The entirety of the cryptocurrency market has been gaining popularity over the past few years. Cryptocurrency continues to make the headlines every other day. The global crypto market cap as of today is $2.12 trillion, according to CoinMarketCap.
The cryptocurrency market in India grew from $923 million in April 2020 to a staggering $6.6 billion in May 2021. This increase in value was observed especially during December 2020 when Bitcoin drastically started to jump at weekly gaps with an average change of 50 percent per month.
From being referred to as the next gold rush in the world of finance and having price hikes and drops, there is plenty of hype around digital investments. The value of most of these digital tokens has risen incredibly high. Moreover, the search volumes for all investing methods related to cryptocurrency has been increasing simultaneously.
Without a doubt, India is the second-largest adopter of cryptocurrency. According to blockchain data platform Chainalysis, over 1.5 crore Indians are currently investing in cryptocurrency. There has also been a surge in the cryptocurrency ecosystem in India with an increase in investments from $923 million in 2020 to $6.6 billion (Rs. 49,189 crore) in May 2021.
From the total of 1.5 Crore Indians, the GenZ population (includes a typical age group of 19 years to 30 years of age) is the prime population that is most enthusiastic about investing in the blockchain ecosystem. At the very forefront of investing in cryptocurrencies are GenZs and millennials. Compared to the large proportion of investors in the adult and older age group, the proportion of crypto investors has been high among the millennial and Gen Z generations. There are plenty of reasons for this trend being observed in the space of cryptocurrencies. Let us explore a few of them.
Why is the Young Population Dominating the Cryptocurrency World?
For starters, millennials have developed a great deal of scepticism towards banks and financial institutions. As a result, they do not prefer investing in standard financial instruments such as a PF, bank savings, etc. Moreover, the disengagement that millennials feel towards the central authorities and the government as a whole has also led to a certain amount of resistance when it comes to investing in these traditional financial instruments.
In addition, the long-term nature of investments with regard to cryptocurrencies is another attractive factor for millennials. Moreover, the thrill behind the volatility that cryptocurrencies involve is another driving factor for millennials. These tokens are definitely volatile.
Finally, the availability of digital technology and digital sources of information enables millennials to stay more aware of the cryptocurrency space and gain more insights about the same. In contrast, the older generation, while having access now, did not have the same level of access during their initial stages of investment. Moreover, the field of cryptocurrency has been booming only quite recently. As a result, the older generation of investors faces resistance when it comes to investing in cryptocurrencies.
Effect on the Rapid Growth of the Indian Economy
With an increase in this trend of millennials investing in cryptocurrencies, the economic landscape of India is expected to improve. With a large per cent of Indian millennial investors in this space, it can revolutionize the Indian economy. Moreover, as cryptocurrencies are backed by blockchain technology and India houses nearly 300 cryptocurrency companies, it has a higher potential to become a tech-driven country which can ultimately contribute to an improved economic condition of the country.
While most of these cryptocurrency aspects can sometimes be complicated to understand for novice investors, it can help to begin by researching the space and understanding the basic terminologies involved. This can help improve the scope of further research and gain a deeper understanding of this space. It is always important to gain an understanding of the space before investing in the same. This helps mitigate risks and increase the chances of staying profitable in the long haul.
Cryptocurrency is a hot space that has been gaining a lot of attention in the past few years. In this investing space, millennials have contributed to the majority of the market share, especially in India. Before investing in cryptocurrencies, it is important to gain a good understanding in order to stay profitable and avoid financial loss.
The author, Sandeep Nailwal, is Co-founder at Polygon (Matic network). The views expressed are personal
(Edited by : Anshul)
First Published: IST