Why we should all own a bit of cryptos.
Not so long ago it could take up to a week to transfer money from one bank to another. It was also very expensive. Transfer fees, administrative fees, and particularly when exchanging one currency to another, there were additional costs involved. Even today, the foreign exchange costs are prohibitively expensive for smaller transactions and it still takes several days to clear US Dollars through the system. I suppose it was inevitable that we needed a better medium of exchange and in stepped digital currencies that enable instant and lower cost transactions.
Most of us know what Bitcoin is, however, fewer of us will know the difference between a coin and a token, to say nothing of Kraken. It’s a new technology, a new age, a whole lot of terminology and lest we forget that Bitcoin has gone up more than 5000% in the last 5 years. There are some who believe it can go up even further and just to prove a point, it went up more than 40% last month. Time to get in? Absolutely, just make sure you understand what you are buying and of course it all comes down to size of bet.
For those of you who are old enough to remember the videocassette, it will come as no surprise that when new technologies arrive it isn’t necessarily the first or even the best products that survive. Beta 2000 was clearly superior to VHS, but nonetheless it was the latter that revolutionised the way we watch movies. With cryptocurrencies, the choice is much, much greater. There is Ethereum, there is Ripple, and there is even something called Dogecoin. There are literally hundreds of different digital currencies, all with their own intricacies, advantages, or shortcomings.
Far be it for me to make an argument which will ultimately win the race to become the dominant force in a future that is yet unknown, but one thing is for sure: cryptocurrencies are here to stay. It is akin to the discovery of the combustion engine and insisting that mail will still be delivered by horse and carriage. The world is going digital, and all you have to look at are the US elections, for which the main source of information for millions of Americans were their Twitter or Facebook accounts (sorry, I had to get one reference in to the biggest elephant in the room this morning).
So, which one of those lovely little digital marvels should we buy? Stick to the biggest ones and spread your bets across a portfolio of different options, whilst the world figures out which technology will ultimately win out. More importantly, don’t put all your money at risk, but if you are going to include Gold in your portfolio because you are afraid of Armageddon, you might as well buy some cryptos in equal measure. It would be an utter travesty if you miss out, whilst cash becomes as obsolete as my videorecorder.