European millennials have been dealt a bad hand, but Bitcoin will show them the path to financial freedom.

This is an opinion editorial by Imo Babics, CMO of Relai, a Swiss-based, bitcoin-only investment app.

Europeans are not taking advantage of their purchasing power and it’s hurting their pockets. It is estimated that the financial wealth of Europeans would be €1.2 trillion higher if savers had invested their money instead of keeping it in the bank.

Yes, you’ve read that right — keeping money in the bank. Keeping cash in bank accounts for emergencies is still the most common way Europeans save their money, despite high inflation. And only 17% of Europeans reported that they owned bitcoin in 2021. Data suggests that the number is similar when it comes to investing in stocks, with only 15% of Germans doing so (rookie numbers compared to 55% of Americans).

The Struggle Is Real

A lack of financial literacy and self doubt about their investment ability are apparent hurdles, but there are several other reasons why Europeans aren’t being smarter with their money:

  • Lack of trust in the financial system: European millennials came of age during the great recession of 2008. Many of them have experienced firsthand their parents losing employment, their homes or their life savings. 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 are not to be trusted (rightly so) and that the system itself is rigged.
  • Debt: Owning a home is a symbol of stability and security. With soaring real estate prices in Europe, owning a home often comes with a 30-year mortgage. Add to that a car lease, credit cards, and, depending on the country, student loans and all of this debt can make it difficult for young people to save and invest, as they focus on paying off their debts first.
  • Job (in)security: Millennials have only ever known a challenging job market. Most of them entered the workforce after the 2008 financial crisis, being faced with a lack of opportunities and stagnating salaries. Just as things started to turn for the better, their careers were dealt another blow 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 literacy: Many Europeans lack the basic financial knowledge and skills needed to manage their finances more intelligently. I will not get into the debate about whether the lack of financial education in the European public school system is a bug or a feature, but we are not being taught about money. Our parents were not taught about money, and this ignorance is being passed on from one generation to the next. Only a quarter of millennials in a PwC study demonstrated adequate financial knowledge. They feel 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 more than the future and sacrificing long-term benefits for short-term gains, is not a new phenomenon. To 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 owning you.” In the world of uncertainty that we currently live in, short-term thinking is more convenient as the benefits of investing don’t 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 Bitcoin’s strengths, in my opinion, is that it promotes a low time preference, and encourages you to give up instant gratification and look to the future instead. Having a low time preference results in saving, it results in thinking before doing and considering the consequences of your choices. This mindset is essential for long-term financial stability and growth, and Bitcoin fosters this behavior by its very nature. 

First and foremost, Bitcoin’s limited supply of 21 million coins means that scarcity is a built-in feature. This scarcity protects value across time. And it creates a strong incentive for you to hold onto your coins rather than spend them.

This mindset can be applied to every aspect of your finances, transform your life and help you break the hamster wheel by saying no to a 30-year-long 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 Bitcoin-curious newbies.

“How can bitcoin be a safe option for my money, if the price crashes every time?”

But price volatility is another way that Bitcoin changes your time preference. Yes, the short-term negative price movements can be significant, but it has shown strong growth over the long term. This has encouraged many to view Bitcoin as a long-term investment, rather than a short-term speculative asset.

I’ve established above that Europeans don’t trust the financial system anymore. Bitcoiners will tell you that Bitcoin fixes this, too. It’s decentralized, and it operates independently of traditional banking systems, putting the custody of your money back in your own hands. Bitcoin will change the world, but before it does, it will change how everyone thinks about money. Helping everyone build long-term financial stability, freedom and security.

This is a guest post by Imo Babics. Opinions expressed are entirely his own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.


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