The lure of quick money has always encouraged young people to invest in risky assets. For Gen Z, it is the volatility – and the decentralized nature – of digital assets such as cryptocurrency and NFTs that are attractive. But they are not regulated, meaning there is little investor protection.
“All my friends were talking about” [cryptocurrency] so one day I decided why not go for it and see if I could make some money,” says 20-year-old Paxton See Tow.
All he needed was his phone and trading assets worth thousands of dollars was just a click away.
Generation Z – also known as Zoomers – is the age group born between the mid 90s and early 2000s. Growing up online, playing games and meeting friends virtually, the transition is natural.
Cryptocurrencies are digital currencies while a “non-fungible token” (NFT) is a means of owning an original digital image presented as the digital answer to collectibles.
Just over a year ago, Paxton bought 1,000 Singapore dollars ($743; £739) worth of Bitcoin – one of the most popular cryptocurrencies – which immediately gave him a 10% profit. He decided to quadruple his portfolio. But then the price dropped.
“There’s always the saying ‘buy low, sell high’, but I’ve done the opposite. I let my emotions take over,” he says.
He had lost a thousand dollars, in addition to all the money he had invested, before he could withdraw his money and redefine his strategy.
For another older trader, Kelvin Kong, the loss was much greater. After making six figures in 2017, he lost more than half a million dollars the following year.
“I’ve lost everything,” he says. “I thought I was the king of commerce and my head got really big, so I thought nothing could bring me down and I kept buying,” he says.
In the end, he only had a few hundred dollars left in his bank account.
“I think I almost went into depression. I had suicidal thoughts.”
He is concerned about the rise of crypto and NFT trading among young people.
“A lot of them will end up losing money,” he adds.
But the cautionary tales of people losing huge sums of money don’t seem to deter young traders.
For many, the first foray into digital assets is through “play-to-earn games” that reward players with NFTs and cryptocurrencies that can then be used in-game or exchanged for new ones.
“All children want to make money by playing games,” said a 23-year-old trader in Malaysia who goes by the name YellowPanther. “It’s my generation’s dream.”
A month after he started trading NFTs last August, he decided to quit his job as a marketing executive to trade them full time.
“The day job was very time consuming – eight to nine hours a day – and the pay was quite low. I saw a great opportunity in the [NFT] space and I took the plunge,” he says.
YellowPanther is now partnering with 29-year-old Resh Chandran, who offers training in conventional stocks, cryptocurrency and NFT trading in Singapore.
Using Axie Infinity, one of the most popular play-to-earn games, Mr. Chandran investors are introduced to mostly Filipino players who play on their behalf for a fee.
But he warns that space is a “wild Wild West”.
The pandemic has only accelerated this growing trend of young people trading cryptos and NFTs.
“There was an extreme degree of volatility in the market, so when you have volatility, you also have opportunities in the market,” said INSEAD finance professor Lily Fang.
“The young people were at home and it’s almost a gamification of the trade. All these factors created a perfect condition for take-off.”
For many aspiring young traders, advice is readily available on platforms such as YouTube, Twitter, and Reddit.
Brian Jung, 23, has a million subscribers on YouTube, but compared to other crypto influencers, he is known to talk more cautiously about risks.
“I really have to make sure I’m careful about what I say to my audience because the last thing I want is for people to get hurt by these kinds of videos,” he told the BBC.
Brian’s family emigrated from South Korea to the United States and he believes his background influences the way he invests and talks about money.
“Our family has always struggled financially, so I still have that frugal mentality,” he says.
“My mom still works with the US Postal Service and my dad works in a warehouse, so I know an hour of their time still equals a dollar value. I see what it’s worth, whatever income I get now.”
Gaining financial freedom is also what lured 22-year-old Jowella Lim, a rare trader, to the crypto world.
But beyond the opportunities to make money, Jowella likes to be at the forefront of this new technology.
As governments around the world try to regulate the industry, she believes they will help legitimize crypto and NFTs.
“Regulators ultimately have to compromise and realize that this is a technology they can’t ignore, especially when it’s constantly creeping into this society,” she adds.
Addiction or passion?
In addition to financial losses, addiction is another major danger.
“The crypto market never sleeps, so people are literally being sucked into it,” Chamdran says.
Andy Leach, an addiction therapist in Singapore, says he has seen a jump in young people – especially men – who become addicted to the thrill of crypto and NFT trading.
“You have the opportunity to watch Bitcoin go up and down and basically that process, that rollercoaster ride, the ups, the downs, it’s available 24/7 on your phone,” he says.
Although they have lost money in the crypto market in the past, Paxton and Kelvin are back after further investigation.
I asked Kelvin if he thought he was addicted. “You can say it like this,” he laughs. “But I would call it passion.”