From about the midway point of 2017, when the price of Bitcoin was starting to climb to its peak of $20,000, it was hard to go anywhere and not hear whispers of this new get-rich-quick investment.
People were frantically googling ‘Bitcoin’, trying to understand blockchain, sending each other memes about the cryptocurrency; it was on everyone's lips - from the postman to the Wall Street executive.
Not only were people googling and asking: ‘what is Bitcoin’, they wanted to know how they could get a piece of the pie that had turned a handful of early investors into instant millionaires. An asset which was growing at an exponential rate was exciting, and got even more so when people found out this complicated cryptographic digital currency was really quite easy to obtain.
It had all the hallmarks of a money-making investment that appealed to a new generation. There was no exclusivity around Bitcoin, a stuffy Wall Street bank did not control it, it could be acquired at any time of day from a smartphone, and as little as a few dollars could buy you in.
Millennials, Generation Y’s and Z’s, as well as fathers, grandmothers and all comers were all suddenly masters of the candlestick graph, checking Coinbase every 20 minutes to watch this asset move and shake like nothing seen before.
It was exciting, it was easy, it was value for money - at the time - and it struck all the right notes with a new generation coming into an era where investing was something to take seriously; the same generation who have been fed up with the traditional financial way of things, especially after witnessing the crash in 2008.
But, as the cryptocurrency market has moved on, and the hype and excitement popped, what has been the effect on all those new would-be investors? The investment bug seems to have still bitten as the new generation start to diversify, but the entire landscape of investing looks to have changed because of the cryptocurrency surge.
Where we have come from
Investing jargon usually conjures up images of Wall Street, high-rise banking conglomerates, suits, ties, and influential business people. These financial institutions, based on strict rules and conventions, have dictated how people can, and cannot invest.
Artem Popov, the co-founder of Roobee, a blockchain-powered investment platform that incorporates cryptocurrencies, as well as the traditional commodities and assets, explains how things have changed in a short space of time.
“The investment ecosystem as a whole is built on tight regulation. Developed countries have large platforms where shares, bonds, commodities, and currency are traded. As a rule, only professional market participants have access to these assets, which, in turn, can re-sell or provide access to assets for retail customers,” Popov explains.
“Over the past ten years, the investment ecosystem has changed dramatically in the emerging markets. Advanced markets anticipated emerging markets by 30-50 years in development, and over the past ten years, this gap has been significantly reduced. The change towards easier access for retail customers in emerging markets to ecosystems through brokers has allowed trading platforms to increase the number of investors and trading volumes dozens of times. More and more retail investors have gained access to the purchase of stocks, bonds and other more complex investment products."
“Then, over the last five years, investments have been growing more and more through ETF tools that make it possible to generate income from assets that are grouped by finance professionals. Thus, retail investors gained access to the possibility of entering with small amounts and low commissions, to tools that were previously available only to investors with large financial resources and had to pay high commissions when working with such tools.”
As Popov explains, there have been different moves in the direction of trading in the last five to 10 years, but what has remained constant is a bevvy of market participants who are there to run the processes of investing, while taking their cut, as a classical intermediary model.
However, as cryptocurrencies came to the fore and got investors excited, so the technology underlying it also helped grease the wheels in changing the investment ecosystem.
A new technology
Like many different sectors, especially those that are heavy in intermediaries, blockchain is often pointed towards them for disruption. But in the case of the investment ecosystem, it was interesting to see how cryptocurrency and blockchain combined to offer what can probably still to this day be seen as blockchain’s killer app - digital asset investment.
“The emergence of blockchain technology made it possible to move away from the usual format of trading and the exchange of assets,” said Popov “Previously, there was a need for clearing houses and reliable asset holders, specialised contracts and many other procedures. Blockchain allowed to share assets directly, without any fear. This format makes it easier to trade because of the possibility of a distributed registry.”
“The emergence of smart contracts allowed us to endow the transfer of assets with many specific conditions that can be specified in the code. World crises and generations have also significantly changed the investment ecosystem.”
But, how cryptocurrencies boomed was a considerable part of the change in the investing mindset. Many sectors have had blockchain attempt to disrupt them, but there has been no need or drive for the adoption to go ahead.
With cryptocurrencies, because they were decentralised, there was a near seismic shift with new entrants avoiding the traditional system and rushing to make quick money through cryptocurrencies. This opened the door to new investors and gave them a first taste of investing that was different, and better suited to them.
“Sure, the cryptocurrency boom definitely attracted many new people in the sphere of investment - millennials, as well as people of older generations, and more previously excluded adults,” added Popov.
“We have seen a huge array of people come to investing in the new modern way, a lot came from cryptocurrencies and are now looking for other options, but the diversification is astounding, we see all types in our Telegram community, where we have the opportunity to do some research to the audience.”
“It turns out that for more experienced investors, cryptocurrency has become a new tool, in addition to others. But really, a large percentage of people who came to the world of investments are now only here because of the of cryptocurrencies; the ease of registering on cryptocurrency exchanges, and the minimum thresholds of entry. In this, I believe, is the great merit of cryptocurrencies. Now, having felt the taste of investment, people begin to pay attention to other investment tools.”
”That’s exactly what Roobee is to realise, giving one the opportunity to maximally diverse his or her investment portfolio and invest in various investment products - like IPO, Real estate, Venture Funds, Stock Exchange, cryptocurrencies and others.”
A new frontier
If the Cryptocurrency market will ever get back to the same levels, it did in December 2017, or if it will drum up similar excitement, is still be being discovered. But what has become clear is the face of investing has changed substantially because of cryptocurrencies.
A new audience, and market, has been born of the cryptocurrency boom, and these customers may have left cryptocurrencies behind, but they are not ready to stop investing. At the same time, these customers have entered the market on smartphones, and little to no barrier, so they are not going to bend to the traditional ways of investing going forward.
