Last year’s explosion in cryptocurrencies (in both price and awareness among the public) has made the financial world sit up and take notice. The promise of blockchain technology disrupting industries, democratizing finance through decentralization and potentially making investors wealthy—was the driving force behind the rise of Bitcoin and altcoins in 2017. Since then, enthusiasm has calmed, mostly due to recent bearish sentiment, but the power-to-the-people fundamentals have not changed.
Buying the dip
Interestingly, the number of cryptocurrencies being actively traded today is in the thousands and growing exponentially. Bitcoin is currently selling at a 65% discount from its December 2017 all-time high of nearly $20,000, while most altcoins are trading around a 90% discount from their highs in early January 2018.
More and more investors, especially those you’d typically consider to be traditional, are adding crypto to their portfolios in order to benefit from portfolio diversification.
Crypto assets don’t directly correlate to more traditional asset classes like bonds, shares, and stocks and are typically lumped in the “Alternative Asset” class bucket. As the market gets more bearish, cryptocurrencies may, in fact, be the perfect hedge against traditional markets’ volatility. The immutable nature of crypto coins and tokens ensures that their maximal supply stays fixed, which can create scarcity in the market and contribute to sometimes staggering profit opportunities. That said, much of the disruption from cryptocurrencies has yet to be realized, but optimism is high as technological advances, and increasingly easier ways to participate, are becoming a reality.
Barriers to entry
Considering all the variables in play, it stands to reason that investing in cryptocurrencies in 2019 could provide significant profit in the long run. Investing in the stock market hasn’t always been universally accessible. Many of us hard-working folks lack the necessary capital to start building profitable investment portfolios and not worry about risk.
With cryptocurrencies, however, people don’t need to invest a lot for the chance to see 10x, 100x or even 1000x gains in a couple of years. So why aren’t most people currently interested in taking advantage and “buying the dip?” Could it be the steep barrier to entry with the interface of most crypto exchanges? Sure. Could it also be the overwhelming number of different currencies and technical jargon people need to understand in order to feel comfortable in the market? Very likely. How about the stress of being your own bank and being responsible for the safe storage of your “key” (AKA access to your crypto investments)? That’s certainly a thing many newbies are uncomfortable with.
Enter Democravesting
Acknowledging these challenges, blue-chip investment firms like Goldman-Sachs, recently introduced financial tools and products, specially designed to ease the beginner into building a well-balanced portfolio of crypto assets. Coinbase also introduced a bundle of their four coins, and others will surely follow with increasingly more diverse bundle offerings. These companies are all talking about mass access, and they’re positioning crypto bundles the way we’ve always thought about mutual and index funds.
Tilting the crypto investment opportunity toward the 99% is a phenomenon I like to call Democravesting. It’s an entirely new category of investment that is well suited for everyone, not just the tech nerds who are leading the crypto investment revolution.
A Democravestor is anyone with an interest in putting discretionary funds into cryptocurrencies, instead of into something less sound such as gambling, or even the lottery. There are millions of democravestors right now (and they don’t even realize it), but there can be billions more. It is our mission to take the anxiety out of buying crypto and open up a path to this decade-old asset class.
Even if it’s just throwing a few bucks into the volatile crypto market and seeing what happens, democravesting is something that everyone should be able to do with comfort and ease because purchases are fractional. You don’t have to buy a whole Bitcoin for $6000: you can buy a portion of one for about $50.
Cryptocurrencies are supposed to be by the people and for the people. Everyone should have the chance to invest and create wealth in the crypto space. Who knows, Democravesting might just turn out to be the best, most life-changing impulsive decision many people will ever make.
Jen Nash is CEO of FreshWealth. An advocate for financial empowerment, Jennifer has two decades of financial-services focused strategy, content, design and UX experience. Recently, she helped launched BloombergBlack, an exclusive wealth-management service for HNW investors, and overhauled TD Ameritrade’s vast list of financial products.