Thursday, December 21, 2017

Living in a Digital World

2017 marked an event so globally pertinent to democratizing money and disintermediating the banco-governmental establishment that has monopolized the "means" of how humans store and exchange value today. People everywhere, and I mean everywhere most simultaneously adopted the notion of a new decentralized method using blockchain technology to transact monetarily.

It's funny - as I talk to friends who have also 'seen the light' it seems there is usually a pivotal moment in time that we connect with the idea and its possibilities and decide, not only to think about it, but to be part of it also.  Is that connection a relation to the idea, or to our human consciousness about the potential brought about by the idea for the collective benefit of our species, society and all around us?
We begin to realize, and then, bam! I can see what is possible. It is similar to the birth of the internet and open communication and free access to all information via a shared network of computers. But blockchain seems unexplainably bigger than that.

I began by researching the dominant coins commanding the greatest market share trying to understand what potentially is driving their price appreciation, and then investing in them.  I then started to think about which ones, the better known ones, like bitcoin, ethereum and litecoin, and then some of the lesser-known ones, that potentially could disrupt multiple industries at once with a network effect.  

I expect many ups and downs along the way, but I believe by buying the leaders and value-add innovators in the digital currency space, that there is a great probability for outsized returns and as well as an exciting space to learn and contribute.  In addition, a strong argument can be made that investing a small portion of a portfolio in this risky, early stage new technology is healthy for a portfolio.  This is because through diversification in a non-correlated asset increases the expected return of the portfolio while reducing the volatility - and this certainly is the case here - thus changing the slope of the Capital Asset Pricing Model upward and to the left, lower portfolio volatility and higher expected return.  This is due to the low correlation of returns between this new asset class and more traditional asset classes.  Its a good thing for sure, but doesn't warranty that returns will increase over any term - but still, as long as the amount invested is constrained to the most risky portion of a portfolio, it is beneficial to the portfolio, and I would argue necessary.

current portfolio:

Bitcoin, Bitcoin Cash, Ethereum, Litecoin, Ripple, Omisego, IOTA, NXT

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