Older Adults and Bitcoin / Cryptocurrencies. Not there yet….

ripple etehereum and bitcoin and micro sdhc card

Photo by Worldspectrum on Pexels.com

I’ve written a lot about the growing influence of technology on the world that older adults occupy, from the world of cute and fuzzy robots, to smart homes and smart nursing homes, and consumer applications of artificial intelligence (think Amazon Alexa and Apple’s Siri technology).

I’ve written about how the fastest-growing adopters of information technology (internet use) are older adults, and in some areas, older adults (particularly the baby boomers) match or eclipse the degree of adoption and use of certain classes of information technology at this point, specifically health-related technology.

One thing I haven’t written about is the so-called “emerging asset class” of cryptocurrencies – the most well-known of which at this point is Bitcoin.

I ran across article the other day, on the crypto-centric news site NewsBTC. Title of the article: “Nearly All American Seniors Don’t Know or Want Bitcoin: But It’s Not a Concern.” They reference a survey, apparently conducted by the “Gold IRA Guide,” located here, that lines up some pretty compelling statistics about how older adults (defined as people 50 years and older) seem to have a pretty dim view of this “emerging asset class.”

I have an uncle, who has been active on Facebook (and Twitter, I believe) for a number of years, who has occasionally posted about cryptocurrencies, and says he suspects that Bitcoin is either a “Ponzi scheme” or a “solution in search of a problem.” Either way, he’s not interested. Then there’s Warren Buffet – one of the most well-known and successful older adults out there, who has famously referred to Bitcoin as “rat poison squared.”

Neither my uncle nor Warren Buffet seem to be particularly out of step with the results of this survey (from https://goldiraguide.org/new-survey-reveals-american-retirees-currently-have-a-negative-outlook-on-bitcoin/):


(Photo by David Crowder from goldiraguide.org)

Big takeaways from this very interesting survey. Over half (56%) of all older adults surveyed have heard of Bitcoin but are “not interested” in it. About 1/3 (32.9%) don’t even know what Bitcoin or cryptocurrencies are. A much, much smaller percentage (3%) own some, and similarly negligible percentages are interested but either don’t know how to invest, or are just “keeping an eye on it” for now.

So, there’s a few things going on here to keep in mind. First, by their nature, older adults are a risk-averse group when it comes to managing their finances. They’re more likely than not to be on fixed incomes, and they’re more likely to be retired and naturally be geared towards wealth preservation and be avoidant of excessive risk in their retirement portfolio. Also, keep in mind – this survey was conducted deep in the Bitcoin bear market of 2018, after Bitcoin and the larger cryptocurrency market had lost around 75% of its market value, and all but the most optimistic of cryptocurrency supporters had thrown in the towel.

What is Bitcoin? Briefly, Bitcoin is the first example of purely peer-to-peer currency. There will only ever be 21 million Bitcoins in existence (making it noninflationary), and it requires no central issuing authority (like the Federal Reserve). Bitcoin itself is only 10 years old, having been borne of the 2008 “Great Recession” and subsequent Federal Reserve money-printing binges (QE1-QE3) that followed.

It’s also the first example of true digital scarcity that I’m aware of. You see, one of the features of computers and technology, as well as the internet, is that it’s trivially easy to copy things, like music (MP3s) or books, or websites, etc.

Bitcoin is the first completely digital entity that is uncopiable and un-counterfitable. That’s what makes it unique and valuable, and due to the fact that it can be sent peer-to-peer, avoids third-parties (like Visa or PayPal, who charge transaction fees) and also avoids censorship or confiscation, such as if the government decided to seize your funds, or if a bank decided to close your account.

All of that aside, cryptocurrencies are a very risky asset class. Despite the aforementioned bear market, since its inception, it’s gone from being worth around .008-.08 cents to being around $5,300 dollars today. While that’s an impressive run, it’s undeniable that Bitcoin has experienced sickening volatility compared to other assets, which has made it an investment only for those with the most iron of constitutions.

I have a confession to make. I own some cryptocurrencies. Mostly Bitcoin, but also several “altcoins.” I bought my first Bitcoins in 2011 – and then sold some and spent the rest a year or two later, which I kick myself about to this day. Since then, I’ve bought back in (and turned a decent profit at the end of the bull market of 2017), and right now my crypto portfolio stands at around a little less than 1% of my net worth, with most of my net worth otherwise being tied up in real estate, as well as a 403B and IRA stock portfolio.

Interestingly, I know of a lot of millennials (e.g., those in their 30s or younger at this point) who have an almost mirror-image view of cryptocurrencies compared to the older adults reported on in this survey, with a number of them with exposure in the double-digit percentages and upwards in their investment portfolios – with many of them reporting they trust cryptocurrencies more than the stock market. While I don’t advise this approach, given the cohort that millennials hail from, and their generational experiences (they essentially came of age during the Great Recession), it’s understandable they have the view they do of “traditional” investment vehicles, and that they embrace high-tech innovations like cryptos.

Here’s what I think – I think that much like any new technological advance or innovation, it takes time for older adults to “catch up.” We’ve seen this with information technology as well, although in the case of internet use, the “youngest-old” (baby boomers, mostly) they’ve basically already caught up in terms of their comfort and usage rates. Cryptocurrency is a bit different though – it’s bleeding-edge fintech,it’s both financial innovation and technological innovation, of a kind we’ve never seen before.

So, not only will Bitcoin and cryptocurrency have to scale the obstacles that technological innovations normally have to in order to be adopted by older cohorts (e.g., generation effects), it will have to also be accepted as a much surer thing, as opposed to the way it seems to most older adults today – a speculative vehicle that’s not much better than throwing it all on black in Vegas. In other words, it will have to truly demonstrate that it’s a store of value, in the same vein as gold and silver.

Likewise, as my uncle has told me, it will have to probably at some point show that it’s a solution that actually addresses an identifiable problem.

However, given the sheer scale of the US Federal Governments’ money printing (QE1-QE3), and the incomprehensible degree of US sovereign debt (21 trillion and counting), I’m guessing we won’t have that long to wait….

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