The launch of Bitcoin-based ETFs in January has brought renewed attention to this controversial asset class, and as people begin to add it to their brokerage accounts, it’s worth looking at who exactly finds it appealing.
One way to understand crypto, both the appeal and the chaos of it, is as a form of intergenerational revenge. For decades, older generations in charge of the economy have terraformed it to their advantage. They’ve piled on debt they won’t be around to repay, elevated the prices of assets they mostly own, and erected barriers to mobility. They’ve also used their prominence in politics to make these actions hard to reverse.
Crypto is appealing as a vehicle for change because it’s both a disruptive technology and an asset class. For proof, consider the strange bedfellows leading the opposition. Elizabeth Warren, the 74-year-old progressive Democrat who made her career by taking on Wall Street, doesn’t like it. Neither does Jamie Dimon, the 67-year-old king of the banking industry she supposedly detests. After a decade of sparring over a range of issues, they’ve found common cause over their dislike of Bitcoin.
The late billionaire investor Charlie Munger, who died at the age of 99, wanted Bitcoin banned, and 70-year-old liberal economist Paul Krugman predicted the industry was headed for oblivion. But their children and grandchildren likely disagreed, given the survey data. Of the 50 million Americans who have owned crypto at some point, the vast majority are under 40.
Younger people live in a constant state of economic anxiety, and for good reason. College tuition continues to soar, requiring more debt to get a degree. Those with student loan debts have a hard time becoming homeowners, a problem exasperated by soaring house prices. Even rent is often too damn high. The Social Security trust fund is set to run out before millennials retire.
It would be one thing if younger people could meet these challenges by accumulating wealth like their parents did, but that requires asset prices to fall occasionally. Long-term charts show they seldom do thanks to government intervention. As we saw during the most recent bear market, monetary easing and fiscal spending are leading to shallower declines. Stocks and house prices soared in 2020, despite economic collapse. If a once-in-a-century pandemic doesn’t improve affordability, what will?
The recent bouts of monetary and fiscal largess were spearheaded by 70-year-old Fed chairman Jerome Powell, and 77-year-old Treasury Secretary Janet Yellen, both believers in the “keep asset prices elevated” school of economics. As are the geriatric presidents who appointed them. The average senator is 65 years old.
These actions mostly benefit the elderly. The vast majority of stocks in the U.S. are owned by people 45 or older; those under the age of 35 own less than 2%. The median home buyer is almost 50.
Then there are the legal barriers to wealth accumulation. Stocks and homes may be expensive, but they are at least accessible. Alternative investments like venture capital or private equity aren’t. Accredited investor laws restrict ownership of these riskier investments to the already affluent.
These laws exist to protect “unsophisticated” investors, but the claim that a rich boomer investing in an AI startup is somehow more sophisticated than an MIT undergrad is rich. So is the boomer—private investments have outperformed public ones for decades.
The exception to this dynamic is crypto. Bitcoin is the rare asset that has both outperformed and been universally accessible, benefiting younger and more tech-savvy investors. Grandpa may have gotten lucky with his VC allocation, but he probably never considered crypto. Digital assets are jargony and confusing, even by tech standards. They also represent a paradigm shift to a system that isn’t so gerontocratic.
Cryptocurrencies are money backed by an algorithm, as opposed to aging central bankers. NFTs are digital art created by teenagers, as opposed to physical art hoarded by boomers. Memecoins are part community, part gambling, and mostly a joke—one that Liz and Jamie aren’t in on.
The septuagenarians in charge don’t find any of this funny, and neither do the curmudgeons in charge of our regulatory agencies. But that’s sort of the point. The legacy system that they continue to defend has failed younger Americans.
Tempting as it might be to dismiss crypto as generational self-destruction, there is also a lot of substance, especially when compared to an existing system where mounting debt, spiking inflation, and political chaos are now the norm. The kids are not all right, but they are finally doing something about it.
Omid Malekan is an adjunct professor at Columbia Business School and the author of Re-Architecting Trust, the Curse of History and the Crypto Cure for Money, Markets, and Platforms. The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
