We need to find a fairer way of providing Goods and Services to the rest of the people on Earth.Cryptocurrencies and/or Gold Standard of money....maybe the answer to fight hyperinflation caused by too much printing of paper/fiat currencies by Governments and Central Banks all over the World. (https://nomorefiatmoneyplease.blogspot.com)
Questions still surround bitcoin. After all, the digital currency experienced wild highs and outrageous lows in 2018 — its value has risen above US $19,000 and sunk below $6,000 per coin. The first question might be which version of bitcoin to focus on.
Besides bitcoin’s initial incarnation, there are the products of bitcoin’s various hard forks. Bitcoin Cash, for example, was created in August 2017, Bitcoin Gold in October 2017, and Bitcoin Private earlier this year.
These hard forks mean that merchants must decide which forms of bitcoin to accept as payment and whether they need to quote their products in the different prices. What if a dozen versions of bitcoin are created? Will merchants quote prices for and accept payment in all 12?
Could bitcoin dilute itself into oblivion, with a hard fork for every Tom, Dick, and Harry with a pet interest? And how are these splits affecting the bitcoin project as a whole?
Nevertheless, prominent advocates remain, and Morgan Stanley, Goldman Sachs, the New York Stock Exchange (NYSE), and even Dimon’s JPMorgan have all been dipping their toes or diving in to the space. Some have developed cryptocurrency trading products. Fidelity Investments recently announced the creation of a digital asset exchange for the retail market. So there seems to be some dissonance between public critique and private investments. These companies are investing in the future of bitcoin and cryptocurrencies.
Maybe a classic shakeout is required that culls most cryptocurrencies from the herd, but leaves a select few survivors that add something special to the marketplace. That’s what Michael Novagratz, formerly of Fortress Investment Group, seems to expect. He says crypto is now in a “speculative mania phase” that will end with a grand crash, one that, like the bursting of the dot-com bubble, will exact a considerable toll but help create a more mature and viable sector.
Those investors who have come to terms with cryptocurrencies and accepted them on a conceptual level must now deal with the realities of owning them. Portfolio managers and advisers have to address the practical questions for their flesh-and-blood clients. How might these investments behave in a portfolio? Do they most closely resemble currencies, hedges, or alternative assets?
And investors must contend with the existing uncertainties and risks presented by the current economy and fiat monetary system. The simultaneous convergence of opportunities and risks means that implementing a cryptocurrency strategy requires vigilant stewardship.
All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.