Asset Classes

Crypto Currencies
Currency

More About Crypto Currency

  • Crypto Currencies can provide people with an easy way to send and receive wealth (even when their home countries currency is worthless or in rapid decline)
  • Allow individuals, companies and countries to escape the control of central banks and regulations
  • International Assets - they are accepted all over the world without need to be exchanged for local currencies/assets
  • Serve a similar function to gold, but may have more upside since they are not yet widely adopted
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  • Governments are not able to control cryptocurrencies like they can fiat currencies
    • They can't block payments
    • They can't freeze accounts
    • They can't seize assets

Cryptourrency Facts
  • Based on globally, decentralized & distributed networks (no one person is in control)
    • Puts the power in the hands of the broader community
  • Many currencies have a way to increase supply
    • Often this requires "mining" (analagous to physical previous metals)
    • The supply increase is often limited to a certain amount/% per period of time


Crypto Currency Benefits (Often Compared to Fiat Currencies)
  • Typically come in fixed quantities (no one can print as many as they want)
  • They are decentralized - the government can't control them.  Power is not in one peron's hands
  • They don't require banks to safely hold (no risk of bank failure) 
  • The supply of coins/money/token is strictly regulated and/or limited (unlike fiat currencies)

Crypto Currency Risks
  • Governments may try to regulate our outlaw them (they take power away from central governments)
    • Some countries have already tried to outlaw
    • Mitigation:  It will be hard for governments to take don a decentralized system
    • Mitigation: Other countries are actively investing in crypto technologies and encouraging crypto businesses
    • Mitigation: Governments were unable to stop other distributed technologies (example:  Bit Torrent)
  • Quantum Computing could render the encryption that backstops the system
    • Currencies can use algorithms that are safe from quantum computing


    • Hacking and Theft is common - nearly $927 Million stolen in first 3 quarters of 2018

    Crypto Currency Using Classic Definition of Money

    • It is a medium of exchange
    • It is a unit of account
    • It may or not be a store of value
      • Wild price swings may indicate that it is not a good store of value (depends on confidence of holders)


    Government Sponsored CryptoCurrencies

    • They may run the same risks as fiat currencies
      • Government regulations
      • Government controls
      • Government printing