Exploring the reasons behind Bitcoin's major boom
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Exploring the reasons behind Bitcoin's major boom
The current system is unfair to the younger generation. Cryptocurrency is a counter-paradigm.
Navigating Web3 tides with focused insightsBy Omid Malekan
Translated by Qin Jin
Omid Malekan is an adjunct professor at Columbia Business School and author of "Re-Amping Trust: The Curse of History and the Crypto Correction for Money, Markets, and Platforms" and "The Story of Blockchain: A Beginner's Guide to the Technology No One Understands." Most of his articles have appeared in publications such as The Wall Street Journal, The New York Times, and the Financial Times. This article was first published in Fortune.
The world today is unfair to younger generations. Cryptocurrency is a counter-paradigm.
The launch of Bitcoin-based ETFs on January 11, 2024, has reignited extraordinary interest in this controversial asset class. As people begin adding them to their brokerage accounts, it’s worth examining who exactly finds Bitcoin appealing.
One way to understand the appeal—and chaos—of cryptocurrency is to view it as generational revenge. For decades, older economic gatekeepers have reshaped the economy to favor themselves. They’ve run up debts they can’t repay, inflated prices of the assets they already own, and erected barriers to liquidity. They’ve also used their political influence to make these arrangements difficult to reverse.
Cryptocurrency is transformative not just because it’s a disruptive technology, but because it’s also an asset class. Consider the odd bedfellows leading the opposition. Elizabeth Warren, the 74-year-old progressive Democrat, dislikes crypto. So does Jamie Dimon, 67-year-old CEO of JPMorgan Chase—the very banking titan said to be despised by Warren. After ten years of consistent disagreements across a range of issues, they finally agree on one thing: they both hate Bitcoin.
The late 99-year-old billionaire investor Charlie Munger wanted Bitcoin banned, while 70-year-old liberal economist Paul Krugman predicted the crypto industry would be forgotten. Yet survey data suggest their descendants may disagree. Among the 50 million Americans who have ever owned cryptocurrency, the vast majority are under 40.
Young people have lived with economic anxiety—and for good reason. College tuition keeps soaring, requiring more debt to earn a degree. Those burdened with student loans struggle to become homeowners, a challenge worsened by surging home prices. Even rent is often absurdly high. The Social Security trust fund is projected to be depleted before most millennials retire.
It would be one thing if young people could respond like their parents did—by building wealth through asset accumulation—but that requires asset prices to occasionally fall. Long-term charts show that government intervention has made such declines rare. As we saw in the recent bear market, monetary easing and fiscal spending have limited downturns. In 2020, despite economic collapse, both stocks and housing prices continued to surge. If a once-in-a-century pandemic can't improve affordability, what will?
Seventy-year-old Federal Reserve Chair Jerome Powell and 77-year-old Treasury Secretary Janet Yellen both subscribe to the school of economics that prioritizes keeping asset prices rising. So does the president who appointed them. The average age of U.S. senators is 65.
These policies disproportionately benefit older Americans. The vast majority of U.S. stock ownership belongs to those aged 45 and above. People under 35 hold less than 2% of stocks. The median age of homebuyers is nearly 50.
Beyond that, there are legal barriers to wealth-building. Stocks and homes may be expensive, but at least they’re accessible. Alternative investments like venture capital or private equity are not. Accredited investor rules legally restrict these higher-risk assets to those who are already wealthy.
These regulations claim to protect “unsophisticated” investors, but it’s a stretch to argue that a wealthy baby boomer investing in AI startups is more mature than an MIT undergraduate. For decades, private investments have consistently outperformed public ones.
The exception to this status quo is cryptocurrency. Bitcoin is a rare asset class that both outperforms the market and remains accessible to all, while particularly benefiting younger, tech-savvy investors. Grandpa might have gotten lucky with venture capital allocations, but he likely never considered crypto. Digital assets are alien and confusing—even by tech standards. Yet they represent a paradigm shift toward a less geriatric financial future.
Cryptocurrency is money backed by algorithms, not elderly central bankers. NFTs are digital artworks created by teenagers, not physical art hoarded by baby boomers. Memecoins are part community, part gamble, mostly a joke—one that Liz and Jamie aren’t joining.
Those septuagenarians don’t find it funny, nor do the aging hardliners at our regulatory agencies. But that’s precisely the point. The traditional system they defend has already failed young Americans.
While it may be tempting to dismiss cryptocurrency as a generation’s act of self-destruction, it contains substantial merit—especially when compared to the existing system, where rising debt, inflation spikes, and political dysfunction have become the norm. Kids don’t always get it right, but now, at last, they’re starting to fight back.
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