THE DR SMOOD EFFECT
Millennials Are Leading The Way To A Cashless Society
By Alan McGlade | seriesOne.com
Last week I dropped into the Wynwood section of Miami, the home of warehouses turned galleries, an eclectic mix of bars and lounges, and a prime destination for Miami’s Millennials. It also has a Dr. Smood which is known for its organic detox juices.
I took my jacket off in my car, pulled my wallet out of the inside pocket and grabbed a wad of cash. It’s too hot to wear a jacket in the July sun. I went into Dr. Smood, selected a beet, carrot and ginger combo and pulled out a roll of bills to pay. The young woman behind the counter looked at my hand clutching a twenty, frowned at my odd behavior and gently reprimanded me, “sorry sir, but you can’t use cash here.”
At first blush this may seem like a strange business move, but the rest of the line moved along smoothly with customers seamlessly conducting transactions with their phones and credit cards. In fact, Millennials rarely carry much cash, if any at all. As a result, Millennial credit card expenditures are growing faster than any previous generation. And it’s not just credit cards. Millennials are leading the way in digital cash adoption in general and they are concentrated in the countries where digital cash usage is the highest — the US, China and India.
This will have an enormous impact on how commerce is conducted in the future. Thomas Lee, of Fundstrat Global Advisors, provided excellent insight on this subject during a recent Sharespost Webcast.
According to Thomas, a generational shift is coming and it is coming fast. The Millennial population has increased to almost 20 million more than the Boomer generation that has been dominant for so long. Globally there are 2.5 billion people classified as Millennials and they will be around even longer. They are projected to have lifespans 10% longer than Boomers.
It turns out that Millennials are really prosperous. According to First Data they will control seven trillion dollars in assets by 2020. That is a third of all liquid assets. If they stay on pace, by 2029 the Millennial cohort will be the largest single controller of disposable income in the US.
So what Millennials think and do will transform the financial landscape. Many came of age during the financial meltdown of 2008 in which irresponsible banks were the villains. They knew someone who lost their house or job, or they came into the workforce when there were no jobs to be found. As a result, 92% of Millennials don’t trust banks at all. In a recent Facebook survey, 92% of Millennials said they would rather go to the dentist than go to a bank and one third said they don’t anticipate even using a bank in twenty years.
This should have enormous ramifications for crypto-currencies which are still in their infancy. There is a dual benefit: it is a digital transaction which is the preferred method of commerce for Millennials and it circumvents the centralized banking system we have today.
Right now, there are only about $200 billion in Crypto assets. At this level, every dollar that moves from FIAT into crypto will have a 20X impact on Crypto valuation. Imagine that Millennials decide to allocate 10% of their seven trillion in assets to crypto currencies. That would add 700 billion to the existing crypto pool which assuming a 20 times valuation bump, would increase crypto value by 14 trillion dollars. Many believe it is a given that categories like real estate and equities will move to the blockchain so the flow from FIAT to Crypto could potentially be a lot higher.
50 million crypto wallets exist today and that number is poised to grow exponentially as Millennials adopt crypto just as they have previous forms of digital commerce. So, save your paper twenty-dollar bills. Someday soon you may be able to sell your collection on an episode of Antique Road Show.
