Cryptocurrencies still arouse much controversy many years after its creation. So, with all the rumours and legal doubts, how can we estimate whether it is worth investing in them?
Many well-known investors in this world did not believe in cryptocurrencies. There were people like Charlie Munger, the vice-president of the Berkshire Hathaway
holding, who told his employees: "It's horrible that professional investors are starting to play with cryptos." There was also Robert Shiller
, winner of the Nobel Prize, who recognized that people overestimate the importance of Bitcoin. Jamie Dimon
, JP Morgan Chase's
CEO, who changed his views - from a declared opponent to a man who personally launched a cryptocurrency.
There are nearly 2,500 cryptocurrencies in the world. So how do we recognize which ones are worth investing in?
According to Erik Kovalak
, the managing partner of Vellum Capital, people translate the value of cryptocurrencies into a traditional model, eg the P / E ratio
(price earnings ratio). It is calculated by dividing the market price of one stock exchange share by the net profit attributable to it. There is another converter for virtual currencies, called NVT Ratio
(network value to transactions), but it is not always precise. Kovalak claims that assigning values to cryptocurrencies means estimating them against philosophy and technology. Investors should ask themselves: does the basic structure of cryptocurrencies provide a transparent and decentralized solution?
A once-in-a-lifetime chance?
The key question for the wider introduction of cryptocurrencies is the question of how easy it is to acquire, protect and use them. The main beneficiaries would be people over forty. There is still a lot to do about the awareness of people, mainly older people, about how to understand this industry.
Cryptocurrencies are more than money - it's a whole industry. Imagine that you have invested in an e-mail in 1993 - before browsers introduced platforms for wide application. Crypto can work on a similar principle.
These are the words of one of the cryptocurrency experts in answering the question of whether the virtual coins may become the first ever global currency. This opinion sounds interesting to all investors. Nevertheless, it's not yet the time for that. To enter the mainstream, one should lead to a situation in which people use the blockchain
without realizing it.
What to remember when investing?
G. Mark Hardy, CEO of the National Security Corporation
, when asked about the criteria that determine the value of cryptocurrencies, drew attention to three elements. First of all
, the financial stability and experience of major developers and their sponsors. Secondly
, monitoring consumer acceptance. The third issue
is to decide whether the company responsible for the coin solves the specific issue. Since there are more than 2,500 cryptocurrencies, many of them simply imitate predecessors.
Cryptocurrencies are still a new and unconventional business. However, here, as in any other case, there is an answer to the question of what to invest in. It is important for investors to know if it is within their own knowledge. It is as if the production expert missed the opportunity to invest in a health care startup. Is this really a loss? Secondly, we should know as much as possible about the companies behind the coin. Consider whether they are acting in a just cause.
The already mentioned here Eric Kovalak advises: select five crypto investments among the largest in terms of capitalization and manage them as your own fund.