Attention Boomers: Investing in the Crypto-Adjacent Stock Market

Last week I was interviewed by CoinDesk. It was not the first time I have been asked about my thoughts on bitcoin and cryptocurrency during a media appearance, but this time I was struck by the question: “What is the difference between Baby Boomers and Gen Z regarding buying bitcoin?

I have thought a lot about this, as most of our clients are baby boomers. Since I did not want our clients to miss one of the greatest bull runs in history because of the generational divide, I sought other ways to participate without buying a bitcoin or Ethereum, or Dogecoin for that matter.

There are several reasons Baby Boomers are reticent to buy direct alternative currency. First, many will not disclose their credit card number on the plethora of websites that are selling alternative coins. Secondly, we are boomers — we are not used to the idea of buying something unregulated by banks. Boomers — incredibly — trust the Federal Reserve to print our dollars when we need them! And on that note, Janet Yellen had a few things to say recently, which only served to further spread fear among her generation.

"Boomers — incredibly — trust the Federal Reserve to print our dollars when we need them!" - Mish Schneider

Yellen said that Bitcoin has a carbon footprint the size of New Zealand. According to an article written by CoinDesk columnist Nic Carter, he pointed out that the electricity used for Bitcoin does not deprive others of their electricity usage. He cites how 8% of electricity is lost in transit or “line losses.” He goes on to say that China, the epicenter of Bitcoin mining, installed hydro capacity, which is double what its power grid can support, allowing waste energy to be used to mine Bitcoin. In a non-Bitcoin world, the excess energy from overbuilding hydro capacity would have either been used to smelt aluminum or simply been wasted. He also points out that the CO2 emissions are not the same for Bitcoin as they are for traditional energy usage. Using hydropower is relatively green.

Yellen’s second point is about the inefficiency of Bitcoin use in financial transactions. While this is true to a degree, this past week, Yahoo Finance published an article that reported “Dubai’s IBC Groupe Pledges 100,000 Bitcoin, the Largest Bitcoin Investment in History, to Support Setup of the Miami Blockchain Strategy Foundation.”

This group intends to make Miami, Florida the hub of blockchain technology in the USA. Their goal is to aide Miami’s vision of integrating Bitcoin in everyday transactions.

Yellen’s last statement is about the illicit financing that Bitcoin is used for. I get it. Yet in some ways I find that statement incredibly naïve. After all, money laundering for illicit gains goes way, way back in history.

Baby Boomers also hear about Bill Gates versus Elon Musk. Gates said that “Unless you’re the world’s richest person, you shouldn’t be buying Bitcoin.”

Musk has repeatedly boosted Bitcoin on Twitter [TWTR] and other platforms. Tesla [TSLA] bought $1.5 billion in Bitcoin a few weeks back. Most Baby Boomers will agree that this debate between the mega rich is one they prefer to observe rather than to become a statistic in.

But perhaps my favorite reason why Boomers are reluctant Bitcoin buyers is a pragmatic one. Bitcoin trades 24 hours a day. We Boomers need our sleep!

To the point of the recent and growing institutional adoption of Bitcoin, JPM strategists Joyce Chang and Amy Ho stated, “In a multi-asset portfolio, investors can likely add up to 1% of their allocation to cryptocurrencies in order to achieve any efficiency gain in the overall risk-adjusted returns of the portfolio.”

"investors can likely add up to 1% of their allocation to cryptocurrencies in order to achieve any efficiency gain" - Joyce Chang and Amy Ho, JPM

So, what is an alternative way for the silver generation to feel good about what Gen Z dabbles in so fearlessly?

We like the Blockchain companies and have already made a lot of money in the Grayscale Bitcoin Trust [GBTC], which holds Bitcoin.

With this recent correction in the overall stock market and Bitcoin, the opportunities to buy credit card companies such as MasterCard [MA] and American Express [AXP] plus Blockchain companies like Riot Blockchain [RIOT] and MicroStrategy [MSTR] are worth looking into.

Another way to invest is in smaller banks like Barclays [BCS] or Santander [SAN]. And then there are companies using Blockchain technology such as Canaan Creative [CAN], which specialises in Blockchain servers for the use of Bitcoin Mining.

So Boomers, get your ZZZs while earning your BBBs! Just make sure you understand how much risk you are taking and where to take your loss if wrong.