This post was originally posted on Medium: https://medium.com/@jonkol/why-your-kids-are-comfortable-with-magic-internet-money-68deb5ea0289

Disclaimer: this piece is not intended to be an in-depth exploration of the topic at hand, rather a quick stream of thoughts that will hopefully stimulate broader discussion. I expect holes to be poked in my arguments, and have no illusions as to my ability to predict the course of future events.

In the cryptosphere, we like to spend some of our time thinking about the answer to the questions ‘When, where, and how will we see adoption of digital currencies?’, and when faced with these questions I often think back to Max Planck’s words (at times referred to as Planck’s Principle):

An important scientific innovation rarely makes its way by gradually winning over and converting its opponents: it rarely happens that Saul becomes Paul. What does happen is that its opponents gradually die out, and that the growing generation is familiarized with the ideas from the beginning: another instance of the fact that the future lies with the youth.(1)

— Max Planck, Scientific autobiography, 1950, p. 97

With respect to digital assets, I have seen numerous arguments about why and how entire swaths of the global population will eventually be brought into the fold and begin using digital currencies in their daily lives. It is my opinion that we will never see meaningful adoption with adult users in developed economies. I believe this is the case because these adults already have mental models around what constitutes money. As Planck said, ‘…it rarely happens that Saul becomes Paul’, in this case Saul (cryptocurrencies) is rarely going to become Paul (fiat currency) for those with well-established beliefs about what constitutes money.

For argument’s sake, let’s define an adult as an individual who is 40 years old or older. This is an arbitrary dividing line, and its sole purpose is to allow us to more easily think about age cohorts and their differences. I argue that it is difficult for adults who grew up in developed nations to see digital currencies as a viable form of money since they don’t yet provide tangible value over or akin to fiat currency, as in the current state there are not economies built around digital currencies. What can an adult in Manhattan buy with Bitcoin that they can’t already buy with the USD they earn? Thus I conclude that to most adults in these economies digital currencies appear novel, and beyond some curiosity there is no perceived need to use them. Without a perceived need (as opposed to a want) to use digital currencies that is reinforced by the persistent use of these currencies, it is my opinion that these individuals will not form a belief around digital currencies being a valid form of money. In sharp contrast to this experience stands the experience of the children growing up in these developed economies.

To the child who grew up in a developed economy with an iPad in hand, and a gaming console in their living room, these digital currencies are every bit “money” as the greenbacks in their parents’ pockets. Why is that? First, I believe these children did not form their beliefs around money in the same way their parents did. Second, these children grew up in a world where they exchanged fiat for CandyCrush credits, Starwars Battlefront lootboxes, and Fortnite V-Bucks to be spent in robust in-game stores on intangible digital goods. Whereas for their parents this may appear as the frivolous spending of a child, the children often view it as a valid exchange for a valuable good. These children have a perceived need to use digital currencies which is being continually reinforced by their use of digital currencies to obtain what to them are valuable items. While these digital items may be intangible by the traditional meaning of the word, they provide very tangible value to the user. The repeated act of using digital currencies to obtain valued digital goods should eventually solidify the belief in these users that digital currencies are every bit as valid as money as fiat currencies.

Thus for the younger generation growing up in developed economies we need not turn Saul into Paul, as they’ve been living in a world where the two are effectively the same. While we in the cryptosphere want to flip the proverbial ‘adoption switch’ in the minds of millions what is far more likely to occur is that the older proponents opposing digital currencies as money will eventually ‘die-out’, and the growing generation will be familiarized with ideas about money from a fresh vantage point, one that allows them to believe something their parents could not.

Special thanks to Charlie Songhurst, Casey Caruso, Dan Held, Joe McCann and others who helped with this post.

(1) Planck, Max K. (1950). Scientific Autobiography and Other Papers. New York: Philosophical library.