Cryptocurrencies — Why I am involved in Kidcoin
Years ago during the heart of the 2013 European financial crisis many investors globally were expecting another catastrophe on par with the 2008–2009 crisis. At the time an intense debate raged — as it always does in crisis moments — between those advocating for investing in that perennial alternative currency, gold, and those who perennially argue that these “gold bugs” are fools for investing in an asset that has no intrinsic value. I considered this a specious argument, because in the modern era of fiat currencies there is also no underlying intrinsic asset, just the “full faith and credit of,” …a credit. To me that is weak backing, too.
It seemed to me what was missing was a willingness on the part of the “gold bug” detractors for understanding why so many people for millennia have considered gold a viable investment. So I decided to contemplate what criteria are necessary to constitute an alternative currency. The net result was that I developed two important alternative currency criteria.
First, a viable alternative currency needs a nearly universal demand curve. That is, the currency must be desirable to hold. If this first criterion is met then a holder can be sure that it serves as a legitimate means of exchange for other goods and services, including other currencies. Sans a nearly universal demand curve then a holder does not hold a currency, but instead, a speculative asset.
Second, among my criteria is that the supply of an alternative currency needs to be fixed in supply. This ensures that the price cannot be manipulated by third parties, such as central banks, governments, speculators, and so on, and for limited, and usually uniquely selfish ends.
Mind you, all of this was before cryptocurrencies had ever come into existence. Because of my work trying to understand the millennia-old interest in gold, I readily understood how cryptocurrencies had the potential to become alternative currencies. Yet, now I must add a third criteria to my initial two and based on my recent experience with that most famous of crypto-assets <and now I am whispering because of the extreme responses in readers it generates>, bitcoin.
My third criteria is that an alternative currency also needs a stable price if it hopes to be used as a medium of exchange. Given my above two initial criteria, it should be obvious that another way of saying this is that the demand for the asset needs to be stable.
So why am I involved in advising Kidcoin? A cynic would say “because cryptoassets are HOT, HOT, HOT!” I would respond that unlike almsot all other cryptoassets there is a nearly universal demand curve in Kidcoin’s domain; namely, education among the globe’s people. After all, it is education that turns hard work, not just into personal fruit, but into fruit trees bearing life-transforming wealth. In short, nearly everyone recognizes the need for education. This is strongly in accord with my own story, and my own values.
Similarly, there is also a nearly universal recognition that empowering education is expensive and requires decided, disciplined saving in order to attain. Further, it is also universally recognized that monetary incentives do, in fact, work. For those of you familiar with Kidcoin you recognize that its design neatly addresses and facilitates the ‘universal demand’ attributes I just described.
You also are familiar with the fact that Kidcoin, like almost all crypto-assets, is limited in supply. Now whether or not it proves to have a nearly universal demand within education, and whether or not it proves to have a stable demand curve remains to be seen. However, that is the point of a startup, is it not? And isn’t that also the point of an advisory board (of which I am proud to be a part)?
I sincerely hope that you recognize the transformative value of Kidcoin and become involved in some way. :)
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Jason A. Voss, CFA is Content Director for CFA Institute’s 150,000+ investment professionals in over 140 countries. He is the retired co-Portfolio Manager of the Davis Appreciation and Income Fund which bested the S&P 500 by 49.1% during his tenure, was a Lipper #1 and Morningstar 5-star rated fund, and one of the first ten mutual funds awarded Stewardship Grade “A” by Morningstar.
Jason is the author of six books, including the hedge fund community favorite, The Intuitive Investor. In addition to Kidcoin, he serves as an advisor to two other startups, one in predictive analytics and the other in healthcare. Furthermore, Jason advises the board of the International Integrated Reporting Council, a new global business reporting standard ready-fit for investors. He is a frequent speaker globally discussing the future state of the investment profession, creativity, overcoming behavioral biases, improving investment returns, and meditation.
