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Who Wants to Be a Crypto Millionaire?


Who wants to be a millionaire?

For two decades, beginning in 1999, that was the name of one of the most popular TV game shows ever syndicated in the U.S. The show, an adaptation of one with British roots, saw a single contestant compete for the chance to win $1 million by answering a series of progressively harder multiple-choice questions read to them by a celebrity host.

The competition for getting a shot at that prize each time the show aired was reportedly intense – an initial cap of 100,000 to 200,000 hopefuls were whittled down to 300, who were further vetted until one person got a chance to take the hot seat. The odds were maybe a smidge better than the one in 14 million chance of winning the lottery, but still largely a crapshoot. Contestants knew that, but wanted the thrill and bragging rights of participating – and, of course, a shot at the million bucks.

Over the show’s 20-year run, most contestants didn’t go home empty-handed, but only 12 contestants, according to some reports, laid claim to the million-dollar prize.

Today’s version of “Who Wants to Be a Millionaire” includes Gen Zers and millennials playing a very different game – one that anyone can play.

People can play this game on their smartphones using a variety of apps, including common digital wallets and investment apps. The game sort of includes the famous “ask the audience” (rather than ask a friend) option that was one of the hallmarks of the namesake’s gameshow format.

According to a September 2021 study by Engine Insights, 59% of Gen Zs believe the way to become a millionaire is to invest in crypto. Almost half of millennials (46%) agree. Apps have turned their smartphones into the modern-day digital equivalent of slot machines, making it largely effortless to place bets on hundreds of crypto coins without knowing much about their intrinsic value beyond what others, including high-profile social influencers, say about them.

And that’s exactly who they turn to for advice. A Motley Fool study in July of 2021 reported that 91% of Gen Z investors believe that social media is more trustworthy than friends, family and traditional investing sites when making their investment decisions. YouTube, Reddit and TikTok were the three most popular social media sites they used to decide whether, when and how much to invest.

All in the hopes of hitting the jackpot, winning big, feeling the thrill, having the bragging rights. The odds are just as stacked against them as they are in any other game of chance – but with potentially dire consequences as they put real money into alt coins, many of which have no real fundamentals that drive their present and future value … aside from what other people just like them are doing.

When the Crowd Has No Wisdom

The story of the SQUID coin might be familiar. Its value – reportedly linked to the hit streaming show on Netflix, “Squid Games” – soared 2400% in value, only to plummet to zero in the space of a few hours.

Like Tulipmania in the 17th century, investors rushed to get in as its value soared for no obvious reason, and social media fanned the flames. One investor in Shanghai, who described himself as an experienced crypto investor, told CNBC that he invested his $28,000 life’s savings in the coin, only to lose it all. The only ones who apparently made any money on the coin were the anonymous SQUID coin developers, who are reportedly $3.4 million richer. The investors who lost it all have no recourse to recover their money.

So why would an experienced crypto investor – and many like him – put their entire life savings into SQUID, even as media outlets raised red flags?

Pure speculation. It seemed like a sure way to make a quick buck. It didn’t hurt that 89,000 other people were doing the same thing. A clear lack of wisdom in that crowd.

Over the course of three days in January of 2021, the value of a coin that started as a joke, Dogecoin, increased 216% in value as a result of an Elon Musk tweet.

That, among other things, drove a rush of new Robinhood accounts to buy it. According to Robinhood earnings reports, Doge accounted for more than 62% of Robinhood’s crypto-related transaction revenues in Q2, 34% in Q1 and 40% in Q3.

Dogecoin today – remarkably, perhaps – has a $30 billion market cap and is trading at $.22 a coin, down from a high of $.74 in May but up from $.002961 at its 52-week low. The year-to-date increase in Doge is an astounding 4,714.59%.

As I was checking its price on CoinDesk, there was a flashing advertisement promoting a $10 bonus for anyone opening an account at their exchange and buying some crypto.

Maybe I should, so that I can get in on the next big dog altcoin action.

Sadly for Doge, a new dog coin has emerged to muscle its way into top-dog position in the alt coin world, pardon the pun. Shib, short for Shibu Inu coin, is trading today at $.00004893 a coin, so it doesn’t take much of an investment to buy a ginormous amount of it. A hundred bucks would buy a couple of million.

And why wouldn’t everyone want to do that?

A recent analysis of the coin reports that anyone who invested $15 in August of 2020, when it was trading at $0.00000000051 a coin, would be a millionaire by now. But buyer beware. As one astute crypto analyst pointed out, it’s also quite possible that Shib’s meteoric rise in value could be followed by an equally sharp decline.

Want to know why there are more than 5,000 alt coins worldwide? Starting a coin is like building a casino, without the hassle of getting government permission and paying for the cement.

Investing in them is like gambling, playing the slots, buying a lottery ticket, hoping to hit the jackpot. Without any real understanding of what these coins do, why they are valuable or what’s the use case for any of them. Where the only fundamentals for making the investment are what other mostly amateur investors say on social media, and whether the price is up or down at the open or close.

It’s not like the real “Who Wants to Be a Millionaire,” because you don’t actually have to know anything, and most people don’t pretend they do.

Unfortunately, though, it’s often those who may be ill-equipped to lose who are drawn like moths to a flame to its allure. It’s one thing for someone with savings and a steady paycheck to speculate with a couple of hundred bucks in a couple of coins – to learn, have fun and see if they might even be the next crypto millionaire.

To gamble with money they can afford to lose.

It’s another thing when the fear of missing out drives those who read the crypto millionaire stories, misjudge the risks and follow the herd, sometimes right off the cliff.

Where’s Consumer Protection When You Need It?

PYMNTS’ own research on the U.S. consumer and crypto shows an appetite on the part of the consumer to “invest” in crypto. When the study was conducted in April of 2021, nearly 30 million U.S. consumers owned crypto then or had in the past, and nearly everyone had heard of it. Only 8% of the U.S. population was unfamiliar.

Sixty-two percent of those who owned or had owned it did so to make money speculate (oh, sorry, invest). Roughly a third – 32% – did so because of a fear of missing out.

Of those who didn’t own crypto – or didn’t yet – not understanding how it works and how it is taxed was the biggest inhibitor. Seventy-five percent of non-crypto owners said they need to know more before diving in.

According to PYMNTS research, those who own crypto are mostly male, mostly millennials – the group who, next to Gen Z, are the most likely to believe that crypto is the road to riches – and right away.

Also see: How Consumers Want to Use Crypto to Shop and Pay in 2021 And After

When the “Who Wants to Be a Millionaire” game show debuted in 1999, there were 7.1 millionaires and 49 billionaires living in the U.S.

In 2021, there are lots more of both. Today, roughly 22 million people living in the U.S. have both income and assets that put them in the millionaire class, and there are 724 billionaires. For those who are curious, you can even find a list of billionaires here.

Today, there are also many more paths to achieving millionaire status than being a master in history and pop culture trivia or having a friend you can call who is.

It has been reported that nearly two million (1.7 million to be precise) people living in the U.S. became millionaires in 2020 as a result of the increase in the value of their stock market portfolios and 401(k)s and the appreciation in the value of their homes. Most of those millionaires believe their portfolios will continue to produce strong, double-digit increases into 2022.

Sadly, the same study that found crypto is perceived as the shortest route to becoming a millionaire for Gen Zers and millennials also reported a 6% decline overall in consumers’ trust of stock investments and a 1% increase in their trust in crypto investments.

I’m sure these numbers ebb and flow with the performance of the market and the volatility – mostly when it goes up – of the value of bitcoin and other cryptos. It…

Read More: Who Wants to Be a Crypto Millionaire?

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