The arena of cryptocurrency is going through a considerable transition, with governments and regulators beginning to take noticeable action. This is causing anxiety and unrest amongst investors and is the key reason that trading in cryptocurrencies is especially volatile at present. Exchanges and wallet providers are upping their game with more risk warnings and educational material as the market matures, so it is good to see that there’s a definite effort on all sides to educate and try to protect those placing investment in to cryptocurrency.
The crypto world is maturing at an impressive rate, and as it continues to move into mainstream attention, we can expect further actions from the law making and regulating institutions. The key however, is to be sure that regulation does not become too much of a burden and stifle what is becoming a very effective and accessible way for sound business ideas to turn into reality, whilst allowing people to democratically become a part of those businesses and potentially profit from them.
The amount of money collected on ICOs is already in the billions, and new campaigns are being launched on a daily basis. In fact, 2017 saw over 300 new launches, a total set to be exceeded in the next twelve months. Whether all of the excitement is justified will become clear in the next few years as the long-lasting impact of the introduction of so many ‘alt coins’ will reveal itself.
Cryptocurrencies have grown into an entirely new asset class. Entirely digital, and built using blockchain technology, they are a game-changing way of raising capital for the funding of projects, and to fund the building of new or existing businesses. There are two key benefits, not only does this permit investors to gain exposure to new businesses, but the tokens that are produced allow for traders and investors to monitor any movements in price of the token. Add the fact that crypto is built on blockchain technology, you end up with a very secure infrastructure.
Last year a huge amount of money was poured into cryptocurrencies, a trend that looks set to continue in 2018 as businesses look to tokenise to raise digital capital to enable growth. Furthermore, late 2017, two major US futures exchanges introduced Bitcoin trading, providing improved access for institutional investors. The more that businesses adopt cryptocurrency by launching their own currency, the more money will flow into the asset class and investors will seek out the very best ideas which should lead to token values increasing.
Other cryptos or “alt coins” as they are commonly referred to, are certainly worth some attention and research. Whether or not an investment is worth the risk needs to be thoroughly researched by the investor. For Playkey’s token PKT, we spent a long time at the end of 2017 travelling around the world to get in front of investors and explain to them why our business model is worth their attention over a vast array of competitors. We gratefully saw a really strong demand for the token when we launched our ICO, granting us the capital we needed and it now looks as though investors are attracted to PKT in the secondary market as our token value has increased over 400% since it launched.
For some tokens, the key to successfully investing is to stay put for the long haul. Patience and a willingness to wait will often be rewarded far better than those looking for a quick win. Frequently, people try to sell quickly following an ICO out of panic, after they thought they had found a safe bet, when actually a longer term investment may have reaped considerable rewards and return on investment.
Research into the background of the company is also recommended before opting to invest into an ICO. The team involved in the launch is a good indication of how well planned and carefully considered the ICO is, if they are recently assembled or inspired by a recent, breakthrough idea – it can be a sign that nothing notable will come to fruition and that it may not be worth the risk of investing. The product is also an obvious indicator of the worthiness of investment, which may sound obvious but is worth saying! If the product isn’t even in a prototype form and is still just a description or in the very early stages the risk is considerably increased.
There is a common perception that gaming shares many similarities with investing in tokens. In both cases, a person is investing money on an outcome as part of a pre-calculated decision on an expected outcome. For many, buying or selling a share is comparable to spinning a roulette wheel. However, in reality cryptocurrencies should not be considered in the same arena, in a similar sense that investing in stocks and shares shouldn’t either. Alternatively, they should be viewed as an entirely separate asset class in their own right. There will unavoidably be success stories and failures in the world of crypto, however some have the potential to go on to transform and innovate their industries. Of course, should an investor choose wisely and back a company that goes on to succeed, then the investor could be significantly rewarded.
As mentioned, investment in digital assets should be seen in a different light to gaming, but of course there are natural human reactions, motivations and impulses that are generated in both activities. Whilst a gamer plays a game due to a desire to win, an investor makes a trade in order to make a profit. In some instances gamers can make money using their skills, look no further than the huge boost in eSports over the past few years, which may well greaten the want to win. With investing and cryptos in particular, mainly because they are so volatile at the moment, the potential monetary rewards are what make investing or trading cryptocurrencies the ultimate compulsive trigger, however investors must ensure that they understand the risks involved as well as an opportunity to profit.
Egor Gurjev, Founder and CEO of Playkey
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