The new generation of digitally savvy investors, who will be responsible for transferring wealth over the next decade, will likely increase their wealth by investing in the growing digital asset space, the president of the blockchain platform said. open source Tezos Foundation.
The transfer of wealth from family offices to the younger generation would occur over the next five to 10 years, and these people – those in their 20s to 30s – should not invest in gold or other traditional assets, opting for cryptocurrencies because of their familiarity. with the digital dynamics involved and having grown in the internet age, said Hubertus Thonhauser.
âWe are seeing a generational shift: For millennials who haven’t been able to participate in the rising stock markets that were available to older generations, cryptocurrencies are the only real advantage they have. in the generation of wealth and the change in wealth that we are seeing right now, âMr. Thonhauser said The National in an interview on the sidelines of the TiE Global Summit at Expo 2020 Dubai Exhibition Center.
The cryptocurrency market continues to maintain its strength, gaining popularity as it is more accepted by investors and with more players entering the industry creating competition.
As of Thursday, the market cap of cryptocurrencies was over $ 2.268 billion, according to CoinMarketCap. Bitcoin and Ethereum remain the largest, with market shares of 40.6% and 21.4%, respectively.
Bitcoin, the world’s first and most popular cryptocurrency, was trading at $ 48,621.83 on Thursday night, up nearly 3% in the past 24 hours, according to data from CoinMarketCap. It hit an all-time high on November 9, surpassing $ 68,000, but has since lost a third of its value.
Cryptocurrency advocates are pushing for widespread adoption, which Mr Thonhauser says will happen in a decade, perhaps as early as “a few years.”
Although digital assets are still in their “very early stages,” it might not take decades for them to be adopted by the general public, said Changpeng Zhao, managing director of the largest cryptocurrency exchange. to the world, Binance. The National in October. However, implementing full-fledged regulatory frameworks for digital assets could take decades.
“The decades are far too long. It underestimates the fact that this is a technology that grows with network effects and grows exponentially,” said Thonhauser.
Both, however, agree that the rapid pace of adoption will speed up the process.
“We are seeing greater adoption due to use cases and price action as more people are involved and feel comfortable using digital assets as an investment vehicle. “said Mr. Thonhauser.
The volatility of cryptocurrencies – that of Bitcoin, most notoriously – discourages potential investors, but this can be addressed by spreading its allocation and transparency, he said.
“One of the problems with Bitcoin is that you still have a fairly large number of individual holders who basically control the overall supply; 70% of all Bitcoin is treasure held by a very small number of people or institutions.” , said Thonhauser.
âSecond, we need more transparency, lots of tools and transparent information about Bitcoin’s on-chain analysis, so that you can really see and anticipate its movements.â
On central bank digital currencies (CBDCs), Mr Thonhauser said that political will is more needed than technological will to deliver the technology that offers more transparency. In theory, the application of this provision could also go beyond traditional banks.
CBDCs are digital versions of fiat currencies. China was the first to implement a “digital yuan”, with other major economies such as the EU also making progress in developing their own versions.
“If you want to send payments to citizens, instead of printing money, giving it to banks and channeling it to end consumers, with CBDCs you can deposit it directly into the end user wallet.” he said, alluding to removing intermediaries that are slowing down services in the financial sector.
With interest rates close to zero or negative, gold trading sideways and highly valued stock stocks, he says cryptocurrencies are a safe bet, despite the volatility, which is normal for a D class. ‘assets.
âCryptocurrencies are the only digital asset in the market that is really gaining institutional acceptance with exchange-traded funds. You shouldn’t worry about the fluctuations that occur from month to month as it is a long-term active, âsaid Thonhauser.
The first Bitcoin ETF in the United States, ProShares, began trading on the Chicago Mercantile Exchange in October. Some financial analysts believe it will be a big deal that drives its price up, giving institutional investors the confidence and security to invest in Bitcoin.
He also cautioned against allocating a large portion of portfolios to digital assets, advising investors to set a threshold proportional to their other assets.
âAlso, don’t listen to all the hype videos on YouTube that tell you what to buy. Very often, good plays are those that do not get high profile; these are sleeping giants and these are the ones you should probably consider. “
Update: December 17, 2021, 4:00 a.m.