On today’s theme, Christopher Jensen by Franklin Templeton is going through part of the noise and erroneous concepts on cryptography investment in today’s Myth-Busting article.
Then, Pablo Larguia de Senseinode answers questions about rethinking rethinks in Ask to Expert.
–Sarah Morton
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Myth bust: 3 things that investors are still wrong about cryptography
Cryptocurrencies have existed for more than a decade, but the investment community remains largely misunderstood. In this article, we dissipate some of the biggest myths about cryptography to help you evaluate opportunities and risks.
Myth #1: “Investing in cryptography is complicated and confusing.”
The possibility of dealing with digital wallets, private keys and unregulated cryptography exchanges has led many traditional investors to believe that investing in cryptography is beyond them. However, the advent of negotiated products in the stock market (ETPs) in 2024 presents investors a new way to access digital assets in a family investment vehicle.
With Crypto ETPs, investing in digital assets such as Bitcoin has become as simple as buying action shares. Investors can buy Bitcoin and Ether ETP through their regular brokerage accounts, just like any other security. This eliminates the need to configure and manage cryptocurrency wallets in an exchange, making cryptography accessible to a broader audience. In addition, these ETP are regulated financial products, providing an additional layer of safety for investors. While there is certainly a lot of truth behind the old cryptographic adage, “not your keys, not your cryptography,” the popularity of cryptography ETP shows that Autocustody does not have to be the only way to obtain exposure to cryptography.
Myth #2: “It’s too late to invest in Bitcoin, I lost my encounter.”
While Bitcoin has seen a substantial appreciation of prices, the idea that it is “too late” to invest is wrong. Actually, Bitcoin remains in the early stages of institutional and conventional adoption, with a significant potential for future growth.
With approximately $ 1.7 billion, Bitcoin market capitalization is less than 9% Gold (~ $ 19.4 billion) and an even lower fraction of the markets of shares, bonds and real estate. If Bitcoin continues to earn traction as a value warehouse, means of exchange or reserve active, its market capitalization could be significantly expanded.
The supply of 21 million with a hard cover of Bitcoin makes it inherently scarce: 94% of all BTC has already been extracted, and up to 20% can be lost permanently. Meanwhile, the Bitcoin emission rate, also known as its “block rewards”, are half in the middle every four years, which means that the new supply is continually reduced while demand grows, particularly institutional investors.
The launch of products quoted in the BTC stock market has been destroyed records, with cumulative tickets exceeding $ 35 billion, the launch of ETP of faster growth in history. These products provide retail institutions and investors for equal regulated and without problems to Bitcoin, accelerating conventional adoption.
The recent presidential change in the United States has marked the beginning of a remarkably more favorable position on digital assets. The policies that once hinder adoption are being revalued, opening the door to a broader institutional participation. On March 2, the Administration announced that it advanced in the creation of a cryptographic strategic reserve that would include five main currencies: Bitcoin (BTC), Ethher (Eth), Ripple (XRP), Solana (Sun) and Cardano (ADA). In addition, 18 US states are actively reviewing the adoption of the Bitcoin Reserve, while a total of 33 states are considering the legislation to establish their own Bitcoin reserves. This underlines Bitcoin’s growing recognition as a legitimate financial asset.
Another important change is the recent repeal of SAB 121, which eliminates a key regulatory obstacle for cryptographic adoption by raiding the way for banks to more easily custen the Bitcoin and digital assets. This could unlock a significant institutional demand and integrate even more bitcoin into the financial system.
Bitcoin is still in the first adoption entries. Its small market size in relation to traditional assets, supply limitations, institutional impulse and evolving regulatory panorama suggest that the opportunity to invest is far from finishing. While the appreciation of the past price does not guarantee future returns, the narration that Bitcoin’s best days are behind it ignores the broader macroeconomic and institutional trends at stake.
To read the full article on the Franklin Templeton website, click here.
All investments involve risks, including the possible loss of capital.
Blockchain and cryptocurrency investments They are subject to various risks, including the inability to develop digital asset applications or to capitalize on those applications, theft, loss or destruction of cryptographic keys, the possibility that digital asset technologies are never completely implemented, the risk of cyber security, claims of conflicting intellectual property and current and changing regulations. The speculative trade in bitcoins and other forms of cryptocurrencies, many of which have exhibited extreme price volatility, entails a significant risk; An investor can lose the total amount of your investment. Blockchain technology is a new and relatively not proven technology and may never be implemented on a scale that provides identifiable benefits. If a cryptocurrency is considered a security, it can be considered to violate federal values of values. There may be a limited or zero secondary market for cryptocurrencies.
–Christopher Jensen, Chief of Research, Franklin Templeton Digital Assets
Ask an expert
Q. Why are betting rewards often look like a type of investment?
TO: Many perceive the rethink as passive income since the yields are often expressed using annual percentage yield (APY). However, its source of income is not of interest; Instead, it is generated by income obtained to perform critical network security tasks.
Q: Why will a security function be applied, not an investment?
TO: The Treasury of the United Kingdom recently clarified that the rethinking is not an investment scheme, but a central security and cryptographic service to validate transactions in a chain of stagnation test blocks (POS). Bet is a security function in which participants ensure decentralized networks and are rewarded for doing so effectively. Protocols such as Ethereum define validator rewards through publicly available mechanisms, such as EIP-2917.
While the rethinking rewards can be predictable, they fluctuate depending on the validator performance and network conditions. Recognizing the reference as the Blockchain Security spine ensures a policy framework that aligns with its true role.
-Pablo Larguia, Founder and CEO, Senseinode
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