Cryptocurrency For Teens

It isn’t illegal for teens to buy and trade crypto, but many of the bigger exchanges will ask for ID verification and proof that you are 18 or over. Kraken, Coinbase and Binance won’t allow minors to do crypto transactions.

This does make it more difficult for minors to get into the crypto market. However, there are perfectly legitimate ways to buy cryptocurrencies as a teen. There are so many apps and platforms available. Many of them are very expensive or difficult to use. Luckily there are some good options out there.

Greyscale

Greyscale is a company that buys and stores cryptocurrencies. You are then able to buy their shares on the stock market. This is accessible to teens and simply requires setting up a custodial investment account.

A custodial account is a savings account with a financial institution, brokerage firm or mutual fund company. The account will be accessed by a minor, but their custodian will have the ultimate control. The custodian will have to approve any transactions, including buying and selling.

Greyscale helps to provide secure access and exposure to digital currencies. The main problem with buying shares in Greyscale is that you don’t own the cryptocurrency directly; you own a derivative. There may be a disconnect between the price of the crypto and the price of the share.

As with any shares that are traded publicly, the price is going to be affected by the stock market. If there was less stock market demand for Bitcoin, Greyscale’s Bitcoin trust would go down in price. It wouldn’t matter if Bitcoin itself wasn’t going down in price.

The market cap of one of Greyscale’s funds can be much higher or lower than the actual AUM (asset under management). Investing in Greyscale may not be the best option for a teen. However, it is very easy to set up, especially if you already manage a custodial account.

Transfer

Using this method will allow you to directly own cryptocurrency. You will need the help of an adult that you trust. First, you need to create a cryptocurrency wallet. You will need to think about which cryptocurrencies you would like to buy and do some research. Crypto wallets will only support the holding of certain coins.

Once you have a wallet, you can ask the help of an adult who already has an account on a crypto exchange. Or, you can ask someone you trust to set up an account with one of the major exchanges.

You can then give them money, ask them to buy crypto and to transfer the coins into your wallet. It will then be held safely in your possession. Wallets such as Exodus will allow you to trade cryptocurrencies directly from your wallet (though the fees tend to be high). This means that you could purchase a ton of Bitcoin and use it to trade for smaller coins.

Peer-To-Peer Exchange

A peer-to-peer exchange is a marketplace where people can directly trade cryptocurrencies with one another. This means that you can buy crypto without having to go through an exchange. People using peer-to-peer can create listings. Here they can dictate how much premium they wish to charge for their crypto, what payment methods they accept, and minimum order amounts.

There are a couple of problems with using this method. Sellers will charge a premium and this can vary a lot. If you want to buy from a trusted and established seller you may have to pay 10% or 20% premium. These fees can soon add up.

Using peer-to-peer exchanges also leaves you open to scammers and people with bad intentions. They may lure you in with low premiums on their cryptocurrencies. Be sure to tread very carefully and try to work with established sellers.

Stack

Stack is a startup based in Seattle. They are building a cryptocurrency platform specifically for teens. They followed this route after they found that most investment gifts were given to teens, but there was no simple way to gift teens with crypto.

Their platform will be gamified and accessible. It will allow teens to invest in more than 30 different kinds of cryptocurrency. If they are under 18, their account will be co-owned by their parent or guardian. The users have the chance to earn rewards for investing responsibly and watching educational videos.

Stack’s CEO, Will Rush, has said that more people would be investing in stocks and crypto if they weren’t so afraid of it. He wants to create a platform that is so user friendly and accessible that you don’t need any investment history to use it.

The platform educates teens through short, fun videos. They do include a disclaimer about the volatile nature of the cryptocurrency market and advise that only those willing to bear this risk should invest.

Subscription costs $2 - $3 per month. The platform is aimed at teens but might also appeal to other demographics. College students and young professionals without much financial literacy may be drawn to the simplicity of use.

Teens In Crypto

Studies show that most Gen Zers are very bullish when it comes to investing in crypto. They are more comfortable with all things digital than previous generations. Many Gen Zers believe that crypto will make them millionaires.

Many teens have a lot of financial worries. The economy seems more harsh than in previous generations. If Gen Zers were given $2,000 to invest, they are three times more likely to invest in digital assets than baby boomers.

Teens may have more of an appetite and tolerance for risk. The younger generation tends to be progressive and open to new innovation, technology and ideas. There is potentially a huge market that can be tapped if the world of crypto is made more accessible to this demographic.

In Summary

If you are starting to invest as a teenager it’s important to do your own research. Crypto is highly volatile and contains a big element of risk. There is the potential for big gains and big losses. There are a number of ways that you can enter the world of crypto as a teen. Hopefully the market will become more and more accessible in the coming times.

Author bio

Hey, I’m Ellie. I’m a writer and personal finance blogger living in Davis, CA. https://about.me/ellielott