The MZ generation, which had been spending ostentatiously to meet their current needs until just recently, is now studying finance to reduce consumption and accumulate assets for the future. Why is the MZ generation so enthusiastic about financial technology?
The first reason is the economic recession caused by COVID-19. Due to the recession in the labor market, inflation, and soaring real estate, it is difficult for the MZ generation to live a rich life only with earned income. If the previous generation was able to save their salaries and buy a house, it is no longer possible for MZ generation to buy their own house with the salary of office workers only. As such, the MZ generation is anxious about preparing for their own homes and preparing for their retirement, so they want to earn additional income through investment technology in addition to their salaries.
The second reason is the increase of the ‘FIRE’. ‘FIRE’ is short for ‘financial independence retire early’ and refers to people who want early retirement after achieving economic independence at a young age. Just as the ‘FIRE’ spread around the United States during the 2008 financial crisis, the emergence of FIRE is in contact with an uncertain economic situation. The perception of the MZ generation that there is no longer a “lifetime job” seems to have boosted the emergence of the ‘FIRE’ in Korea. In addition, distrust in the social safety net that pensions will not be able to prepare for retirement also affected the increase in the number of ‘FIRE’.
Recently, the MZ generation is engaged in financial technology activities through various investment methods. This is because their financial technology methods are more volatile than stable methods such as deposits and installment savings, but they are attractive in that they can expect more returns. Their financial method is as follows. Typical examples are stock and coin. It is actively used among the younger generation, who have a relatively strong aggressive investment tendency.
Virtual currencies like coin are usually obtained from mining or purchased by paying cash, but in order to mine virtual currencies, the price has risen due to increased demand for memory semiconductors such as graphics processing units (GPU) and DRAMs. Representative virtual currencies include Bitcoin, Ethereum, Dodge Coin, and Ripple, which have the No. 1 market capitalization.
However, in the case of virtual currency, unlike stocks, there is a risk of major damage because the market price continues to change in real time, and carbon dioxide emissions increase rapidly due to increased demand for large amounts of electricity and high-performance computers to mine, causing serious environmental pollution. For the environment, many countries are considering mining bans.
In addition, new financial methods such as “Resell-tech” “Music-tech,” “Art-Tech,” and “NFT” are emerging. Currently, there are two main trends in financial technology in the MZ generation: partial investment and reselltech. Both methods are characterized by low entry barriers and low initial investment costs that can produce fast and high returns. First, partial investment is an technique in which several investors invest together in one asset and share profits. This was developed from a “decimal point investment” that allows one share to be split and traded, and is now used in various fields such as art, real estate, music copyright, and luxury bags. In the case of digital images, videos, and music files, there was a problem that it was difficult to identify the original because it could be copied in large quantities, but with the emergence of a blockchain technology called NFT, it became possible to invest in pieces of music copyright or art.
Representative partial investment platforms of Korea are Tessa, Musicow, and Bancow. Tessa is an art partial investment platform that allows users to invest in works of famous artists from 1,000 won. This investment method using art is also called ‘Art-Tech’, which is a method of making profits by reselling art works. Investors can purchase 1/n of artworks, and they cannot own the real thing of the work, but the risk is also low as the investment cost is small.
‘Musicow’ which is a music copyright sharing platform is also gaining popularity among investors in Korea. After purchasing a stake in the music source, ‘Musicow’ gives investors the authority to buy partial stake. Once a stake transaction has been made, music sources can be bought and sold like stocks, and if the music becomes popular, investors can earn big profits. Even if you don’t buy and sell shares of music, you can earn regular profits through copyright fees. Currently, the cumulative number of members of ‘Musicow’ has exceeded 1 million, drawing attention from the MZ generation.
The Korean beef partial investment platform ‘Bancow’ is also gaining popularity among the MZ generation due to the possibility of stable investment. The investment is used for raising Korean beef, and if cattle are sold through an auction, they can receive investment and profits as much as their shares. The existing Korean beef investment market was exclusive to high-value wealthy people and institutional investors, but ‘Bancow’ lowered the minimum investment to 40,000 won, making it easy for beginners and students to invest in Korean beef. As the number of partial investors increased due to the lowered entry barriers, farmers who relied on loans could borrow breeding costs without interest. The partial investment market is gradually growing as demand from the MZ generation, which wants to find new investment destinations with small amounts, and fintech companies, which want to pioneer new markets, match.
ResellTech is a combination of Resell and investment techniques and is to purchase rare-value products such as limited-edition shoes and watches and then resell them at high prices.The most famous of Resell Tech is Nike Draw, which is a limited edition sneaker lottery system for Nike. If you enter Nike or Draw site, apply, and win, you can buy shoes at the regular price. The editor also had Nike Mid Jum Red and Dunkrow products, which were available for 120,000 won at the time of winning and went up to 400,000 won, and now they are formed at around 270,000 won. Draw is not everything, and even if you don’t win the draw, you can participate in this investment technology. We can buy shoes as if they are investing in blue-chip stocks for products that already have extra money but are likely to rise further in the future.
In the case of sculpture investment mentioned above, it can be an attractive investment means in that it can be invested in a small amount, but it should be aware of the risks. Prices of artworks and copyrights are volatile in that it is difficult to objectively evaluate the value and that trading volume is not large.
Although the partial investment and resell market are growing, there are many concerns. Since most of the companies that operate the platform are startups, investor protection systems may be insufficient. In the case of some partial investments, it is difficult to distinguish them from P2P and the investment is not guaranteed, so there is a concern that individual investors will take great risks. In addition, since the operator of the partial investment company has only promised to distribute profits by operating assets, there is virtually no official consumer protection system such as the disclosure obligation. Therefore, it is difficult to provide information related to the management method or risk of investment, and investors are likely to misunderstand that it is a safe asset. Also, since the recently emerging partial investment platform often does not own the asset directly, investors could inevitably suffer damage if the company goes bankrupt or the service is suspended.
Now that various financial technology methods have emerged, we, who invest, should not only be buried in financial technology, but also value the income and value earned from work. Investors should take wise financial measures by carefully checking investment product information and being wary of overheating investment.
K-UNIV
Asia Journal
