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A recent eToro survey explored the preferences of investors. GETTY
Millennials have great faith in the digital currency market, according to an industry poll.
The eToro survey, which drew input from 1,000 online traders between the ages of 20 and 65, revealed that roughly two-thirds of online Millennial cryptocurrency traders (age 20-38) place more trust in digital currencies than they do in stocks.
Further, 43% of Millennial participants expressed greater faith in digital currency exchanges than in stock exchanges.
Members of Generation X, in contrast, were far more likely to favor marketplaces for stocks, with 77% of the people in this group (age 39-53) indicating this preference. In addition, only 41% of these respondents stated they trust cryptocurrencies more than stocks.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Breaking Down Preferences
When explaining the varying preferences of people in separate age groups, the poll emphasized a few key variables.
One major factor cited in the survey results was the sharp differences in education that existed between the varying age groups.
More than half of all Millennial participants (52%), for example, stated they were either "knowledgeable" or "very knowledgeable" when it came to digital currencies.
However, only 32% of Generation X respondents and 19% of Baby Boomers (aged 54-65) provided this response.
Millennial Point of View
Many Millennials perceive cryptocurrencies differently than individuals in other age groups, and this view is worth exploring.
Eric Ervin, CEO of Blockforce Capital, pointed to their reliance on technology when explaining this situation.
"Millennials tend to trust what they use and understand," he stated.
"They've grown up with and understand Amazon, Google, etc. and now blockchain/crypto, and it makes sense they over-index in trusting those investments/infrastructures," he added.
"It also makes sense that those who've invested in crypto have an even higher trust level of those exchanges even through 2018's bear market slide," noted Ervin.
Joe DiPasquale, CEO of cryptocurrency fund of hedge funds BitBull Capital, also shed some light on the subject:
"Digital markets are less mature, less regulated, and more vulnerable to hacking," he noted.
However, Millennials gravitate toward them due to several factors, including "the ease of use, low barrier to entry, high profit potential and the hype around them," he stated.
Sean Walsh, CEO of crypto mining firm HyperBlock, also weighed in on the preferences of Millennials, stating that:
"Crypto markets may be less developed, but the younger generations seem to feel a greater affinity for them specifically because of the fact these markets are new."
While the digital currency markets seem to have gained the trust of younger generations, they still have a long way to go in terms of developing proper infrastructure.
A perfect example is the numerous hacks of cryptocurrency exchanges, which have resulted in $1.5 billion worth of losses, according to CoinDesk.
The stock market is clearly more proven than that of digital currencies, a claim analyst Sheila Warren described as "impossible to dispute."
While the digital currency market's infrastructure is less evolved, it will "catch up fairly quickly," predicted Warren, head of the blockchain project at the World Economic Forum.
"I think crypto markets are (unsurprisingly) relatively immature, and the amounts/volumes running through them aren’t yet supported by the current infrastructure," she stated.
However, she emphasized that the field is making progress on this front:
"There's a lot of investigation and work focused on decentralized exchanges, etc, and I think the issues are largely known (and therefore en route to being solved)."
Financial Institutions' Vulnerability
Further, several market observers noted that the stock market's infrastructure is far from perfect.
"Stock markets are by no means immune to a hacking or other nefarious attacks," noted Ervin.
"U.S. markets experienced a flash crash in 2010, Nasdaq was hacked in 2011, and then had a price reporting glitch in 2017," he added.
"These occurrences are noted by Millennial investors, many of whom are drawn to crypto investing for its eventual promise of immutability," said Ervin.
Tim Enneking, managing director of Digital Capital Management, offered a similar perspective.
Simply "Because one doesn't hear about fiat hacks doesn't mean they don't occur," he noted.
"Banks are hacked much more frequently than generally published, for instance, but rarely report them publicly," claimed Enneking.
Matthew Unger, founder and CEO of iComply Investor Services inc., also spoke to the shortcomings of financial institutions' infrastructure.
" In its current form the stock market has seen little technological innovation since the 70s when the inefficiencies of paper trading created a crisis that nearly shut down the markets," he stated. "People forget about that."
"The migration to the stock market’s current infrastructure required a massive overhaul and forced firms to digitize their assets," noted Unger.
Cryptocurrency Market Progress
"Crypto exchanges are still young, and their fractured infrastructure shows it," said Ervin.
"However, many are working to bring an institutional presence to the digital asset world — making great strides along the path to regulation that traditional investors yearn for."
"We feel that whatever the trust level that Millennials (and other groups) have in crypto and exchanges, will only increase as the assets and infrastructure mature," he predicted.
Disclosure: I own some Bitcoin, Bitcoin Cash and Ether.
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