The future of DeFi is on TikTok

Published at: Oct. 3, 2022

In July 2021, TikTok hit three billion downloads. The social network boasts more than one billion active monthly users. And, in the United States, TikTok is now more popular with Generation Z than Instagram.

Over the last six months, Bitcoin (BTC) has seen a drop of 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 looking to have a future, it needs to be embraced by more people. The aforementioned volatility (as well as the cynicism of cryptocurrency in general) puts many investors off. Fortunately, members of Generation Z are far from your typical investors.

Digitally savvy and financially literate

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

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

Young adults are also leading digital asset adoption. According to the "Invest in You" survey by CNBC, 18-34-year-olds accounted for 15% of cryptocurrency investments, compared to 11% for 35-64-year-olds and a measly 4% for 65+. The problem is, a considerable segment of that 18-34 year old demographic sees crypto as a short-term investment: 21% of 18-34-year-olds only regard it as a 12-month strategy.

It’s no surprise that Gen Z is not only embracing cryptocurrency but also educating themselves regarding finance. According to Credit Suisse’s global investment returns yearbook, Gen Z will earn a third less on traditional stock and bond investments than past generations.

December’s “OK Zoomer” research report from Bank of America revealed that the COVID-19 pandemic will hit Generation Z’s professional and financial future in a similar way that the Great Recession impacted Millennials. Therefore, although the majority of Generation Z don’t have a lot of money to invest in crypto right now, they could in the future, especially if they’re as financially savvy and investment-driven as the data suggests. And, that’s where the opportunity lies for DeFi.

Building trust in digital assets through transparent marketing

For the future and health of the digital asset market, DeFi firms need to engage the right audiences in specific ways targeted to those demographics.

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

But, if DeFi is to capitalize on the opportunities available via the trendiest social media platform, it’s going to have to get better at marketing. This means clear and concise short-form videos that are tailored to the target audience, making crypto not just accessible but fun too, while also being transparent about the risks inherent in investing.

Short videos are playing well on TikTok. But, they’re predominantly top-of-the-funnel activities. That’s not necessarily a bad thing. Brands can warm up the Generation Z audience now so that in a few years, when they have the money to invest, they’re knowledgeable leads ready to be converted.

It’s this conversion content that’s needed. Crypto companies need to build trust in the audience over the next few years. No mean feat considering the turbulence and bad press the bear market has experienced lately.

DeFi firms must stay 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 how to speak their language today, tomorrow could be bright for bitcoin and other digital assets.

Zac Colbert is a digital marketer by day and freelance writer by night. He’s been covering digital culture since 2007.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.