Cryptocurrency – An Asset Class With Two Superior Benefits
Upgrading The System
For many traditional investors, Crypto is viewed as an unnecessary investment vehicle. It’s seen as a speculative gamble, void of any “intrinsic value”. It’s difficult to understand how certain individuals can be so opposed to an asset class that has proven itself to be so resilient, as well as desirable. Every resurgence from bear market desperation to bull market euphoria is evidence of investor conviction and approval.
Yes, the unparalleled gains are perhaps the primary draw card for most investors. However, there are additional benefits that cannot be found in TradFi. Benefits that provide true ownership, and ultimately, a level of financial sovereignty. It’s these two primary benefits that I believe will eventually become Crypto’s most significant selling point. However, it takes time to penetrate the herd mentality.
This is unfortunate, or fortunate, it all depends on how you look at it. Unfortunate because it will take a lot longer, and fortunate because it gives the astute investor more time to build meaningful positions. As discussed many times, early access is imperative. This is especially true regarding micro-caps and newly launched projects. Building positions via self-custodial solutions is the first and foremost benefit of Crypto investing.
True Ownership Defined
Whenever an investor purchases a share or any other financial contract such as a CFD or ETF, he has to offer up true ownership rights. Capital is deployed to trading platforms such as Robinhood and other investment brokers. Once the asset or investment vehicle has been purchased it remains within the custody of the broker. The investor receives a contract note as proof of ownership.
It’s important to distinguish between proof of ownership and actual ownership. True ownership is determined by who has physical custody of the asset. In other words, who has sovereign ownership? An exchange or broker ultimately has sovereign ownership for the simple reason that your decision, as an investor, can be overruled by the broker. This implies true ownership. The beauty of Cryptocurrency is that it offers non-custodial ownership.
In other words, once an asset has been purchased on an exchange, it can then be moved into a private wallet which is controlled and owned by the investor. Essentially, this provides a level of financial sovereignty. The investor is in control and is not reliant or beholden to a third party, such as an exchange or broker. The FTX and Celsius collapse provide a real-life example of this dynamic.
As an investor, you “own” the assets, but do you really? Regardless of who you are, if you had capital on any of these third-party services you have been restricted in accessing your assets, and perhaps, even losing them altogether. Taking full advantage of the benefits inherent to Cryptocurrency can enhance your investment experience by providing true ownership and self-sovereignty.
Satoshi’s Idea
Furthermore, in regard to self-custody, another amazing benefit comes to light, in the form of private keys and the ability to simply recover a wallet. In reading some of Satoshi’s transcripts, I remember seeing how Satoshi envisioned a form of money, that if stolen, could ultimately become useless/worthless. This is very much a reality in the Crypto world… and nowhere else.
If you are holding valuable and precious items in a safe and that safe is stolen, you have now lost these items. They are no longer in your possession. In the case of Crypto, this basic law is overcome and defeated via a seed phrase. If someone were to steal your hardware wallet, it would essentially be worthless to them. This is especially true, if you are quick to act, regarding exercising the appropriate course of action.
Simply restore your wallet on a new device, and secondly, move your assets to a new address just to be safe. It’s amazing when you think about it! Someone can literally steal your wallet, and you can simply regain your assets with a few “digital moves”. Once the masses begin to realize and understand these benefits, significant adoption will kick in.
Final Thoughts
Cryptocurrency is a superior asset class when compared to anything else in the marketplace. Not only are the returns more significant, but aspects such as true ownership and safety give this asset class an edge over everything else. Yes, hacks and exploits are always a concern. These risks can however be mitigated by opting for cold storage and hardware wallet solutions.
Nothing is perfect in this imperfect world. However, this particular asset class has proven itself over time. For many citizens in troubled areas of the world, it is an absolute must! As trust continues to crumble, Crypto will become more attractive, even in regions that are now perhaps not as distressed. That’s it for this one. See you next time!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.
