There are some really amazing things currently happening within the global fintech space especially with respect to Blockchain and cryptocurrencies, that are throwing up once in a lifetime opportunities for discerning investors who understand the futility of trying to fight an idea whose time has come.
Take the Wall Street giant Goldman Sachs for instance, who in stark contrast to Jamie Dimon; CEO of JP Morgan chase who earlier in September called Bitcoin a ‘fraud’, are currently looking into setting up a new operation for trading bitcoin and other digital currencies in response to growing client interest. As a matter of fact, Sheba Jafari; vice president of Goldman Sach’s FICC Market Strategy team, published a series of technical analyses of bitcoin’s price beginning from earlier in the year when the digital currency’s price soared.
Perhaps one could argue that traders and investors alike may be reading too much into Goldman Sachs’s inclination toward opening a Bitcoin desk, especially as its exploration is still very much in its early stages and may ultimately not amount to much. However, one can also not discountenance the effect Goldmans’ opening of a Bitcoin trading desk could have on legitimizing the cryptocurrency especially as it (Goldman) has the capacity to attract massive investment funds into the derivative, given its deep pockets and pedigree.
Interestingly, very shortly after reports of Goldman’s interest in exploring crypto surfaced, Forbes launched a ‘CryptoConfidential’ newsletter dedicated exclusively to delivering the most important crypto news and opportunities to your inbox every Tuesday and Friday.
Oh and by the way, James P. Gorman; CEO of Morgan Stanley, also differed with Jamie Dimon of JP Morgan, stating that cryptocurrencies are ‘certainly something more than just a fad’.
Suffice it to say however, as many have rightly observed, that Bitcoin is highly volatile and so one must take extra care when trading in it. For example, from a peak of about $4921/unit, it fell to about $3,000/unit after Jamie Dimon blasted the currency and China announced a ban on ICO’s (Initial Cryptocurrency Offer) mid-September. However by Thursday, 12th October, it had smashed through the $5,000 barrier, soaring all the way up to $5, 586.10 as investors shrugged off the latest risk warnings and instead speculatively drew confidence from the combination of reports of upcoming splits in its software; Goldman Sachs exploring opening a trading desk; and rumours that China could ease restrictions. As at the time of writing this article (8.07am GMT, Tuesday October 31st, 2017) Bitcoin’s value stood at US$6135.35
In 2016, the value of bitcoin increased 122%, from $432 to $960 per unit. By comparison, for the same year, the S&P 500 total return was approximately 12%.
So what makes digital assets such as cryptocurrencies attractive as an alternative investment vehicle despite its volatility?
Peter Smith; a 2016 World Economic Forum Technology Pioneer and the Co-founder and Chief Executive officer of Blockchain; a leading financial technology and data company which has empowered millions of users across the globe to store and transact digital value quickly and without costly intermediaries;
‘Digital assets can revolutionize the prevailing status quo of exchanging value today which is still mostly an antiquated, cumbersome and costly process. Benefits include the reduction of transactional frictions, the ability to transact across borders, the elimination of counterparty risk assessment, regulatory and monetary policy freedom, access to money for the “unbanked,” user anonymity and ledger transparency. Given the long list of benefits as well as the fact that a digital infrastructure is available to most of the modern world, there is a present and growing need for a digital medium of exchange. The future of money is digital – and bitcoin is the first early success of that broad, world-changing vision’
As blockchain/crypto gains in popularity and acceptance, we are seeing an increasing number of ICO’s being offered by all manner of entities from all around the world – and I urge readers to exercise the greatest levels of caution by conducting as much due diligence as possible before subscribing to any as there are quite a number of scams out there.
Another interesting phenomenon we are beginning to see is the launch of tokens (tokenization is the process of converting rights to an asset into a digital token on a blockchain) with niche purposes such as investing in real estate. Given my keen interest in real estate investing, a project that recently caught my attention is one presented by BrickBlock, who through their platform, give interested parties the ability to trade exchange-traded funds (ETFs), real estate funds (REFs), passive coin-traded funds (CTFs) and active coin managed funds (CMFs) in a secure marketplace.
Brickblock, a Berlin based financial services company co-founded by Jakob Drzazga uses blockchain technology and smart contracts to simplify investing in brick & mortar assets, as well as crypto funds. By cutting out middlemen, Brickblock significantly reduces the costs of investing, introduces a more streamlined process, and increases security.
Coincidentally, BrickBlock launch their ICO today (October 31st, 2017) and by December, they will be the first platform in the world to sell a tokenized apartment on the blockchain, – the inaugural step of their goal of making investing cheaper, easier, and more secure. By December, anyone interested will be able to buy real estate in the form of funds or REITS and earn passive income from the profits earned by those real estate assets.
The ability to diversify one’s real estate portfolio and buy European and U.S. real estate without geographical restrictions is both an interesting proposition and a clear indication of where the future of real estate investing is headed.