Cryptocurrencies: The Saviour of Modern Society?

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The times we live in, according to many experts out there, it’s going to be cryptocurrencies to the rescue, most especially for young people.

Cryptocurrency coins
Cryptocurrency coins

The times we live in, according to many experts out there, it’s going to be cryptocurrencies to the rescue, most especially for young people.

Even JP Morgan, the largest investment bank and handles money for a large number of banks around the world as well as for major investors, based on recent reports by major finance magazines, is all fired up for these investments. This very bank, in the past, was seen to be waging a war of words on cryptocurrencies.

First of all let’s try to understand what cryptocurrencies are. These are nothing but assets like any other, except that for most part it is in digital form. To begin with, it is bought digitally using fiat currencies such as dollars and euros via crypto exchanges and thereafter it can be traded the same as any other asset or held as an investment.

Cryptocurrencies boosting price
Cryptocurrencies boosting price

By means of these exchanges, one cryptocurrency can be traded for another or for fiat currencies. Those who trade in them, largely keep the currencies in their accounts with the exchanges and the ones who have decided to invest and hold, usually transfer the currency from the exchange to their digital or paper wallets.

According to most analysts, after the trailblazer, Bitcoin, it is Ethereum and XRP Ripple which are the two most important cryptocurrencies.

XRP Ripple is especially favoured by students and youth on account of its price at present, which is around $0.60. Just a month back it was $0.23.

It is estimated that 38.4% of young adults between the age of 25 and 34 currently live in a shared household or with their parents. This is higher than at any time in the past. If analysts are right, it will be investments in cryptocurrencies that will most help them buy their own property.

What these analysts are pledging on, is the prospect of fiat currencies getting debased and losing their value. This is on account of extensive, perhaps even haphazard printing of money that is pumped into the economy by most governments.

So let’s give a closer look to the three cryptocurrencies, which we have mentioned. Bitcoin, as recently as 2013 was being quoted at around $120 and today it’s being traded at around $19,000.

 

New Players

ETHEREUM ETH cryptocurrency

Ethereum had a value of less than a dollar in 2016 and is now valued at around $595. The price of XRP Ripple hasn’t seen a rise anywhere of that order. However, many an expert predicts that the price will go through the roof, mainly since the currency is different from Bitcoin and Ethereum and is meant as a real time gross settlement system without any charge unlike the fee that is paid while using SWIFT transfers and other such methods.

They further go on to point out that the company has already tied up with more than a 100 major banks around the world and is already the third largest by market capitalization.

 

A Word of Caution

Before you go on and read further or decide to act on cryptocurrencies, bear in mind that the same as many commodities, investment in cryptocurrencies carries its associated risks. A good rule to follow is that no investment in your portfolio should exceed 10 percent on any one particular commodity, including cryptocurrencies.

 

Famous Investors

The story of Erik Finnman has often been reported by many of the major news channels. As the story goes Finmann was just 12 years of age when he invested $ 1000 he had borrowed from his grandmother in cryptocurrencies.

By the time he hit 18 he was already a millionaire and his net worth has only increased over the last three years while he is still a young adult at 21.

Other reportedly famous investors who are said to have made between 150 million to over half a billion dollars are the Winklevoss twins more known for having sued Facebook, Jared Kena, Dave Carlson, Charlie Shrem and Roger Ver.

 

The Difference Between Men and Women Investors

Men think they are better investors at the same time research shows that women regularly outperform men at an average of 40 to 94 basis points per year. It is also well known that women usually buy and keep until such time they find the price to be right when they decide to sell and laugh all the way to the bank.

This research from Rice University goes on to show that men are more prone to take risks for personal financial gain than women and women are more likely than men to take risks to protect themselves from financial loss and that women are more influenced by “communion” goals related to loss minimisation.

 

Students and Cryptocurrencies

Students and Cryptocurrencies

The youth of today are extremely savvy. Based on several reports, after the money has been paid for books, tuition and living expenses around 20 percent of university students go on to invest in cryptocurrencies. 

It certainly appears that the days when most were contemptuous and derisive of cryptocurrencies has passed. Today, top universities such as Pennsylvania, Duke, California, Michigan, New York, Hong Kong, Alcala, Autonoma de Madrid, Edinburgh, Denmark and many others offer courses in cryptocurrencies.

In closing, the famous quote by the Italian diplomat and philosopher Niccolo Machiavelli comes to mind, “It must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than a new system. For the initiator has the enmity of all who would profit by the preservation of the old institution and merely lukewarm defenders in those who gain by the new ones. ”

Photos: Shutterstock


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