The future of DeFi is on TikTok

In July 2021, TikTok achieved three billion downloads. The social network has more than one billion monthly active users. And, in the US, TikTok is now more popular with Gen Z than Instagram.

Over the past six months, Bitcoin (BTC) has seen a more than 70% drop 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, more people need to embrace it. The aforementioned volatility (as well as cryptocurrency cynicism in general) discourages many investors. Fortunately, members of Generation Z are far from your typical investors.

Digital knowledge and financial literacy

Finance on TikTok has become so popular that it has its own portmanteau. Dubbed FinTok, finance-related content has seen a meteoric rise alongside the social network itself. Last year, the #Crypto hashtag blew up, garnering 1.9 billion videos. Uploads with the hashtag #NFT increased by a mind-boggling 93,000% (also fueled by the general boom in NFT interest). Additionally, videos with the hashtag #StockTok garnered 1.4 billion views.

The glut of money management videos isn’t limited to the crypto market. Last year, the hashtag #PersonalFinance racked up more than 4.4 billion views, with content ranging from taxes and budgeting to savings and debt. Considered in the context of TikTok’s core users, Generation Z, it shows that today’s youth have a healthy appetite for financial information. They just want to consume it to the soundtrack of a catchy pop song and a viral dance.

Related: Throw your boring apes in the trash

Young adults are also leading the adoption of digital assets. According to CNBC’s “Invest in You” survey, 18-34 year olds accounted for 15% of cryptocurrency investments, compared to 11% of 35-64 year olds and a tiny 4 % for over 65 years. The problem is that a sizable segment of this 18-34 demographic sees crypto as a short-term investment: 21% of 18-34 year olds only see it as a 12-month strategy.

15% of 18-34 year olds say they own cryptocurrency. Source: CNBC

It’s no surprise that Gen Z is not only embracing cryptocurrency, but also educating itself about finance. According to Credit Suisse’s Yearbook of Global Investment Returns, Gen Z will earn a third less from traditional investments in stocks and bonds than past generations.

Bank of America’s “OK Zoomer” research report revealed that the COVID-19 pandemic will affect the professional and financial future of Generation Z in the same way that the Great Recession affected Millennials. So while most of Gen Z don’t have a lot of money to invest in crypto right now, they might in the future, especially if they’re as financially savvy and investment-driven as the data suggests. And this is where the DeFi opportunity lies.

Build trust in digital assets through transparent marketing

For the future and health of the digital asset market, DeFi companies need to engage the right audiences in specific ways that target these demographics.

Similar to how DeFi promises to democratize finance, social media platforms like TikTok have the potential to democratize the investment process. What was once a closed community accessible only to Wall Street bankers and qualified hedge fund managers is now open to everyone.

But if DeFi wants to take advantage of the opportunities available through the hottest social media platform, it will need to improve its marketing. This means clear and concise short videos that are tailored to the target audience, making crypto not only accessible, but also fun, while being transparent about the risks inherent in investing.

Related: The Feds are coming for the metaverse: from Axie Infinity to Bored Apes

Short videos play well on TikTok. But mainly, they are top-line activities. This is not necessarily a bad thing. Brands can warm up to the Gen Z audience now so that in a few years, when they have the money to invest, they are potential customers ready to convert.

It is this converting content that is needed. Crypto companies need to build audience trust for years to come. Not a mean feat considering the turbulence and bad press the bear market has been experiencing lately.

DeFi companies need to be transparent, distinguish themselves from TradFi brands, and figure out what forms of video content will build long-term trusting relationships with the younger generation. If crypto companies learn to speak their language today, tomorrow could be bright for bitcoin and other digital assets.

Zac Colbert he’s a digital marketer by day and a freelance writer by night. Covering digital culture since 2007.

This article is for general information purposes and is not intended and should not be taken 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.

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