I think we are firmly in the 2nd wave now. There is a commonly talked about S-curve of adoption staring with innovators, probably the tech savvy millennials you brought up right at the outset. Then come the early adopters which is probably what we are seeing now. Running a brokerage, I have the luxury of an intimate insight into investor demographics and it is heartening to see that there really isn't a typical one. Our oldest investor is 75, we are gradually seeing an increase in female investors which is something the industry still lacks, the diversity is promising for the market as a whole.The third wave, almost counter-intuitively, appears likely to be the financial services industry. We already seeing big moves by large institutional players globally which is forging the path and as regulation moves gradually towards Cryptocurrencies becoming a regulated financial instrument, I expect to see Wealth managers and financial advisors who are currently constrained by its unregulated nature being able to invest into this market. However, that will only come with greater oversight, improved custodial solutions and greater adoption and usage of Crypto. But, baby steps.
I guess this is first best qualified by asking another question, which is Who's asking? f you are a Syrian refugee trying to flee across a border, then Crypto is definitely a more portable asset than a bag of cash. If you live in Venezuela where hyperinflation has made your local currency a worthless store of value, then yes. But if you are asking from the perspective of a developed world investor in a stable economy, government and political climate such as we are in, then perhaps one of the main value propositions of Crypto is its capacity to act as a Non-correlated asset as compared to any Fiat currency markets. Whether or not you believe that the next global financial downturn is imminent, inevitable or likely, Cryptocurrencies allow investors the opportunity to diversify their portfolios by acting as a hedge against Fiat market risk.
I expect that the future will see a consolidation, and a dramatic one at that, of the different coins out there with a narrowing down to a few select categories, broad use-case scenarios. Specific coins which hold the mantle of both market share and value proposition within those categories will likely garner market share from the rest and establish themselves as the sole primary currency for that broader purpose.To compensate, infrastructure that is built around the current multiple different coins will adapt to make themselves malleable enough to work with the reduced specificity of the eventual coin that is used for their industry or purpose.This would lead to a situation more analogous to the current currency landscape.
The short answer is with difficulty. Crypto markets are going to be inevitably volatile, a reflection of the small market capital and just how early on we are in the cycle of adoption. The total market capital of Bitcoin is only $200 Billion. In comparison, the market capital of Gold is $7 trillion. So any event geopolitical, economic, local or international that causes market fluctuations which would cause barely a ripple in the depth of the fiat currency market is likely to be reflected by shifts in the Crypto market. It's like throwing a pebble into the ocean vs into your bathtub.To minimize volatility, investing in the currencies with a larger market capital, that have been around for longer and have a more stable architecture and infrastructure around them and not chasing the ludicrous 100x gains from newer, speculative coins is probably the most sensible strategy I can recommend alongside having a diversified Crypto portfolio. It's one of the key lessons we educate our clients on.
The internet was arguably the greatest revolution in the way society operates, relates to each other and functions. Ever.Comparisons have been made suggesting that Blockchain technology in all its iterations may eclipse that. I think the greatest promise though lies in the confluence of almost mind-bendingly revolutionary technologies that we sit on the cusp of, the synergy of which would mean a sum that is exponentially greater than its parts. Blockchain technology, Cryptocurrencies, Artificial Intelligence, VR technology, renewable energy, Quantum Computing.We are heading into a time of the greatest ideological and functional change the world has ever seen, led by technology. But more than the volume of change, the rate of change has never been higher than it is now. And crucially the acceleration of change: The rate of change of the rate of change is what truly gives me goosebumps and I'm glad to be alive and part of this.
Dr. Prash is the CEO at Caleb and Brown is available to guide new and seasoned investors.
About Dr. Prash P: Prash is considered a thought leader in the philosophical and existential implications of this emerging technology and is a regular speaker at industry conferences.
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