From the days of barter to bitcoins, man has always strived to invest his funds into avenues that multiply his investments.
Leaving the barbaric era of warfare and pillaging behind, we have ushered into an age where financial investments have become the domain of pen wielding fund managers instead of the sword wielding princes.
Always Keep Evolving
Even among fund managers, what separates the proverbial wheat from the chaff is knowledge coupled with hard work and ever evolving research.
What may have been a solid investment vehicle in the 1900s got outdated before the advent of the new millennia.
Take for example, the so-called tulip mania that dominated the futures market of the 18th century, but soon fell out of fashion within a few years.
This example and many more throughout history have taught fund managers the valuable lesson of investing big on emerging trends.
A notable pivot in the investment circles arrived with the arrival of the internet. Once just a medium to send a few packets of data from one node to the other, the internet has grown by leaps and bounds, encompassing everything we do.
This makes the internet a foundational technology, on the back of which, the technolog-ization of other domains of our lives took place.
You however cannot invest directly into the internet. You can, however, invest in the use-cases of the internet.
This is why, the behemoths of the internet such as email, instant messaging, social networking, and media distribution etc. gave birth to the biggest tech firms on our planet that gave phenomenal returns for over a better part of the last twenty years.
Always Ask for More
A similar foundational technology is the Blockchain. It is a trustless system which implies that it makes obsolete the middle-man from any domain that deploys it. The Blockchain is a decentralized and a distributed ledger that ensures radically transparent transactions.
Imagine, if all the ledger books of all the people was transparently and securely available on the internet. Will that not make money laundering a thing of the past, overnight?
Will that not make obsolete the costly banking sector by facilitating easier person to person transactions?
This is, but one use case of the Blockchain. Just like the internet, the Blockchain has applicability in almost all the domains of our daily lives. Everyday, more and more companies and organisations are building Blockchain based solutions for all our requirements.
Why Blockchain?
If a doctor in America wants to access the medical records of a visiting Australian patient, he just types in the patient’s public information on the futuristic Blockchain application, and instantly receives all medical records of the patient, irrespective of the place of treatment. This is radically different from the current scenario, where patient records are stored in clunky softwares which prevent the sharing of records to a competing software. This is just one of the uses of the Blockchain in the medical domain.
The most common legal dispute that arises these days is regarding the ownership of property. Judgement hangs on which party can provide the most conclusive proof of ownership. It is not uncommon to see forged documents finding more legitimacy over faded actual title deeds. This is being changed by companies that are building solutions that put the notary-verified title deeds on a Blockchain. Now, when disputes arise, the magistrate only needs to pull up the original title deed and award his judgement on favour of the true owner. Thanks to the Blockchain, costly litigation is a thing of the past.
Again, this is just one of the uses of the Blockchain in the legal domain.
Similarly, all the other domains also benefit tremendously from the application of the Blockchain due to fewer middlemen and improved logistics.
Always do your homework before going to bed
Coming back to the internet, the companies like Google, Amazon, and Facebook have shown us the kind of astronomical growth that occurs due to economies of scale. Jeff Bezos just uncrowned Bill Gates to become the richest man on the planet.
A lot of shrewd fund managers, who diligently did their homework, invested early in these companies and did not throw in the towel when times looked tough. They stayed invested because they knew that they had invested in companies better than gold. For them, volatility is just a trend, and it would pass.
Just like that, Blockchain, as a foundational technology is here to stay. It has spawned multiple applications in multiple domains. The much in the news, bitcoin is just one of the applications of the Blockchain technology in the economics and finance sectors.
Like spectrum is a major prerequisite in using mobile communications, cryptocurrencies are a prerequisite for using the Blockchain.
Each of these cryptocurrencies is built to serve one or more purposes.
For example, Ethereum (ETH) is geared towards automatic execution of contracts (smart contracts), Ripple (XRP) is built to simplify transactions of large sums of money in a secure manner, and so on.
There are over 2000 such cryptocurrencies, and counting. Navigating through each of their white papers and deconstructing them is the homework that is expected of any fund manager worth his salt.
Ignoring the cryptocurrencies from one’s portfolio will turn out to be their costliest mistake… ever.
If still undecided, the least one can do is invest 2–5% of their fund in BTC and leave it untouched for the next couple of years. Just doing this will make the fund perform better than what it would have performed without BTC.
You see, cryptocurrencies were the fastest growing asset class in 2017, by a very very vast margin, and things are expected to only grow bigger.
Think of it as the internet in the year 2000. It had various detractors following the dotcom bust, but within five years, it had erased all its losses and embarked on a juggernaut that hasn’t slowed down even after fifteen straight years.
Conclusion
Since the people have tasted, or at least witnessed the spectacular returns from the internet, they are buoyed by the emergence of the Blockchain. Those who missed the previous bus are already buying any new cryptocurrency they get their hands on. Investment is an art, and skilfully locating the next big multibagger requires a flourish of the brush, and not the slashing of the canvas.
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