Crypto-Currency, the Blockchain and Your Portfolio

I am attending the Barron’s Independent Summit in Salt Lake City for the next few days. Ric Edelman, a well-regarded advisory firm founder, author and entrepreneur has assembled a group of experts to discuss the future of digital currencies. I admit that I have been a skeptic, so I wanted to understand what the proponents and futurists had to say on the topic.

A couple of years ago I received frequent questions about Bitcoin, Etherium and other types of crypto currencies.  It seems like the hot topic has shifted to cannabis investments and as bitcoin has dropped from $20,000 to around $4,000, less media attention has been focused on the topic. Although the short-term bubble seems to have burst, my primary take away from the day was that crypto assets are real and my prior skepticism stemmed from the speculative trading during the frenzy of the past few years.

The realization that other assets can be securitized or “tokenized” and it can create liquidity for assets that may not have previously been liquid. For example, an apartment building in Manhattan recently had a token offering. If you purchased a “token”, you would own an interest in that property, and you could (conceivably) readily sell your interests to another willing buyer.  Similarly, there is a car dealer in California that has issued “tokens” on Ferraris and other issues are planned for art and rare wines. The exciting aspect is that blockchain/crypto-currencies can solve a wide variety of financial challenges and open up the ownership of a variety of assets that were previously difficult to hold.

As technology evolves and our world becomes even more digital, it is clear that crypo-currencies will be here in some form. There are many forms of these currencies and it is very difficult to determine the potential risk in any particular coin or token. Investors should be wary but the concept of having some exposure to the asset class is worth considering.  If I could go back to the inception of the internet, I was suspicious about how companies like Amazon, google and Facebook could actually generate profits.  While I plan to exercise caution, I am open-minded to looking at investment opportunities that have the potential to generate extraordinary returns.

 

This article is intended strictly for educational purposes only and is not a recommendation for or against cryptocurrency.