Tech Investing

Looking Beyond “Bitcoin Day”

Last Tuesday was a day many crypto investors have long forecast and waited for…

It was “Bitcoin Day.”

It was the day El Salvador officially became the first country to accept Bitcoin as legal tender.

Now, I’ve stressed that this is a small but significant first step toward cryptocurrencies, hopefully, seeing widespread adoption. El Salvador was the first of many countries to do this. (I discussed this in Friday’s YouTube video.)

But larger cryptocurrency volatility is not what I want to focus on today. This topic too often becomes all that investors and media focus on.

Today, I want to highlight a trend more important than El Salvador… and one that’s more important than any single country’s recognition of crypto as official legal tender.

Because Bitcoin, Dogecoin, Ethereum and other digital currencies are already being used for transactions.

The $460 Million Pizzas

On May 22, 2010, Laszlo Hanyecz paid 10,000 Bitcoin to have two Papa John’s (Nasdaq: PZZA) pizzas delivered to his house.

At the time, those 10,000 Bitcoin were valued at $41.

And the Florida man became the first person ever to use Bitcoin for a commercial transaction.

This moment is celebrated every year as “Bitcoin Pizza Day.” And on each anniversary, we like to point out what those 10,000 Bitcoin would be worth today: $460 million.

So those two pizzas are arguably the most expensive pizzas in history.

But what’s often glossed over here is how much has changed.

Hanyecz posted his offer of 10,000 Bitcoin in exchange for someone delivering two large Papa John’s pizzas on the Bitcoin.org forum on May 18, 2010. It took four days before an individual, Jeremy Sturdivant, took him up on the offer.

And at the time, with Bitcoin trading at a minuscule $0.004, many thought Sturdivant got the raw end of the deal. Many thought that he delivered the pizzas for free.

In reality, Sturdivant sold those 10,000 Bitcoin for $400 a couple of months later – a nearly 1,000% return.

Of course, he would have been sitting on hundreds of millions of dollars today if he’d held them.

But that merely demonstrates how much has changed for digital currencies over the past decade. However, more has changed than just prices…

The Real Generational Divide

Whenever the topic of cryptocurrencies is broached, there often appears to be a generational divide in how it’s perceived.

A lot of time is spent on how millennials, baby boomers and Gen Z are involved in these culture wars.

And more often than not, it’s older investors – the likes of John Paulson, Sam Zell, Carl Icahn, Warren Buffett, etc. – who love to take the mic and slam cryptocurrencies.

But Gen Xers, millennials and Gen Z are much more open to the disrupter.

I like to bring up E.M. Rogers’ “Diffusion of Innovation” theory when I talk about new trends and technologies. The theory is one of the oldest in the social sciences, and it breaks down how an innovation moves from the fringes to the mainstream, gaining market share along the way.

Bitcoin is making the trek from early adopters to the early majority. And this is where investors need to pay attention.

A 2020 survey found that 36% of small and medium enterprises were accepting Bitcoin and other cryptos.

On top of that, 59% of those companies had purchased cryptocurrencies for their own use.

But digging further into the data, we can see very clear trends harking back to that generational divide.

First, 47% of the companies accepting cryptocurrencies had been around for five years or less. That is compared with the mere 21% of companies older than two decades accepting cryptocurrencies.

Next, there are scores of major companies – like AT&T (NYSE: T), Burger King, KFC, Microsoft (Nasdaq: MSFT), Overstock (Nasdaq: OSTK), Pizza Hut, Subway and Virgin Galactic (NYSE: SPCE) – that gladly accept Bitcoin.

And this list will just get longer.

In my opinion, that’s far more important than any country officially recognizing cryptocurrencies as official tender.

There’s also a very straightforward reason all of these companies are accepting cryptos.

The fact is 49% of millennials own cryptocurrencies – as do 38% of Gen X and 13% of Gen Z. The only reason the Gen Z percentage is so small is because the oldest members of this generation are 24 years old. They’re at the dawn of their entrance into the larger economy.

But companies are realizing that more than half of the people in these younger generations are likely to purchase products and services with cryptocurrencies.

The percentage of baby boomers who own cryptocurrencies is in the low single digits.

This is the real generational divide, and it’s why so many have a hard time seeing what’s unfolding.

Cryptos are making true inroads into being mainstream – and they already have among certain generations.

It all began with Hanyecz and Sturdivant and two Papa John’s pizzas. And now you can buy a flight to space with Bitcoin.

This is no longer an innovation on the fringes. And that’s what makes cryptocurrencies such an attractive investment for years to come.

Here’s to high returns,

Matthew

P.S. Check out my other articles on digital currencies here.

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