The biggest fear facing investors is fear of loss. Stocks are richly valued, bonds are still offer terrible yields, and commodities are losing their unique movements as correlation to other assets increases over time.
Cryptocurrencies are being heralded as the solution to the retirement crisis facing the global 99%.
But are they? The market is still VERY small and volatile, and governments certainly don’t appreciate the competition to their fiat currencies.
In the case of cryptocurrencies, the biggest fear facing investors is STILL fear of loss: both fear of investing in something they don’t understand, putting a nest egg at risk, and fear of NOT investing in the crypto space and taking part in the life-changing gains digital assets have seen over the last couple years.
Facing a lack of information, many investors have chosen to stay on the sidelines. Therefore, the purpose of this post is to lift the veil of obfuscation surrounding the crypto space.
We asked our Managing Director, Tim Enneking, his thoughts on the crypto investing...
3 Things You Should Know Before Investing In Cryptocurrencies:
1. What is a cryptocurrency?
“Well, to start, alternative currencies are NOT a new idea, and parallel currencies have existed for millennia: Armies issued scrip throughout history, Sperry & Hutchinson distributed S&H Green Stamps from the 30’s to the 80’s, and Frequent Flyer Miles have been around for decades. Further, communities for years have tried with varying levels of success to launch their own local currencies. For example, following a 1974 coup, the Cypriots created their own currency, the Cypriot Pound, issued at a rate of USD $2 = 1 Cypriot Pound. And let’s not forget that the first real attempt at launching a crypto currency occurred in the Netherlands in the late 1980’s! Are cryptocurrencies cool? Yes. Are they revolutionary? No.”
2. How is a cryptocurrency different from a fiat currency?
“This is a great question, because less than 4% of the USD, and most other currencies for that matter, are actually represented by physical money. Sadly, in this day and age, fiat currencies aren’t backed by ANY assets. In the case of crypto, or purely electronic, currencies, we’re talking about currencies not issued or regulated by a central authority. The peer-to-peer nature of cryptocurrencies is an essential differentiator from fiat.”
3. How do cryptocurrencies work?
“Cryptocurrencies represent a TRUE 24/7/365 market where viability and price are determined purely by supply and demand, rather than government manipulation. Occurring on open and public ledgers called Blockchains, Crypto transactions avoid third-party intermediation creating a nearly-instantaneous, low-cost, global payment infrastructure.”
Thanks for reading!
Look forward to our next posts as we dig for more answers to the above questions. Can’t wait ‘til then? See our proprietary and first-of-its-kind Cryptocurrency Index here: CAM Crypto30 Index