Global interest in cryptocurrencies has exploded in recent months, with many focusing on the daily peaks and troughs of currencies such as Bitcoin, Ripple and Ethereum. With a constant flow of new ICOs on offer and even celebrities endorsing investments in certain currencies, it is clear that cryptocurrencies have become more mainstream than ever before. But despite the constant attention, much skepticism still exists and many seem keen to show that the crypto-bubble has burst and these currencies are doomed for failure. But is this really the case, or have cryptocurrencies like Bitcoin yet to reach their premium price? Andrew Pritchard MD Blockchain of The 10x Growth Account discusses what the future may hold for cryptocurrencies.
Two Steps Forward, One Step Back
The constant interest in the performance of major currencies like Bitcoin means that there are daily stories about price crashes, recoveries and further drops, all fueling speculation that Bitcoin and other currencies may have had their day and were just momentary ‘fads’. However, I would argue that all investments tend to show short term losses and gains and it is not helpful to any investor to be watching a minute by minute analysis of their investment performance! Investments in cryptocurrencies particularly should be viewed over the longer term, as there are many trend predictions which show that Bitcoin is likely to gain significant ground in the months and years to come. In fact, one investor is confident that Bitcoin could reach $1 Million by 2027!
No Risk, No Reward
Many critics of cryptoinvesting have suggested that the risks are just too high and that those who invest must be willing to lose everything. Whilst this may be true, it is not really that different to any other high-risk investment, of which there are many! Investors have varying risk-propensities and structure the balance of their investment portfolios according to their preferred level of risk. Whilst it would be extremely risky for an investor to put all of their financial eggs into one cryptobasket, the reality is that very few people would even contemplate this approach. An healthy portfolio ideally includes a mix of high, medium and low-risk investments, of which cryptocurrencies can form a small, but potentially lucrative, portion.
Are Managed Cryptocurrency Funds the future?
Whilst many investors are currently adopting the DIY approach, or mirroring the activities of successful investors, the crypto-investment market is set to evolve in a similar way to the traditional investment marketplace, with new offerings emerging to help solve the complexities and uncertainties investors face with new types of investment. For example in the UK, a new cryptocurrency managed fund called The 10x Growth Account has been launched, which allows investors to pay in as little as £1,000 into the fund, which is then invested across a portfolio of cryptocurrencies, therefore spreading the risk and increasing the chances of a positive return. Like traditional investment funds, investors cannot access their investment for 12 months, allowing a much longer view of the cryptomarket to be appreciated. Managed funds will certainly be helpful in transitioning the mindset of investors from the current micro-analysis of cryptocurrency performance to the longer term performance potential, where those short-term gains and losses become far less significant.
Whilst many may suggest that cryptocurrencies are just a fad that will come and go, the real benefits of this kind of currency and more importantly, the technology behind it, have wide reaching impacts and benefits for the way the world operates. To assume it will not form a significant part of the future is to ignore its potential, which is already making waves across the world. Change is never smooth and cryptocurrencies is one such change which cannot be ignored.