European millennials have been given a rough ride, but Bitcoin will show them the path to financial freedom.
This is an opinion editorial from Imo Babics, CMO of Relai, a bitcoin-only investment app based in Switzerland.
Europeans are not taking advantage of their purchasing power and it is hurting their pockets. It is estimated that the financial wealth of Europeans would be 1.2 trillion euros more if savers had invested their money instead of keeping it in the bank.
Yes, you read that right: save money in the bank. Keep cash in bank accounts for emergencies is still the most common way Europeans save their moneydespite high inflation. And only 17% of Europeans reported who owned bitcoin in 2021. The data suggest that the number is similar when it comes to investing in stocks, with only 15% of Germans doing so (newbie figures compared to 55% of Americans).
The struggle is real
Lack of financial education and doubts about their ability to invest are apparent obstacles, but there are other reasons why Europeans are not being smarter with their money:
- Lack of confidence in the financial system: European millennials came of age during the great recession of 2008. Many of them have experienced first-hand the loss of jobs, homes or their life savings by their parents. They have seen the big banks, the architects of this disaster, Go unpunished. This led to a general lack of trust in Wall Street, banks, and the financial system as a whole among millennials. Many believe that traditional financial institutions cannot be trusted (rightly) and that the system itself is rigged.
- Debt: Owning a home is a symbol of stability and security. With Real estate prices on the rise in Europe, owning a home often comes with a 30-year mortgage. Add to that a car rental, credit cards and, depending on the country, student loans and all this debt can make it difficult for young people to save and invest as they focus on paying down debt first.
- Job (in)security: Millennials have only known a challenging job market. Most of them entered the workforce after the 2008 financial crisis, facing a lack of opportunities and stagnant wages. Just when things started to look up, their careers took another hit with the COVID-19 pandemic, the war in Ukraine, and sky-high inflation. All of these things caused widespread job losses and a global economic downturn, making it difficult for them to plan for the long term.
- Lack of financial education: Many Europeans lack the basic financial knowledge and skills needed to manage their finances more intelligently. I won’t get into the debate about whether the lack of financial education in the European public education system 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 generation to generation. Only a quarter of millennials in a pwc studio Demonstrated adequate financial knowledge. They are intimidated by the investment process, leading to a paralyzing fear of making a mistake and losing money.
- Short-term thinking: High time preference, or valuing the present over the future and sacrificing long-term benefits for short-term gains, is not a new phenomenon. Quote “fight club”, a cult classic from the late 90s: “Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need, and the things you own, end up being yours”. In the world of uncertainty in which we currently live, short-term thinking is more convenient since the benefits of investing do not exist in the present.
Bitcoin: a new hope
Many Bitcoiners, myself included, 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 low time preference and encourages you to forgo instant gratification and look to the future. Having a low time preference results in savings, results in thinking before you do, and considering the consequences of your choices. This mindset is essential for long-term financial stability and growth, and Bitcoin encourages this behavior by its very nature.
First of all, Bitcoin’s limited supply of 21 million coins means that scarcity is a built-in feature. This scarcity protects value over time. And it creates a strong incentive for you to save your coins instead of spending them.
This mindset can be applied to all aspects of your finances, transform your life, and help you break the hamster wheel by saying no to a 30-year mortgage, cutting your credit cards in half, or stopping “saving” your money in your bank account.
Bitcoin is more than just speculation
Price volatility is a big problem for curious Bitcoin newbies.
“How can Bitcoin be a safe option for my money, if the price falls every time?”
But price volatility is another way Bitcoin changes its time preference. Yes, short-term negative price movements can be significant, but it has shown strong long-term growth. This has encouraged many to view Bitcoin as a long-term investment, rather than a short-term speculative asset.
I have previously established that Europeans no longer trust the financial system. Bitcoiners will tell you that Bitcoin fixes this too. It is decentralized and operates independently of traditional banking systems, putting custody of your money back into your own hands. Bitcoin will change the world, but before it does, it will change the way everyone thinks about money. Help everyone build long-term financial stability, freedom, and security.
This is a guest post by Imo Babics. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
