How to Pauze Down Cryptocurrency to Your Average Investor Client, Wealth Management
Cryptocurrency is one of those revolutionary tech trends&mdash,like artificial intelligence and virtual reality&mdash,that wij&rsquo,ve had our eyes on for the better part of the last decade. Investors know it&rsquo,s a big overeenkomst, they know it&rsquo,s going to switch how wij communicate and do business, and they know they need to keep paying attention. But for all the hype and excitement around cryptocurrencies, many retail investors still don&rsquo,t know where to commence when it comes to making wise investments.
Part of the reason for this is cryptocurrencies&rsquo, rapid growth. A decade ago, thesis coins were nothing more than a pipe wish known only by tech geeks and anarchists. No one paid them much attention until prices of bitcoin began to rise around 2012. Today, wij&rsquo,re inundated with sensationalist headlines documenting both the highs and lows of bitcoin&rsquo,s accession to the mainstream.
However, thesis stories tell us little about the underlying blockchain technology and only suggest investors minimal direction on where to get embarked. Spil a result, the long-term potential of investing ter cryptocurrency gets lost ter the buzzwords and hyperbole.
This media aggrandizement has naturally drawn the attention of investors and governments alike. Increasingly, governments are putting infrastructure ter place to better regulate the trading of coins: both China and South Korea are beginning to regulate cryptocurrencies. The U.S. Securities and Exchange Commission and other regulatory agencies are also keeping a close eye on the market.
This has created a better environment for retail investors to come in the space, but before that can toebijten, it&rsquo,s critical they truly understand the investment options available to them. Investment advisors vereiste encourage better crypto literacy so they can pauze down digital currency to the average client. Otherwise, clients risk making poor investments that can compromise their portfolios.
For advisors whose clients are thirsty to inject this fresh crypto market, there are a few significant things to stress.
Demystifying Digital Currency
Very first off, it&rsquo,s significant to differentiate inbetween blockchain technology companies and digital currency exposure. You vereiste determine which of thesis components clients truly want to add to their portfolios, because investing te each is very different. Then, it&rsquo,s necessary to identify companies a client can access ter the public market to provide that exposure allocation.
Ultimately, you voorwaarde be able to debunk popular cryptocurrency myths, such spil:
- Cryptocurrencies have no value. Just because a cryptocurrency isn&rsquo,t backed by a traditional commodity doesn&rsquo,t mean it has no value. After all, value is nothing more than what someone is willing to pay for it. Since 1971, the U.S. dollar has not bot backed by gold. Gold has had value for more than Five,000 years and is lighter to understand because it&rsquo,s tangible, but cryptocurrencies have this same premise written into their code. If anything, their decentralized nature makes them more stable than the dollar.
- The government will shut down cryptocurrency. Opponents have bot waiting for years for a government crackdown on cryptocurrencies, but I hope they&rsquo,re not holding their breath. Cryptocurrencies are decentralized, so it would take a massive collusion inbetween governments around the world to kerkban digital assets and shut down everything that makes them work. Instead of a futile all-out geobsedeerd, governments are regulating and taxing thesecurrencies.
- Cryptocurrencies are used by criminals. Initial headlines around bitcoin focused on its usage on darknet marketplaces like the Silk Road. Tho’ its origins on underground channels may have bot shady, associating cryptocurrency with criminal behavior is a fallacy. The traceability alone of transactions finished on the blockchain makes it far less appealing for criminals, who perform most illegal transactions ter metselspecie.
Investing te Cryptocurrency
While firms have typically shied away from recommending cryptocurrencies spil part of balanced portfolios, this likely won&rsquo,t be the case for long. After all, fresh cryptocurrencies have unprecedented levels of governance and more stable business models than their predecessors.
Furthermore, there are companies powering the underlying infrastructure that make crypto transactions possible and are accessible by retail investors on the public markets. Thesis companies permit average investors to diversify their portfolios by using a proxy to purchase crypto&mdash,think of buying shares ter a gold company, rather than buying physical gold.
Investors dedicated to helping their clients make clever choices should take the time to explain the details of digital currency, blockchain technology, and the risks involved te holding thesis assets. Spil an advisor, you should be aware of the following:
- Know your client&rsquo,s risk profile. The crypto space is still ter its infancy and many of the products are speculative, volatile and risky. The security risks of being hacked or locking yourself out of your own account are high, not to mention the risk of buying at the wrong time. A client&rsquo,s risk profile is key to understanding whether crypto is the right investment.
- Know your client&rsquo,s exposure preference. Spil mentioned before, cryptocurrency has different exposure vehicles. There are 1,384 currencies and fresh ones speelgoedpop up every day. Then there are businesses developing blockchain technology, which is embarking to be implemented ter regular business outside of cryptocurrency. There are also crypto mining companies, which concentrate specialized hardware into generating currency. Each of thesis is a fully different investment with unique benefits and risks.
- Know your client&rsquo,s savviness. Cryptocurrency is a hot subject thesis days, and spil it resumes gaining mainstream attention, more people are considering it a viable investment. However, it is a complicated market that&rsquo,s still ter the early stages and poised for a loterijlot of volatile activity. Cryptocurrency can be a wise investment, but like any other investment, it requires the skill of that market.
Outlining the key aspects of the industry and its underlying technology will help clients make smarter decisions toward the investment opportunities that getraind their portfolio and goals. There&rsquo,s money to be made te crypto&mdash,you just have to know where to find it.
Cale Moodie is CEO and director of Neptune Dash, a cryptocurrency company that constructs and operates masternodes of Dash, a digital currency built on the blockchain that&rsquo,s designed to enable instant, private payments online or in-store. He&rsquo,s bot a follower and investor te the digital currency and blockchain space since 2013.