The Enormous Hidden Opportunity Within Cryptocurrency That You Might Be Missing
An Alternative Investment Option, within an Alternative Investment Class.
Introducing an asset within crypto that offers an investment option and store of value that transcends market fluctuations.
But first we must ascertain what makes something valuable? Why are diamonds worth more than lumps of granite?
Time for a quick economics lesson, and trust me, I’ll keep it short, interesting and relevant.
Price is discovered by the interaction between supply and demand of a specific good or service. This elegant and simple graph allows us to see the economic equilibrium and how the price is determined. On the whole, it’s not overly complex.
This equilibrium explains why we pay what we pay for a majority of the goods and services that we purchase.
Certain resources such as gold, diamonds, rare baseball cards, vintage cars and famously Bitcoin have a fixed supply. There’s only a certain amount of them in existence. This is shown on the graph by having a supply curve that stands up straight. Regardless of what happens in the world, the supply is what it is. The lower the supply, the further to the left the supply line sits. As supply is reduced we slide up the demand curve and higher price is discovered. Scarcity, and limited supply is the reason why we pay more for lumps of diamond than lumps of granite.
In a free market this economic method of price discovery holds true regardless of exogenous factors. Should there be political turmoil, a recession, or even a post apocalyptic event; supply and demand will always continue to determine price in a free market environment.
Let’s zero in on everyone's favorite precious metal; gold. Humans have had an affinity towards gold since records have began. Whilst the captivating manner in which it reflects light, the colour, and feel is attractive, it’s not the reason why people have fought over it for thousands of years. Nor is it the utility of gold, which is limited to jewelry and electrical components.
It instead is the value it holds, the status it represents and the difficulty level in which to obtain. Put simply, gold has value because it’s scarce and has demand.
Historically people have flocked to invest in gold during times of economic uncertainty. Gold tends to perform very well and can help protect stores of wealth whilst other investment options such as stocks and shares decline. This is due to the strong fundamentals rooted in supply and demand.
Collectibles are another form of alternative investment that can be used to recession proof a portfolio and can help protect wealth during an economic downturn. The price in these are also heavily rooted in supply and demand and go a long way to separating themselves from the overarching economic climate.
Some notable examples;
Wine - A case of Le Pin 1982, for example, cost just £200 when it was released, but was worth about £25,000 a few years ago — a staggering increase of more than 12,000 per cent.
Classic cars - in 2011 you could have picked up a Jaguar E-Type for Around £40,000 they are now fetching in the region of £120,000
Stamps - According to Geoff Anandappa, investment portfolio manager at Stanley Gibbons, the rarest stamps have delivered annual average returns of around 9.7 per cent, with the prices being driven mainly by collectors.
Baseball Cards - A Honus Wagner T206 card could have been purchased for around $1500 in 1975. Today that card would conservatively be worth around $5 Million.
There’s inherent risks investing in this types of asset, whilst the supply might be limited and/or fixed the price is determined by the demand. Changing trends can hugely impact the price. The market is also often illiquid, whilst you may own a Jaguar E-type it’s only worth the price someone is willing to pay at any given moment, if nobody in your locality wants one or has £120,000 to part with then it’s no longer worth £120,000. However, if you correctly anticipate the trends you can comfortably out perform the market.
Cryptocurrency is a fascinating study and if you had invested in Bitcoin early, congratulations for spotting the trend. However the price is still very volatile and the price is still heavily influenced by speculation and affected by short-term confidence. Just today I read an article about how BTC may hit $200,000 very soon, whilst I read another article proclaiming its death for the 350th time.
There’s a hidden asset class within the depths of cryptocurrency that holds enormous potential. ERC-721 tokens, more commonly referred to as Non-Fungible tokens (NFTs). Non-Fungible tokens allow developers to tokenize ownership data that can represent anything on the Ethereum blockchain. This in turn makes each token unique to its owner.
By creating unique tokens this fundamentally changes the supply and demand characteristics. The price is no longer determined by the supply and demand of Ethereum it’s instead the demand for the unique collectible.
Kingdom Token has created tokens that represent the most endangered species on Earth. The unique ERC721 tokens are mapped to the relative scarcity of each animal. Thus creating an in-demand, rare and collectible token that can be traded on the open market.
There’s 84 endangered species all with a limited total token supply. For example there are only 750 Sumatran Tigers, 1750 Iberian Lynx, 2000 Blue Whale and 2500 Giant Panda, etc.
With fixed supply for these tokens the price is solely dependent on demand.
Whilst investing in stamps, wine or Jaguar E-Types might not be for everyone they have there place within certain portfolios. Those with a modern attitude to risk may see the opportunity with ERC-721.
Perhaps the new collectibles are found in digital wallets as opposed to protective sleeves. Non-Fungible tokens can transcend the volatility of cryptocurrency. With fixed and limited supply, NFTs are the diamonds of this story.
Visit https://www.kingdomtoken.io/ to learn more.
We are currently giving away a rare tokens to the lucky few that are early supporters and sign up to the mailing list. So, it’s worthwhile paying a quick visit now.