In July 2021, TikTok reached three billion downloads. The social network has more than a billion active monthly users. And in the US, TikTok is now more popular than Instagram among Generation Z.
Over the past six months, Bitcoin (BTC) has fallen more than 70% from its all-time high north of $69,000 in 2021. Market volatility is to be expected. But if decentralized finance (DeFi) is to have a future, it needs to be embraced by more people. The volatility mentioned above (as well as cynicism towards cryptocurrencies in general) turns many investors off. Thankfully, Gen Z members are a far cry from typical investors.
Digitally savvy and financially savvy
Finance on TikTok has become so popular that it has its own portmanteau. Under the FinTok name, finance-related content has experienced a meteoric rise along with the social network itself. Last year, the #crypto hashtag exploded and received 1.9 billion videos. Uploads tagged #NFT increased by a whopping 93,000% (further fueled by the general boom in NFT interest). And videos tagged #StockTok garnered 1.4 billion views.
The flood of money management videos is not limited to the crypto market. In the past year, the hashtag #PersonalFinance has been viewed more than 4.4 billion times, with content covering everything from taxes and budgeting to savings and debt. Put in the context of TikTok’s main users – Gen Z – today’s youth has a healthy appetite for financial information. They just want to consume it, accompanied by a catchy pop song and a viral dance.
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Young adults are also leading the way in adopting digital assets. According to CNBC’s Invest in You poll, 18-34 year olds accounted for 15% of cryptocurrency investments, compared to 11% for 35-64 year olds and a meager 4% for the 65+ age group. The problem is that a significant portion of 18-34 year olds view crypto as a short-term investment: 21% of 18-34 year olds only see it as a 12-month strategy.
It’s no surprise that Generation Z is not only embracing cryptocurrencies but also learning about finance. According to Credit Suisse’s Global Investment Returns Yearbook, Generation Z will earn a third less than previous generations from traditional stock and bond investments.
Bank of America’s December research report, OK Zoomer, revealed that the COVID-19 pandemic will impact Gen Z’s professional and financial future in much the same way that the Great Recession impacted Millennials. Although the majority of Gen Z don’t currently have a lot of money to invest in crypto, they could do so in the future, especially if they are as financially savvy and investment-oriented as the data suggests. And here lies the opportunity for DeFi.
Build trust in digital assets through transparent marketing
For the future and health of the digital asset market, DeFi firms need to target the right audiences in specific ways that cater to those demographics.
Much like DeFi promises to democratize finance, social media platforms like TikTok have the potential to democratize the investment process. What was once a gated community open only to Wall Street bankers and qualified hedge fund managers is now open to everyone.
But if DeFi is to capitalize on the opportunities available across the trendiest social media platform, marketing needs to get better. That means clear and concise short videos, tailored to the target audience, making crypto not only accessible but fun while also being transparent about the risks involved in investing.
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Short videos play well on TikTok. But it’s mostly top-of-the-funnel activity. That’s not necessarily a bad thing. Brands can now warm up Gen Z audiences so that in a couple of years, if they have the money to invest, they’ll be knowledgeable leads ready to be converted.
It is this conversion content that is needed. Crypto companies need to build trust with audiences over the next few years. No small feat given the turmoil and bad press the bear market has seen of late.
DeFi firms need to remain transparent, differentiate themselves from TradFi brands, and identify what forms of video content build long-term, trusting relationships with the younger generation. If crypto companies learn to speak their language today, the future could be bright for Bitcoin and other digital assets.
Zac Colbert is a digital marketer by day and a freelance writer by night. He has been reporting on digital culture since 2007.
This article is for general informational purposes and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.