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Cryptocurrencies: The Greatest Opportunity of Our Generation?

Bitcoin’s meteoric rise has been well-chronicled. Could we be on the eve of one of the greatest bull-runs ever witnessed? I believe so, especially in an increasingly technological society (Read my rationale here: In 2018, Cryptocurrencies May Surge to New Heights: Here’s Why).

In 2016, the election of Donald Trump was unforeseen and shocking. The fervor and sentiments exhibited by his base were severely underestimated. Likewise, the general population is seemingly unaware of the gathering momentum behind cryptocurrencies.

Source: https://www.linkedin.com/pulse/adopter-categories-shabnam-jafari

Despite the recent bitcoin mania, we are still in the early adoption phase of cryptocurrencies. A growth fueled by retail investors like you and I. The institutional money is just starting to trickle into the crypto market. In 2017, many cryptocurrencies increased by multiple magnitudes in value (See: January 1, 2017 prices vs December 31, 2017 prices). I anticipate continued growth.

Should You Invest?

Be skeptical, but open-minded. If you dismiss bitcoin and crypto because “Joe Expert” makes negative commentary, then please, do your own research. There are often cognitive biases and hidden motives, which aren’t always evident.

While you may be telling your friend “I told you so” after a big bitcoin drop, they’re probably elated and buying the dip to maximize profits. Bitcoin is thriving and gaining support. The wherewithal and resiliency of the cryptocurrency market continues to be demonstrated.

Yes, cryptocurrencies are hyper-volatile. If you’re impulsive, lack patience, and/or buy because of hype, you’ll more than likely get burned in this market and inevitably lose some money. If you cannot sleep or maintain your sanity, then maybe it’s not for you. It’s not a get rich quick scheme.

However, for the savvy investor who will continue to educate themself, your portfolio can benefit greatly from exposure to cryptoassets. You shouldn’t go all in, especially since vast movements in the market can sometimes be unpredictable. I still think continued diversification in other investments (stocks, bonds, real estate, etc.) is vital. It is also important to have a plan before starting your cryptocurrency investment (Will you use dollar cost averaging? Which cryptoassets are you targeting? When will you buy/sell? etc.).

You can buy a fraction of a bitcoin. There is a wide-array of other cryptocurrencies (i.e., altcoins), some of which have real utility. So, what’s the attractiveness of bitcoin?

  • Serves as a store of value — Often referred to as “digital gold”, but unlike gold, it’s highly mobile
  • It’s decentralized — It’s driven by a distributed network based on consensus and not a single entity. This eliminates the need for the middle man or intermediaries.
  • It’s scarce — The total supply is only 21 million bitcoin, a stark advantage over fiat currencies that are continuously inflated
  • Provides a layer of anonymity — Although there are a wide-array privacy coins like Monero, Zcash, and Dash that are better purposed for this

Last year, I noticed how stocks in AMD and NVDIA were being partially fueled by cryptos. This encouraged me to do some serious research. In the early summer of 2017, I finally decided to invest and I haven’t looked back. It’s a calculated risk, with exponential upside and opportunity. I believe blockchain technology and cryptocurrencies will be revolutionary, much like the internet.