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Should I Invest in Cryptocurrencies?

should you invest in cryptocurrency

Should you invest in cryptocurrency? Read this before deciding to invest in cryptocurrencies in 2019

No one can answer that question with an overly optimistic yes or an affirmative no unless they have something to sell.

We at crytpotapas.com will give you 10 reasons for investing in cryptocurrencies and 10 reasons why you may consider not to invest. What you conclude from this information is up to you.

Due to the sheer size of this article – we will break it into 2 parts. In part 1, we will discuss the 10 Reasons, according to us, that support investing in cryptocurrencies. 

10 reasons that support, in our opinion, investing in Cryptocurrencies

1. Possible opportunity to turn a small investment into a sizeable portfolio

If you had invested $300 in Bitcoin when it was trading at $3 in 2011, you would be sitting on $350,000 even in today’s bear market. If you managed to sell it during the high $19000s, you would have made 1.9 Million dollars. That is 6333 times your original investment.

And yet, those gains are nothing compared to 15819 times (that’s 1,581,900%) gains that people have reaped on investments like Verge. That means same $300 investment in Verge would have yielded you $4.75 Million dollars if you sold at right time.

Other projects like Stellar, Ripple, ICON have all done more than double/triple digit timers from their initial price to their peaks.

Possibilities like those are what keep people coming back to this space, to try out their luck. It is no different than gambling, it can become an addiction too.

As long as you invest responsibly – there is a lot of room for growth in this space according to many veteran investors.

2. Follow the money: Institutional approval

Fidelity is starting their crypto fund in 2019. Bakkt, a NASDAQ initiative, is going to offer physical delivery of Bitcoins starting 2019. VanEck’s ETF has been long pending in front of SEC and is expected to bring institutional money into Cryptocurrencies.

Yale University’s economist Aleh Tsyvinski’s report talked about the potential of cryptocurrencies and made a note about including 6% Bitcoin in one’s portfolio for a well-diversified structure. What more, Yale’s endowment manager has invested in two funds dedicated to cryptocurrencies.

Veteran investors like George Soros, Mike Novogratz, Steven Cohe, John McAfee and Tim Draper have not only invested in crypto but they have made outlandish predictions about Bitcoin’s price for the coming decade.

Coinbase has started adding new digital assets to its platform and is expected to increase the number of offerings in the future.

You can view all the institutions that have set their foot into this space in this article on compilation of Bullish signs.

Enterprise blockchain adoption – Big companies like Walmart are investing heavily into blockchain solutions. The promise of blockchain in the supply chain, in particular, is massive. In fact, more than 80% of Fortune 100 companies have explored Blockchain in their businesses.

So, the institutional money is not just flowing into this technology as an investment in cryptocurrencies but the blockchain solutions as well.

3. Follow the talent: Mass exodus of Wall Street talent to Crypto

Many individuals have recently left their high-paying jobs in Wall Street to join the Crypto Street. Chris Matta, Goldman Sachs executive left his earned bonus on the table to start Crypto project.

We have provided a brief list of professionals that left their secured-high potential-jobs to take part in the blockchain and crypto revolution. You can access the list here.

Timothy Tami left his Wall Street glory for Crypto. He is now the CEO of CoinFi. Bloomberg even ran an article on professionals from Goldman Sachs, Deutsche Bank, Blackrock, etc. that have left their Wall Street race to join Crypto race.

One major indication of the potential for any new technological advancement is the adoption and adoption will never come to space if talented individuals do not see the promise. Right now, many highly talented individuals see the disruptive potential of Blockchain and Cryptocurrencies. This is a powerful indicator in our opinion.

4. Millennials lack trust in Wall Street

35% of the workforce today consists of Millennials and Millennials do not trust Wall Street. When the largest working group does not trust in Wall Street, unless something changes, investment in traditional asset classes are going to dwindle in the coming decade.

Close to 50% of Millennials said they were interested in Bitcoin (and Crypto) investment and 30% felt they would rather invest in Cryptocurrencies than the traditional stock market. When major institutions like Fidelity facilitate investing in Crypto (and Bitcoin) – it will not be a surprise that more and more investments will flow into Cryptos and propel this space to new heights.

5. Security Token Offering (STO) is coming, and it’s a big deal

We were obsessed with how Cryptocurrencies have disrupted the venture capital and crowdfunding platforms through their Initial Coin Offering (ICO) craze in 2017, but imagine what will happen when traditional capital is raised through security token offerings?

The possibilities are just boundless.

You could have a company raise money through an app, like the WeOwn (CHX), communicate with the investors via App, maintain investor registry (called Share Registry) through automated Blockchain enabled platform – all of these could result in potential savings in Millions of dollars and make capital accessible to companies and ideas of all sizes.

In fact, the tokenized economy may not be that far a reality either. Overstock owned tZero has recently announced a successful raise of $134 million via STO.

“This is one of the first Security Token Offerings on a decentralized public network, and was conducted in full compliance with the U.S. securities laws,” said tZERO CEO Saum Noursalehi. “This is an exciting milestone for tZERO, and we are even more enthusiastic about the opportunities this will create for private and public companies wishing to raise capital through security token offerings, and for investors who wish to trade those securities.”

STOs are coming and they are coming fast.  Our bet is that we will start trading in STOs by 2020.

6. Blockchain and Cryptocurrencies are paving the way to the global decentralized economy

Blockchain use cases are numerous. World Economic Forum has identified over 65 use cases of Blockchain. Most of these use-cases cannot work with the existing fiat system.  They need a special on-platform currency. Cryptocurrencies associated with projects that will have wide use-case and adoption will inevitably increase in value.

Ethereum, for instance, has the largest network of business partnerships in the blockchain space. Bitcoin is preparing to enable smart contracts using RSK protocol. NEO has been spreading its roots in this bear period. ICON has been signing business deal after business deal to hyperconnect the world.

Blockchain’s success will inevitably contribute to the wider adoption of cryptocurrencies, however, only a fraction of the existing projects will survive for the wider adoption – but those that do survive will probably be worth a lot more than what they are today.

7. Gamification of investment when it comes to crypto space

investing in cryptocurrencyLet’s say you decided to stay home during the weekend and saved $50 that you would have spent at a restaurant – you saved another $50 by not going to the movie theater and ordering a video on demand. For that month, if you put this $100 into the crypto market and even if you lost it all you have just lost a weekend’s worth of entertainment, not your life savings.

Gamification strategy of investing in crypto could be a better way to stay indifferent to the volatility in this space.

Trouble comes when people go out of their way to take loans or invest their life savings into the crypto market and panic sell during lows.

There are few solutions that are currently in works where you can copy successful traders and invest (even a little) to follow their trades – automatically. That means – you choose who you would like to follow, pay the fees and system just mirrors those traders for you while you go on with your life.

Whatever your investment strategy is in crypto space – always remember that there are no experts who actually know what is going to happen in this space in next 2 or 5 years – and every decision you make is subject to a complete loss or gain. And neither is guaranteed.

8. Some of these crypto projects may be future FAANGs

investing in cryptocurrencyFAANG stands for Facebook, Apple, Amazon, Netflix, Google. During the burst of the dot-com bubble, Amazon lost 90+% of its value.

Amazon went from trading in early 100s to $7, over 90% loss of value.  However, those who stuck with the company are now sitting on a $1500 stock, over 214-fold gain from its low.  Many refer to the current market situation to that of the dot-com bubble, meaning, most of these 2000 odd projects will not be around in a couple of years but those that do survive may be worth 100’s of times their current valuation in the next decade.

Speculators believe that projects like Bitcoin, Ethereum, Stellar, Cardano, NEO, Ripple etc. may have the potential to withstand the bear market turmoil and emerge as winners. If we see any mass adoption of this technology – those that survive may become big brand names in the coming decade.

9. Market consolidation – potential entry point for new investors?

invest in cryptocurrencyBitcoin has gone from $19,000 at the end of 2017 to $3,400 at the time of this writing, 83% fall from its peak in 2017. Some speculators expect that Bitcoin may fall even further. While it should scare many traditional investors – some investors in crypto space are waiting in anticipation for an opportunity to own a full bitcoin.

Coinbase has added other assets in addition to Bitcoin, Ethereum and Litecoin. It gives average individuals an opportunity to own projects outside of these 3.

Coinbase has created space for those that are thinking about investing a very small amount in this space. You can save $10 (it pays us $10) if you use this referral link (totally optional).

10. Future of pay-as-you-go, joint ownership among strangers, and the shared economy will be built on Crypto-economy

invest in cryptocurrencyIf you think Uber and Airbnb are greatest things that happened in a shared economy, wait until we enter into a new age of shared ownership and shared revenue-based economy. CBRE’s David Cervantes opines that in future we may be able to tokenize the traditional Real Estate market.

Imagine a world where you own 1/1000th of a hotel and you get 1/1000th of revenue sharing. Imagine helping an entrepreneur 1000s of miles away with his/her business idea by just investing a couple of bucks?

A world where there are:

  • No minimum investments
  • No minimum revenue sharing
  • No border walls for innovation
  • A global commerce accessible to micro, small and medium enterprises
  • End of 9-5 job culture and the dawn of Gig economy that is not limited by geographies

Pay as you go models for what is now expensive machinery accessible only to big guys, for instance, instead of needing to own a supercomputer, which also has limits, to conduct a research – you could rent a global supercomputer that has no scaling limits, for as long as you need it, thus removing the fixed costs and making research accessible to developing nations.

All of these wonderful things can one day be made possible because of Blockchain and Cryptocurrencies.

The case for blockchain and cryptocurrencies may seem all rosy – but anyone who has been following the news will immediately realize that it is not so.

Go to Part 2 to read the 10 reasons why one may not want to invest in cryptocurrencies, reason 2 and 10 are interesting.

should you invest in cryptocurrency

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should you invest in cryptocurrency

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IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

CryptoTapas does not endorse or guarantee the accuracy of the information and claims made in respective publications referenced in this database.

About the author

RK Reddy holds two Masters degrees, one in Accounting and another in Business Administration with over 15 years of experience in the financial services industry.

RK Reddy is an ardent fan of Blockchain and Cryptocurrencies. You can see the excitement about this new technology in every article on Cryptotapas.com. Sometimes this excitement leads to an overly optimistic view. Guilty as charged. RK Reddy says what may seem like an ‘overly optimistic expectation’ today may become an everyday norm in 5-10 years; look at the history of cars or airplanes, Blockchain and Cryptocurrencies belong to a similar frame of reference.”  Of course, that is just his opinion.


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