Europe’s millennials have been treated badly, but Bitcoin will show them the path to financial freedom.
This is an editorial opinion by Imo Babics, CMO of Relai, a Swiss-based bitcoin-only investment app.
Europeans don’t take advantage of their purchasing power and damage their pockets. It is estimated that the financial wealth of Europeans would be €1.2 trillion higher if savers had invested their money instead of keeping it in banks.
Yes, you read that right – keep your money in the bank. Keeping cash in a bank account for emergencies is still the most common way for Europeans to save money, despite high inflation. And only 17% of Europeans say they have bitcoins in 2021. Data shows that the same amount when investing in stocks, only 15% of Germans do (rookie numbers compared to 55% of Americans).
The Struggle Is Real
Lack of financial literacy and doubts about investment skills are obstacles, but there are several other reasons why Europeans are not smarter about money:
- Lack of trust in the financial system: European Millennials came of age during the great recession of 2008. Many of them experienced first-hand the loss of their parents’ jobs, homes or savings. They saw the big banks, the architects of this disaster, go unpunished. This has led to a general lack of trust in Wall Street, banks and the financial system among millennials. Many believe that traditional financial institutions are untrustworthy (they really are) and that the system itself is rigged.
- Debt: Owning a home is a symbol of stability and security. With real estate prices rising in Europe, owning a home often comes with a 30-year mortgage. Add in car leases, credit cards, and, depending on the country, student loans and all these debts can make it difficult for young people to save and invest, as they focus on paying off their first loan.
- Job Security: Millennials have only ever known a challenging job market. Most of them entered the workforce after the 2008 financial crisis, facing a lack of opportunities and stagnant wages. As things started to improve, his career was hit again by the COVID-19 pandemic, the war in Ukraine and sky-high inflation. All this has led to job losses and a global economic downturn, making long-term planning difficult.
- Lack of financial literacy: Many Europeans lack the basic financial knowledge and skills needed to manage their finances more intelligently. I won’t debate whether the lack of financial education in European public school systems is a bug or a feature, but we are not taught about money. Our parents were not taught about money, and this ignorance is passed down from one generation to the next. Only a quarter of millennials in the PwC study demonstrated sufficient financial knowledge. They feel intimidated by the investment process, leading to a paralyzing fear of making mistakes and losing money.
- Short-term thinking: High time preference, or valuing the present over the future and sacrificing long-term gains for short-term gains, is not a new phenomenon. To quote “Fight Club,” a cult classic from the late ’90s: “Ads make us chase cars and clothes, work jobs we hate so we can buy shit we don’t need, and the things you have, will have you..” In the world of uncertainty we live in today, short-term thinking is more appropriate because the benefits of investing do not exist in the present.
Bitcoin: New Hope
Many Bitcoiners, including me, will tell you that discovering Bitcoin and going down the rabbit hole has had a significant impact on our lives and the way we think about money and saving. One of the strengths of Bitcoin, in my opinion, is that it promotes the choice of less time, and encourages you to give up instant gratification and look to the future instead. Having limited time options leads to savings, it causes you to think before you act and consider the consequences of your choices. This mindset is essential for long-term financial stability and growth, and Bitcoin promotes this behavior by its very nature.
First, Bitcoin’s limited supply of 21 million coins means scarcity is a built-in feature. This scarcity protects the value over time. And it creates a strong incentive for you to hold onto your coins instead of spending them.
This mindset can be applied to every aspect of your finances, changing your life and helping you get off the hamster wheel by saying no to a 30-year mortgage, cutting your credit cards in half or stopping “saving” money in the bank. account.
Bitcoin Is More Than Speculation
Price volatility is a big problem for beginners interested in Bitcoin.
“How can bitcoin be a safe option for my money, if its value is collapsing all the time?”
But price volatility is another way Bitcoin changes your time preferences. Yes, short-term negative price movements can be significant, but they have shown strong growth over the long term. This has encouraged many to view Bitcoin as a long-term investment, rather than a short-term speculative asset.
I have established above that Europeans no longer trust the financial system. Bitcoiners will tell you that Bitcoin fixes this, too. It is decentralized, and operates independently of the traditional banking system, putting the custody of money back in your own hands. Bitcoin will change the world, but before that, it will change how everyone thinks about money. Helping everyone build long-term financial stability, freedom and security.
This is a guest post by Imo Babics. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.