Amanda’s Note: This article was provided by an online contact.
An investor should not only look at ROI, but at mitigating risk when building a portfolio. Traditional choices have been stocks and bonds, dividends, real estate, commodities, precious metals etc. to limit exposure to any one type of asset.
Investing in bitcoin and blockchain assets is becoming more mainstream since it came onto the scene in 2009, and is now a feasible option for including in a portfolio. Confidence in bitcoin is growing as evidenced by the list of retailers accepting bitcoin, like Expedia, Overstock, and television and Internet service provider Dish Network.
Traded 24/7 on markets, bitcoin has bounced back as there are many people with billions of dollars in the game. Fin-tech start-up companies raised an astounding £974 million ($1.27 billion) last year by selling bitcoin and other cryptocurrencies, an Anonymous report has revealed. According to the report, initial coin offerings (ICOs) have overtaken venture capital investment. Bitcoin has shown a rapid increase in value perhaps due to positive reaction to innovations such as multi-signature security on wallets.
Bitcoin is usable for more and more payments; its high difficulty and energy usage give it a reasonably high price and as such can be used for an investment.
The global movement towards a cashless society creates the perfect environment for blockchain banking. Cash is challenging to secure physically; the development of the technology therefore represents more convenient and efficient purchases.
In Sweden, almost 60% of all consumer transactions are cashless, and physical money makes up less than 2% of the economy. The Federal Reserve estimated that there would have been $616.9 billion in cashless transactions in 2016, up from $60 billion in 2010.
Some banks are already exploring blockchains. Currently gold isn’t rallying and bitcoin is now the “new gold” as investors see it as a hedge against rising global uncertainties. Questionable government policies when it comes to a national currency have propelled people into bitcoin. Popularity has risen in countries with political instability (for example Venezuela, Brazil and Turkey) because of its ability to work between borders. Tensions in another area, Asia, boost the value of digital currency in a couple of ways. The prospect of war dampens the demand for regional currencies like the yen and the won while inspiring demand for bitcoin. In Turkey, bitcoin is used for primarily investment or trading purposes as well as for purchasing items. Especially after PayPal has been pushed out, having lost its license following a new set of Turkish regulations.
Potential for its use in small open economies that are fragile (like the Caribbean) whose regional currencies may be in jeopardy, is evident. In countries recently disrupted by natural disasters where physical infrastructure has all but disappeared, bitcoin can still be used to make transactions. It is also an option in regions with strict money market regulations. China even though (or because of) their monetary system is highly regulated, 80% of mined bitcoin is traded for Chinese yuan. Major events on money markets like Brexit also makes bitcoin even more attractive. Its entry signifies that pending payment barriers can be overcome. Indeed, after the Brexit vote the pound plunged and having cryptocurrency then became a rational option. Even cyber incidents, like the WannaCry cyberattack pushed corporations that have never considered Bitcoin before, into researching how to buy it to offset future ransomware events.
Blockchains are indubitably faster, cheaper, and more secure than traditional systems, which is why banks are turning to them. Also saving time and money is the expanding use of smart contracts that are coded into the transactions, where an event is triggered, for example, by a strike price or a date and the contract executes itself, thereby eliminating the middle man. It is clear that bitcoin is advantageous in diversifying one’s portfolio at this time. Look for a viable digital banking option that is establishing regulated banking in the blockchain era, that can support both traditional fiat currencies as well as cryptocurrencies and provide traditional banking capability. You can get other benefits from referral programs.