It is becoming increasingly more difficult to classify investments into a particular type as the lines are beginning to blur between those we associate with being traditional, and those that were considered alternative. Once stodgy pension funds may now be holding various forms of derivatives, because without riskier investment products, they find it difficult to achieve the returns necessary to fund the plans.
We are starting to see the merging of traditional financial products with the millennial investment world of cryptocurrencies and blockchain projects.
The movement appears unstoppable with the emergence of cryptocurrency-based financial instruments that include futures, margin trading, IRAs, 401(k)s, ETFs, hedge funds, as well as a variety of other types of investment trusts and funds arriving on the global scene. One such fund is the Canadian FBC Bitcoin Trust, the first registered cryptocurrency investment fund in Canada. This represents the first opportunity for Canadians to hold cryptocurrency in a self-directed Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA). While this trust is currently only available to wealthy accredited investors, there are other options for all investors in cryptocurrency.
Unfortunately, a lack of education on the subject along with the spectacular attention-grabbing media headlines, has often resulted in every coin, project, or token being lumped together in one big ‘bitcoin boat’. Bad actors, with all the negative media attention they bring to the industry, may be overshadowing good projects, but make no mistake – there are amazing, innovative, cryptocurrency/blockchain projects developing that are operating in strict accordance of the law. With the explosion of unregistered blockchain-based Initial Coin/Token Offerings that are running afoul of securities regulations, it is really important to educate yourself before investing.
You don’t have to wait for cryptocurrency to merge with financial products in order to participate, the opportunity is available right now as a stand-alone, self-directed, ‘anything you want it to be’ investment. For example, DNotes 2.0 (symbol NOTE) has a CRISP, which stands for Cryptocurrency Investment Savings Plan, built right into its blockchain, in the form of staking rewards when held for various lengths of time. See – DNotes
Because you can acquire tiny fractions of a single cryptocurrency unit for pennies and occasionally for free, they represent the lowest entry barrier financial product ever. The average person can now invest in innovative new startups, an opportunity that up until now, was only available to wealthy venture capitalists and their friends. Thanks to crowdfunding, legitimate cryptocurrencies, and registered or legally exempt Initial Coin Offerings (ICO), the startup investment ‘playing field’ has been levelled for everyone, regardless of their financial status.
When the cryptocurrency industry matures and the blue-chip currencies / projects become evident, countries, regulators, banks, pension funds, and others that had the foresight to see the potential, will see the greatest economic benefit of all. If those that are imposing overly aggressive regulations for the protection of their citizens are not educated on, and keeping abreast of, the developments in the cryptocurrency and blockchain space, their rigid enforcement may harm the very people they are trying to protect.
It will be difficult for people that don’t have a decent level of financial literacy, to step into a world that is dependent on digital financial literacy. We provide everyone with free access to all material in the modules at DNotesEDU, so everyone has a chance to not only catch up in their understanding of basic financial literacy, but to prepare and financially benefit as we move toward a world of digital finance.
Knowing that this technology breakthrough is being called “the missing piece of the internet”, it becomes very obvious that the investment world will never be the same again.