Matt Luongo is the CEO of Thesis, a cryptocurrency venture production studio. Thesis’ first two products are Fold, a consumer payment app, and Keep, a privacy layer for public blockchains. He’s also a contributor to tBTC, which lets bitcoin holders access DeFi on Ethereum.
Millennials are now the largest generation in the U.S. workforce. As we increasingly drive the world’s major economic, technological and social trends, millennials are beginning to reshape industries from entertainment to travel. It’s no surprise: From careers to fashion to music, millennials (now aged 24 to 39) are remaking the world in our own image.
A common thread in this millennial disruption is a desire for autonomy, self-sufficiency and personalization. Across the board, millennials are rejecting one-size-fits-all solutions in media, fashion, food and career choices. Studies show millennials are demanding a personalized, seamless experience from businesses and retailers. We expect personal treatment – and decision sharing – in our medical care, and we want the businesses and products we use to align with ideas and causes we support. Gone are the days of the company man; most millennials are happy to change jobs if they find an opportunity that offers room for personal growth.
This desire for autonomy and granular choice extends into the world of finance. For most of the past hundred years, retail finance was dominated by a small number of regional, and later national, institutions. No more: 71% of millennials would change banks based on the quality of an app, and a full third of us say we won’t need a bank at all in the future.
Instead, we are looking for new forms of finance that we can tailor to our individual needs. We want products that give us, rather than brokers and middlemen, the ultimate say in how we handle our money. With governments and entire economies buckling under the stress of a global pandemic, we are demanding even more self-sufficiency in the financial sphere, and using revolutionary technologies such as cryptocurrencies to get it.
Millennial finance is premised on the ability of new technologies to fundamentally and permanently reshape how the money system operates in both form and function. This isn’t just theory. It’s happening now, and millennials are leading the charge. The success of platforms like Robinhood, Acorns and Wealthfront demonstrates the potency of this movement and underscores millennials' thirst for options beyond the traditional banks and brokerage houses.
But these apps are only the tip of the iceberg. Their fundamental innovation is around user experience; they ultimately use the same financial infrastructure that legacy banks and wealth managers do. Millennial finance has more in store – and cryptocurrencies will be key. Rather than building a better train to run over the same old rails, crypto lets us build new, open, peer-to-peer rails.
No more middlemen
Our generation is the driving force behind a new financial system, based on crypto, that’s already cropping up and expanding in ways that will soon be impossible to ignore. Statistics bear this out: 18% of millennials have bitcoin, and 42% are planning to buy it in the next five years. Some have suggested crypto is already an important driver for growth for the entire fintech space.
Millennials’ gravitation toward crypto is not surprising. From our perspective, it can offer solutions to many of the shortcomings of traditional finance. This generation has extremely low levels of trust in institutions, including regulators and banks; cryptocurrency minimizes the need for trust. We are globalists; crypto crosses borders seamlessly. We reject the corruption and insider deals of older generations; code cannot be bribed.
Most important, crypto is built on a foundation of peer-to-peer self sufficiency. With nothing more than a wallet and a private key, we can have unlimited access to a growing universe of financial tools. Some of these parallel the functions of the traditional economy; others will no doubt create entirely new concepts around money and wealth. The space is still nascent, and crypto is a long way from displacing the J.P. Morgans of the world. Nonetheless, the past year has seen a surge in activity that indicates the future could be nearer than it seems.
Millennials are using crypto to drive the growth of decentralized finance, or DeFi. Platforms including Maker DAO and Compound have gained significant traction in the past year by letting people earn interest on savings and take out loans through tools such as collateralized debt positions (CDPs). Crucially, access to such applications is decentralized and trustless, not controlled by middlemen.
Millennial finance is changing venture capital too. The success of Seedinvest and Republic shows millennials’ appetite to invest in privately held companies. And a truly novel concept – the decentralized autonomous organization, or DAO – is showing signs that it is ready for prime time taking flight on Ethereum The original DAO famously crashed and burned in 2016. But since then, DAOs have matured impressively and now have the potential to become the new venture firms, allowing people to join permissionlessly and get returns on their investments. Just last month OpenLaw launched the first “legal DAO” for distributed VC investments.
Millennials’ eagerness to disrupt finance prompted CNBC to declare that “fintech may be one of the few industries looking back fondly at what happened to Wall Street after 2008.” But this is just the beginning. Millennials, history’s first digital-native generation, are poised to drive epochal change with crypto-powered fintech in the form of decentralized finance. By combining real financial competence with technological innovation and a radically different view of how finance should work, we will reform the system from bottom to top.
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