Why American Millennials Are Adding Bitcoin to Their Savings Plans

Bitcoin has become a mainstream investment for billionaire investor Mike Novogratz and celebrities like Ashton Kutcher and Paris Hilton, and the unregulated digital payment system has been criticized by many, but there is still a group of young people who envision a cashless future and are investing their money in this digital asset.

They are a unique group of people, accounting for only 1% of Americans, who have not only heard of Bitcoin but have also traded it on their smartphones and laptops. What's more, some millennials have already seen Bitcoin as a long-term savings. Some experts believe this could shake up the country's financial institutions.

Roshaan Khan, a 20-year-old college student at Virginia Commonwealth University, is one of these millennials. Khan recently invested in Bitcoin and Ethereum, and he is encouraging his friends to do the same.

“All of my net worth is in crypto, and I thought this was the best way to pay off my student loans,” Khan said. “I like the idea of ​​decentralization and the fact that it would greatly reduce corruption and political connections. The idea was very appealing to me… It doesn’t have to go through a bank.”

Andreas M. Antonopoulos, author of Mastering Bitcoin and Internet of Money, is well-versed in the distrust that exists among millennials. He says that the concept of Internet of Money is not only appealing to millennials, but also that the system will not betray them.

“When you go to millennials who are disillusioned with institutions, they don’t trust anyone anymore,” Antonopoulos said. “They remember what happened in 2008 because it was their first big crisis and a lot of millennials couldn’t find jobs. And they don’t see bankers being sent to jail.”

Now, millennials are starting to choose their own way.

“I feel good about running my savings plan by investing in this new technology,” said Emil Thorsplass, a 24-year-old musician from Norway. “I still regularly contribute to my pension fund and pay my bills through my bank account, but cryptocurrency investment has become part of my savings plan.”

However, digital currencies also face a lot of criticism. Some traditional investors believe that although Bitcoin has no inherent flaws, it is not worth investing in as a digital payment method because of its high volatility and lack of support from a central institution or government. Antonopoulos responded by calling this argument "lame" and believes that mature investors can include more volatile investments in their portfolios.

"You can criticize Bitcoin, it's obviously risky, the technology is only about nine years old, and it's still very much in the experimental stage," Antonopoulos said. "If you include it as part of your portfolio, you may get a high return if you have a low probability of it crashing, but you can't ignore the possibility that it will crash completely. If you're willing to take that chance, it could be a big life-changer, especially for young people."

“I’m not as nervous about volatility as I used to be,” said Thorsplass, who has invested $5,000 in digital currencies since 2015. “I’m used to taking risks, so I like to pull the trigger when my gut tells me I should.”

Khan, who has seen a 40 percent return on his investment since he began investing in digital currencies two months ago, expressed similar sentiments.

"Maybe I'm new to this, but nothing else excites me more than this, and the stock market has become extremely boring. For a college student with a limited budget, there is nothing to do in the huge stock market."

But it’s important for anyone trading Bitcoin to understand that while Bitcoin itself may be unregulated, the fiat currencies it is exchanged for are subject to a lot of controls.

"There is nothing inherently illegal about owning or using Bitcoin, or any other cryptocurrency, you just need to be aware of it before investing in or using it," said cryptocurrency attorney Tyson Cros. "But you could easily get into trouble with your taxes."

He continued, “I think the IRS is watching this space closely, and a lot of cryptocurrency transactions may not be taxed. I think those days are behind us, and if anyone is thinking about investing in Bitcoin or other cryptocurrencies, I would warn them not to think about tax evasion, because the IRS has a lot of tools to detect these activities now.”

One thing is certain: the concept of cryptocurrency is unlikely to go away anytime soon. Even if Bitcoin suddenly disappeared tomorrow, a new and better digital currency would take its place.

“What Bitcoin has shown us is that its technology can be used to create a competing product that is comparable to national fiat currencies and in some ways better,” Antonopoulos said. “It opens the door to competition, which will determine the direction we go. What happens when new products enter the market? A catastrophe.”

“Now, there’s a choice in the market, and millennials are exercising that choice.”