and what about the risks?
In total, 42 percent of young people invest. One-third (31 percent) do so in stocks, bonds and mutual funds, 27 percent have crypto and 10 percent invest only in digital currencies and have no traditional stocks.
It’s no surprise to Bert Slagter, bitcoin expert and one of the book’s authors, that so many young people are investing Our money is ruined† “There’s a bigger story behind it,” he says.
An important factor here is inflation, which rose to 5.6 percent in November, he explains. “It is often said that it is the highest level since the 1990s. But if you look at the savings rate at that time, it was more than 8 per cent. It compensated for inflation.”
“With a savings rate of 0 percent, the purchasing power of savings is halved in about twelve years. This means that the savings no longer work,” says Slagter. “If you want to keep your fortune, you’re forced to invest.”
“Young people are used to the digital world, that you can immediately send and transmit something.”
Bert Slagter, bitcoin expert
Investing in cryptocurrencies
It can also be explained that cryptocurrencies are particularly attractive to young people, says Slagter. “Young people are used to the digital world, that you can immediately send and transfer something. Digital possession is much more natural for them than for the older generation.”
But as established as equities are, cryptocurrencies are still just as new and unregulated. And it also raises concerns, says Ariane Kleijwegt of the government platform Money Wise. “There is a big difference between stocks and bonds. There is nothing below this at all, no underlying value. You do not own a part of a company, as is the case with stocks.”
“At the same time, the attraction is great. Young people are talking about it. There are many influencers, called finfluencers, on social media who can also be behind shady companies,” says Kleijwegt. “In addition, the legal protection of consumers with cryptocurrencies is not yet properly designed. For example, there is no licensing requirement for crypto providers, which means that it is often unclear to consumers what kind of party to cooperate with.”
Risks with cryptocurrencies
It admits the butcher. “I think one should at least distinguish bitcoin from the rest. It is a category unto itself. If banks develop an infrastructure for cryptocurrencies, it is always for bitcoin,” says Slagter. Another digital currency, ethereum, may be moving into this category, according to Slagter.
But all the other coins? That’s a big risk. “I compare it to start-ups. Bitcoin, like the Internet, is a network of value transfer. But all the other currencies can be seen as start-ups in Silicon Valley in the 1990s. A few have grown very large, but the majority no longer exist. . “
In addition to ‘trials and experiments’, there are also a number of scams involving digital coins. For example, it turned out last month that the new cryptocurrency Squid Game was counterfeit. The creators of the coin based on the popular Netflix series Play squid ran off with $ 2 million (more than 1.7 million euros).
“People spend, so to speak, five evenings on Kieskeurig.nl to compare boilers, but with cryptocurrencies, everyone immediately turns to them.”
Bert Slagter, bitcoin expert
I’m not chasing the hype
Butcher therefore recommends that you always do good research. “People spend five nights on Kieskeurig.nl to compare boilers, but everyone immediately shows up with cryptocurrencies. Then you are vulnerable to the wrong coins.”
Plus, he says, running after the hype also risks you becoming “the sucker who buys last,” just before the coin reaches its peak. “It makes people greedy and eager, but realizes that most of them lose everything. You only belong to the people who succeed.”
At present, the crypto market is not yet regulated for consumers, but this is being worked on at European level, among other things. The Dutch Financial Markets Authority (AFM) can then take stricter action when, for example, advertising. “Then the Wild West becomes a little more civilized,” Slagter says.
Money you can miss
According to Slagter, it is positive that more than three quarters (77 percent) of young people believe that you should only invest with money you can save. In addition, 86 percent of respondents also have a savings on hand. “It makes sense to look for returns. Most people do it responsibly.”
Kleijwegt also advises young people to maintain a buffer. “In any case, do not speculate with money you can not afford to lose. Be very aware of risks. There is no legal safety net like the deposit guarantee scheme for money in the bank, as is the case with an investment. Depends entirely on supply. and demand, which causes the value of bitcoin and other cryptocurrencies to fluctuate widely. “
Money Wise will start giving guest lectures at schools about bitcoins from next year, says Kleijwegt. “We think it’s important that cryptocurrencies and their risks get more attention in education.”