"Seems like asking my friends if they have Robinhood on their phone is just as common as asking them if they have snapchat" -HS senior & varsity athlete
In the last month, journalists, intellectuals, and parents across the world have heaped criticism on Facebook, whose own research says that Instagram is uniquely bad for teenage girls. But teenage boys are also suffering at the hands of the online community, encountering the negative externalities associated with gamified apps and digital communities. While a generation of our young women are posting pictures in a space where they can see--down to a number--how their body performs on a digital marketplace of likes, comments, and messages, a generation of our young men are speculating in volatile assets in search of a similar dopamine hit of likes, comments, messages, and status.
Pandemic restrictions, stimulus checks, and social media drove many of our boys to develop a side hustle in investment banking. They download apps like Robinhood, purchase volatile crypto assets like Dogecoin, and enter intense communities led by powerful influencers like Elon Musk. It’s changing how our boys see themselves, to the detriment of the civic and character lessons we are trying to teach in schools.
$HOOD & Free Trading
The most popular of these apps, Robinhood, aimed to “democratize finance for all” by allowing everyone to trade. Rather than charging per trade like its competitors, Robinhood makes its money selling order flow to the big Wall Street firms. Robinhood makes more money selling options order flows than equity order flows, which means that the company’s business model depends on a high volume of risky trades.
To incentivize trading, Robinhood took a page out of the social media companies’ book and built an addictive, gamified application. When users signed up, they received essentially a scratch-off ticket that yielded a free stock! And when users completed a trade, confetti fell on the screen. Engineers designed trading to be as frictionless as possible to ensure the experience kept users coming back. And the app was designed specifically “to appeal to the video-game generation of young, inexperienced investors” (Forbes). The app encourages day-trading, and all the research on investing shows that day traders tend to lose money, and those who trade more, lose more.
With a pandemic shutting down all social events and--crucially for this age group--sporting events, young men opened free accounts at an astonishing clip (22.5 million users in 2021). One such young man, a 20-year old college student, Alexander Kearns, took his own life in June 2020 after mistakenly believing he had over $730,000 in debt to Robinhood for options trading (CBS).
The nascent company is already mired in legal trouble, including a lawsuit from Kearns’s parents, a $65 million fine to the SEC, and another $70 million to settle a FINRA investigation . More recently, in May, the financial press attacked Robinhood because it had to literally shut down crypto trading in the midst of a liquidity crisis sparked by its users' rush to buy speculative cryptocurrencies, specifically the satirical currency Dogecoin.
Dogecoin & Meme Stocks
In the first quarter of 2021, “Dogecoin accounted for 34% of Robinhood’s cryptocurrency transaction-based revenue, and 6% of the trading firm’s overall revenue in the same period.” (Scott Galloway). Nevertheless, no financial professional would recommend frequent Dogecoin trading as an investment strategy. Not even Dogecoin’s own founder wants people to invest in crypto, which he calls a “cult-like ‘get rich quick’ funnel.” Dogecoin is not a means of exchange, it’s not a store of value, and it will not replace fiat currency. But it’s lucrative, and it’s fun.
While the stimulus did bring a number of new investors into the markets, it also inflated a number of the most attractive pandemic-era stocks (like Amazon and Apple). In previous recessions, investors with money could buy great companies for cheap--not this time. As such, new investors, egged on by the Robinhood app, sought riskier investments. Young men investigated cryptocurrencies. Many take screenshots of their Robinhood app to show off their winnings on social media. In a similar way that likes on an Instagram post make users feel popular and attractive, good investments make young traders feel smart, savvy and even visionary.
The biggest driver of cryptocurrency trading is a cult-like and energetic community of evangelists, including Elon Musk. Musk, often referred to as the “Dogefather,” drives up the price of dogecoin with a single tweet. And when he hosted SNL, Dogecoin dropped 30%! Nevertheless this currency, and many others, have loyal followers that hold (or “HODL”) the assets at all costs and can find a million reasons why these assets will go “up and to the right.” Communities of like-minded young investors are gathering on Reddit pages, Discord servers, and Twitter hashtags. Not only does this community provide confirmation bias for our young men, but it also encourages additional trading and further investigation into similar products like coins or NFTs. Like how Instagram creates a poisonous FOMO in its users, young men in these social media communities experience an infectious FOMO, not wanting to miss the next big thing by continuing to trade frequently.
One particular investor community on Reddit called Wall Street Bets snatched the financial spotlight in January when investors flocked to “meme stocks” like Game Stop and AMC, running up these stocks for the investors willing to risk wild fluctuations investing in languishing companies. Many succeeded, celebrating their capitalist spirit by posting their winnings online. One key aspect to this movement (in addition to nostalgia for the mall and movie theaters), was a desire to “stick it to the man”: in this case, institutional investors that had shorted GameStop. While the movement exposed the short-sellers, ironically “the man” still ended up ahead, buying the order flow and playing the same pump and dump game as the Redditors buying meme stocks.
Impact on our Young Men
That our young men are studying finance, currency, and technology is positive. Disruptive technologies are worth studying; I’ve been teaching cryptocurrency since 2014, and I added a smart contracts unit last year. It’s worth critically considering the complexities, challenges, and opportunities of new technology. I am no luddite. “Democratizing finance” seems good. But manipulating users with a controversial business model and app design is bad. The egalitarian, libertarian movement towards cryptocurrency could create positive changes in our society (e.g. banking the unbanked and creating new financial instruments like smart contracts). But the majority of our young men are not studying disruptive technologies, they’re trying to “get mine” while “worshiping a crowd” of believers and we need to evaluate the negative externalities associated with that behavior.
Get Mine
The “get mine” philosophy comes from the fact that everything in our students’ lives has been metricized. It starts not online, but at school, with GPAs and SATs that increasingly drive our students’ behavior. In order to succeed within this structure, our students spend time performing for a teacher, a coach, a standardized test, or an admissions committee. In the past, teens have blown off steam with risky behavior like sex, drugs, and rock and roll, but those behaviors are declining, and the pandemic has catalyzed the decline. So Robinhood serves as a substitute.
Another key driver of the “get mine” attitude is that the path to financial stability available to previous generations is just not available to the current generation. Our culture and our economy drives college graduates to go get another degree, to take on more debt. Beyond college student loan debt is the crippling cost of a mortgage, especially in cities and suburbs where knowledge-based work is best available. Given these realities, it’s no wonder our students are feeling disillusioned. It’s no wonder many are embracing volatility as a way to make money, and fast, while also gaining status as a successful investor who understands complicated concepts in economics and in technology.
Worship the Crowds
That sense of disillusionment makes it easy to find belonging in a community that mixes fun and easy money, especially when that community has your back. They’ll stick together to shut down and drown out anyone trying to rain on their parade. As much as cryptocurrency evangelists celebrate successes, they spend as much time dismissing critics to mitigate the cognitive dissonance. Many tech journalists have documented the “crypto bros” with matching NFT avatars brigading critics. Once in the community, the worship of the crowd and the confirmation bias that comes with it makes it hard to critically consider these nascent technologies. Trying to understand cryptocurrency and its impact on the world requires more than an avatar, a slogan, or a meme. Nevertheless, it’s far easier for our boys to reify their identity within the group by telling outsiders they’re “Not Gonna Make It” (NGMI) and to “Have Fun Staying Poor” (HFSP). And it’s more fun to try to get in early on the next big thing to gain wealth and status in the community.
The most prominent member of the movement, and the richest man in the world, Elon Musk, acts as if he were a rank-and-file member of this crypto community--one who defies conventional wisdom, takes on established institutions, and remains worthy of praise no matter what. On Twitter, Musk provoked the SEC when he infamously threatened to take his company private at $420 a share (a weed joke), he infuriated $TSLA stockholders when he said the stock was overvalued, and he attacked senator Bernie Sanders (VT) and Ron Wyden (OR) when they asked him to pay more in taxes (one of which was so offensive I won’t link it here). Because of these tweets, Musk is a hero to crypto fans. He’s in on the Dogecoin fun, often tweeting memes in support of the cryptocurrency. Those tweets make Dogecoin spike. When Elon Musk spars with citizens, the SEC, or Congress, he sends a message to his followers that when you are rich, you make your own rules--that we don’t need to treat people with respect, that we don’t need an SEC to create a healthy financial industry, and that we don’t Congress to legislate (despite the fact that Congress literally bailed out Tesla in 2009!).
Pandemic restrictions, stimulus checks, and social media drove many of our boys to develop a side hustle in investment banking. They download apps like Robinhood, purchase volatile crypto assets like Dogecoin, and enter intense communities led by powerful influencers like Elon Musk. It’s changing how our boys see themselves, to the detriment of the civic and character lessons we are trying to teach in schools.
$HOOD & Free Trading
The most popular of these apps, Robinhood, aimed to “democratize finance for all” by allowing everyone to trade. Rather than charging per trade like its competitors, Robinhood makes its money selling order flow to the big Wall Street firms. Robinhood makes more money selling options order flows than equity order flows, which means that the company’s business model depends on a high volume of risky trades.
To incentivize trading, Robinhood took a page out of the social media companies’ book and built an addictive, gamified application. When users signed up, they received essentially a scratch-off ticket that yielded a free stock! And when users completed a trade, confetti fell on the screen. Engineers designed trading to be as frictionless as possible to ensure the experience kept users coming back. And the app was designed specifically “to appeal to the video-game generation of young, inexperienced investors” (Forbes). The app encourages day-trading, and all the research on investing shows that day traders tend to lose money, and those who trade more, lose more.
With a pandemic shutting down all social events and--crucially for this age group--sporting events, young men opened free accounts at an astonishing clip (22.5 million users in 2021). One such young man, a 20-year old college student, Alexander Kearns, took his own life in June 2020 after mistakenly believing he had over $730,000 in debt to Robinhood for options trading (CBS).
The nascent company is already mired in legal trouble, including a lawsuit from Kearns’s parents, a $65 million fine to the SEC, and another $70 million to settle a FINRA investigation . More recently, in May, the financial press attacked Robinhood because it had to literally shut down crypto trading in the midst of a liquidity crisis sparked by its users' rush to buy speculative cryptocurrencies, specifically the satirical currency Dogecoin.
Dogecoin & Meme Stocks
In the first quarter of 2021, “Dogecoin accounted for 34% of Robinhood’s cryptocurrency transaction-based revenue, and 6% of the trading firm’s overall revenue in the same period.” (Scott Galloway). Nevertheless, no financial professional would recommend frequent Dogecoin trading as an investment strategy. Not even Dogecoin’s own founder wants people to invest in crypto, which he calls a “cult-like ‘get rich quick’ funnel.” Dogecoin is not a means of exchange, it’s not a store of value, and it will not replace fiat currency. But it’s lucrative, and it’s fun.
While the stimulus did bring a number of new investors into the markets, it also inflated a number of the most attractive pandemic-era stocks (like Amazon and Apple). In previous recessions, investors with money could buy great companies for cheap--not this time. As such, new investors, egged on by the Robinhood app, sought riskier investments. Young men investigated cryptocurrencies. Many take screenshots of their Robinhood app to show off their winnings on social media. In a similar way that likes on an Instagram post make users feel popular and attractive, good investments make young traders feel smart, savvy and even visionary.
The biggest driver of cryptocurrency trading is a cult-like and energetic community of evangelists, including Elon Musk. Musk, often referred to as the “Dogefather,” drives up the price of dogecoin with a single tweet. And when he hosted SNL, Dogecoin dropped 30%! Nevertheless this currency, and many others, have loyal followers that hold (or “HODL”) the assets at all costs and can find a million reasons why these assets will go “up and to the right.” Communities of like-minded young investors are gathering on Reddit pages, Discord servers, and Twitter hashtags. Not only does this community provide confirmation bias for our young men, but it also encourages additional trading and further investigation into similar products like coins or NFTs. Like how Instagram creates a poisonous FOMO in its users, young men in these social media communities experience an infectious FOMO, not wanting to miss the next big thing by continuing to trade frequently.
One particular investor community on Reddit called Wall Street Bets snatched the financial spotlight in January when investors flocked to “meme stocks” like Game Stop and AMC, running up these stocks for the investors willing to risk wild fluctuations investing in languishing companies. Many succeeded, celebrating their capitalist spirit by posting their winnings online. One key aspect to this movement (in addition to nostalgia for the mall and movie theaters), was a desire to “stick it to the man”: in this case, institutional investors that had shorted GameStop. While the movement exposed the short-sellers, ironically “the man” still ended up ahead, buying the order flow and playing the same pump and dump game as the Redditors buying meme stocks.
Impact on our Young Men
That our young men are studying finance, currency, and technology is positive. Disruptive technologies are worth studying; I’ve been teaching cryptocurrency since 2014, and I added a smart contracts unit last year. It’s worth critically considering the complexities, challenges, and opportunities of new technology. I am no luddite. “Democratizing finance” seems good. But manipulating users with a controversial business model and app design is bad. The egalitarian, libertarian movement towards cryptocurrency could create positive changes in our society (e.g. banking the unbanked and creating new financial instruments like smart contracts). But the majority of our young men are not studying disruptive technologies, they’re trying to “get mine” while “worshiping a crowd” of believers and we need to evaluate the negative externalities associated with that behavior.
Get Mine
The “get mine” philosophy comes from the fact that everything in our students’ lives has been metricized. It starts not online, but at school, with GPAs and SATs that increasingly drive our students’ behavior. In order to succeed within this structure, our students spend time performing for a teacher, a coach, a standardized test, or an admissions committee. In the past, teens have blown off steam with risky behavior like sex, drugs, and rock and roll, but those behaviors are declining, and the pandemic has catalyzed the decline. So Robinhood serves as a substitute.
Another key driver of the “get mine” attitude is that the path to financial stability available to previous generations is just not available to the current generation. Our culture and our economy drives college graduates to go get another degree, to take on more debt. Beyond college student loan debt is the crippling cost of a mortgage, especially in cities and suburbs where knowledge-based work is best available. Given these realities, it’s no wonder our students are feeling disillusioned. It’s no wonder many are embracing volatility as a way to make money, and fast, while also gaining status as a successful investor who understands complicated concepts in economics and in technology.
Worship the Crowds
That sense of disillusionment makes it easy to find belonging in a community that mixes fun and easy money, especially when that community has your back. They’ll stick together to shut down and drown out anyone trying to rain on their parade. As much as cryptocurrency evangelists celebrate successes, they spend as much time dismissing critics to mitigate the cognitive dissonance. Many tech journalists have documented the “crypto bros” with matching NFT avatars brigading critics. Once in the community, the worship of the crowd and the confirmation bias that comes with it makes it hard to critically consider these nascent technologies. Trying to understand cryptocurrency and its impact on the world requires more than an avatar, a slogan, or a meme. Nevertheless, it’s far easier for our boys to reify their identity within the group by telling outsiders they’re “Not Gonna Make It” (NGMI) and to “Have Fun Staying Poor” (HFSP). And it’s more fun to try to get in early on the next big thing to gain wealth and status in the community.
The most prominent member of the movement, and the richest man in the world, Elon Musk, acts as if he were a rank-and-file member of this crypto community--one who defies conventional wisdom, takes on established institutions, and remains worthy of praise no matter what. On Twitter, Musk provoked the SEC when he infamously threatened to take his company private at $420 a share (a weed joke), he infuriated $TSLA stockholders when he said the stock was overvalued, and he attacked senator Bernie Sanders (VT) and Ron Wyden (OR) when they asked him to pay more in taxes (one of which was so offensive I won’t link it here). Because of these tweets, Musk is a hero to crypto fans. He’s in on the Dogecoin fun, often tweeting memes in support of the cryptocurrency. Those tweets make Dogecoin spike. When Elon Musk spars with citizens, the SEC, or Congress, he sends a message to his followers that when you are rich, you make your own rules--that we don’t need to treat people with respect, that we don’t need an SEC to create a healthy financial industry, and that we don’t Congress to legislate (despite the fact that Congress literally bailed out Tesla in 2009!).
* * *
Trading cryptocurrency on Robinhood ensures your portfolio sits in your pocket all day, everyday, 24/7/365. My students check their account during class. I worry about what this does to a young man’s psyche and sense of place in the world. On Instagram, our girls are optimizing their looks and their posts for social status; and they’re depressed. Meanwhile, our boys are learning that everything is economic and their self worth is connected to their portfolios. And our boys are in need of help too, as we’re seeing negative mental health outcomes, a decline in romantic relationships, and a drop in interest in higher education.
This generation has definitely been dealt a tough hand, a number of America’s prized institutions (e.g college and Congress) and markets (e.g. the stock market and home ownership) are not working for them. The lasting challenges facing this generation are massive. There are sophisticated political and geographic challenges like the polarization of our electorate that will surely be exacerbated by the “worship of the crowds” approach (see QAnon and January 6). Our climate is in a state of crisis. Ironically while Musk’s company is helping with that, his crypto evangelism is making matters significantly worse (most cryptocurrencies are incredibly energy intensive). Solving these challenges requires sustained engagement, coalition building, and innovation and they cannot be reduced to lolz, memes, and money.
Educators and schools would be wise to catch the Robinhood-using, stock- and meme-trading, Musk-loving, boys. Our ability to serve as mentors and further the character education of our young men depends on us understanding their activities and their needs. Our ability to graduate quality citizens depends on meeting them where they are, teaching them ethical decision making, and guiding them to moral communities. And, of course, we must design curriculum and projects that inspire our boys to pursue worthy and authentic causes beyond school.
Sometimes I wake up at night and think about the fact that everyone who has ever downloaded Robinhood and invested in cryptocurrencies has never experienced anything but a bull market. What happens when that changes? Who will be holding the bag on these risky assets? When that earthquake shakes, how do we (re)embrace our young men?
