Cryptocurrencies, between universal payment method and PONZI scheme

The most balanced opinion on cryptocurrency investing

By Marius Morra, CEO/Co-Founder TOKERO Crypto Exchange

From payment method to investment asset

In recent years, cryptocurrencies have attracted the attention of the financial world, both from investors and spectators, causing extremely polarized opinions. From crypto maximalists who believe they will revolutionize the global financial system with Bitcoin or another cryptocurrency as the sole payment method to those who consider cryptocurrencies a scam or pyramid scheme, public opinion is quite divided.

First of all, for context, the creator of Bitcoin, Satoshi Nakamoto, introduced Bitcoin as a decentralized electronic currency, designed to allow direct transactions between parties without the need for financial intermediaries such as banks.

As Bitcoin and other cryptocurrencies have grown in popularity, they have gradually become, in addition to being a payment method accepted by individuals and businesses, an investment and store of value tool for many people around the world.
The main factors that determined this were in order of importance:
– The possibility of unimaginable profits on other classes of investment assets against the background of increased volatility;
– Ease of trading due to the increasingly simple interfaces of other trading platforms;
– Accessibility of investments through the possibility of investing small amounts, starting from 10-20 euro;

As enthusiasm and adoption grows so does the wave of distrust or even hatred – Critics state: “Crypto is a SCAM, a fraud, or even slots. Don’t invest because you’re going to lose money, cryptocurrencies have no hedge.”

Let’s deal with these allegations individually:

– “Crypto is a SCAM”. Here the main problem is generalization. At this time, according to there are 23,253 cryptocurrency projects. Yes, among these there are also weak projects or even some possible scams, but this depends on the founders of the projects, which are different in most of the projects. Bitcoin for example is already 15 years old, a huge market capitalization, so a very good track record. So is Ethereum, the 2nd largest cryptocurrency by capitalization, with a market age of almost 9 years;
– “Don’t invest because you will lose money”. If we were to follow this advice, we should not even invest in the classic stock market where, according to public studies, an overwhelming majority – 85-90% of investors lose their money. Or in start-ups where only 18-20% of companies survive. Let’s not talk about insurers or even big banks that have recently gone bankrupt despite strong regulations in these areas.
– “Cryptocurrencies are not hedged in anything.” We will be brief here – Bitcoin has behind it “proof of work” – miners who validate transactions with expensive and energy-consuming equipment that costs, from production, installation to maintenance. And most importantly, behind the projects is BLOCKCHAIN TECHNOLOGY, this Internet 2.0 that is starting to be used in more and more fields.

So, after all these arguments, I think it’s time to place cryptocurrency investments where they belong – at the top of the investment pyramid, at the top of investments depending on the level of risk. Investment assets with a high degree of risk, but without a doubt assets. No SCAMs, no slots.

The Pyramid Explained? If at the base we have the investments perceived as stable or much more stable – deposits, government securities, real estate, in the middle precious metals, stocks, bonds and ETFs, then, towards the top, the area of start-up investments upuri and crypto.

Cryptocurrencies, in turn, can be divided into risk levels, at the base the well-known Bitcoin and Ethereum, the 1st and 2nd place worldwide, then top 100 cryptocurrencies and at the top the so-called GEMS – undervalued projects with massive potential. Beyond the line, in the area of gambling, we can agree to leave the so-called “shitcoins” – useless cryptocurrencies, created without a specific purpose and whose future is extremely uncertain. DogeCoin, Elon Musk’s favorite meme-coin may be the exception that proves the rule.

Any investor with even a modicum of investment knowledge knows that the largest percentage of the amount allocated to investments should go to the safer asset classes at the bottom of the pyramid, allocated according to the investor’s risk profile and investment plan.

Another basic principle is DIVERSIFICATION: therefore correlated with the undeniably very good returns obtained for years, a percentage however small should also go to the crypto area. So, the question should not be “Should I invest in crypto” but rather “What percentage should I allocate to crypto investments” and “Among which cryptocurrencies I should divide the percentage allocated to crypto”.

It is also not to be ignored that large investment funds and international companies have invested in crypto. Among them we can list: Grayscale Investments LLC, Pantera Capital, Andreessen Horowitz, MicroStrategy and Tesla. JPMorgan Chase, Goldman Sachs and Morgan Stanley have also started offering cryptocurrency trading services for their institutional clients.

Beyond words, the numbers speak for themselves: Bitcoin and Ethereum are by far the best performing assets of the last 10 years. (We verified the information with ChatGPT in case you don’t take our word for it):

And yes, not everyone has the opportunity to invest (although many could but education is still needed on this aspect) but almost everyone can make one or a few first trades to see what it’s all about and what the process is. Investments can be as low as 10-20 euros, with minimal costs – accounts on trading platforms are free and exchange commissions in the area of 1%. The gain? Apart from the financial potential, there is a potential that is unfortunately very little discussed and which is related to the knowledge gained and the access to a new world – the world of investments and Web3 – the new internet where I read, contribute and own. In Web3, access keys are one or more wallets and cryptocurrencies. Cryptocurrencies are the key to the future.

In our experience, the difference between someone who has never made a cryptocurrency transaction and someone who has made at least one is considerable. The person who made a transaction, no matter how small, has learned the process, can follow a crypto discussion in the know, and most importantly, is much more prepared for when an opportunity arises. Also, many who invest in crypto, educate themselves as they use crypto platforms, learn the process, learn about investing, and start investing in other types of investment assets as well. We can say that access to crypto helps access to investments in general.

But crypto is not just about speculative investments. With the significant increase in adoption and projects in recent years, the number of jobs available in this field has also increased. Due to its technological nature, these jobs are generally related to the fields of IT, software development and cyber security, but there are also opportunities in marketing, management, legal, accounting and other related fields. Specialists in the crypto area are not only in high demand, but also very well paid. Also, in the state institutions – the National Bank, the National Office for the Prevention and Combating of Money Laundering, the Police and others, departments related to crypto appear where people who have a minimum of information related to this field are promoted.

And because we’ve entered the realm of regulation, a big fear of critics is that cryptocurrencies can be used in drug trafficking, terrorist financing and other crimes. Here, the simplest argument we can offer is that these activities unfortunately existed until 2008 when Bitcoin appeared, so we cannot see a direct causal link. It is well known that the most anonymous means of financing illicit activities is fiat currency in cash form.

Exchanges are also subject to applicable anti-money laundering laws so KYC (Know Your Customer) technologies are implemented and source and proof of funds are requested like bank transactions.

In conclusion, after this plea, I have the following request: if any great Romanian or foreign financial analyst still screams loudly against crypto, comment with a link from this article.

Some of them I admire and respect until they start discussing crypto where the logic unfortunately starts to disappear. And yes, I can accept that I’m ignorant but I have a hard time believing that Elon Musk or Michael Saylor don’t know what they’re doing.

As a market capitalization, today cryptocurrencies have a total of about 1.1 trillion dollars. By comparison, McDonalds has 206 billion and gold has 12 trillion, so we can conclude that the cryptocurrency market is large enough to be considered but small enough to have very high growth potential. As we say here, “we’re still early”!

“The question I leave you with today is: what do you want to be? Actor or spectator? Gambler or investor? I have good news – the choice is 100% yours, so choose SMART!”

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