PROPTECH
Investing in the digital economy
Legitimacy of Cryptocurrencies
Carel de Jager
The perceptions around Cryptocurrencies are generally changing in cycles and are likely to have a long-term uptrend in society’ s understanding( and optimism) about this asset class.
Typically, people would label the crypto phenomenon a scam or criminal enterprise upon first encounter and declare it dead as its inherent volatility causes another price crash and eventually forget about it.
What are Cryptocurrencies? While everyone has a slightly different narration and understanding of what cryptocurrencies are, Investopedia explains these currencies as a digital or virtual currency that is secured by cryptography. This then makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralised networks based on blockchain technology; a distributed ledger enforced by a disparate network of computers.
The Narrative VS Reality As cryptocurrencies live through another of their normal four-year cycles, and as they make their way back to the dinner table discussions, those who wrote their obituaries will start investigating why they have been wrong and a whole new world will open.
• We have seen these events play out at scale in Wall Street over the last four years. After threatening to fire anyone who mentions the word“ Bitcoin” for being“ stupid” in 2017, the CEO of JP Morgan Bank now has a price target of $ 146 000 for the digital gold.
• Shark Tank celebrity Kevin O’ Leary previously labelled cryptocurrency“ garbage” and a“ giant nothing burger”, but he is now diversifying 3 % of his net worth into Bitcoin.
• Ray Dalio, a famous billionaire American hedge fund manager and author of several books on macroeconomics, has been vocally critical about the magic internet money in the past. However, he, too, recently changed his mind, calling it“ one hell of an invention”.
Although Warren Buffet and Bill Gates remain cynic, the list of those that changed their mind on the decentralised currency is growing fast.
The Proof Microstrategy was the first public company to buy Bitcoin in August last year, investing
16 MARCH 2021 SA Real Estate Investor Magazine