Real Estate Investor March 2021 March 2021 | Page 36

their entire cash position of $ 500m into Bitcoin . Since then , they have borrowed an additional $ 1b to buy the superior asset and many listed corporations including Tesla have followed suit . In fact , press releases show that listed companies already own 7 % of all available Bitcoin .
“ If you want to invest in this asset class do your homework , get educated , choose reputable service providers and be prepared for a wild ride .”
According to Michael Saylor , CEO of Microstrategy , having dollar reserves is like building a company on top of a melting icecube .
There will only ever be 21 million bitcoin . The issuance rate of Bitcoin is similar to that of gold in that it requires a finite resource to extract and is fundamentally scarce . The difference with Bitcoin though , is that the amount in circulation can be audited in real time . Scarcity can therefore be defined with absolute certainty instead of trusting on states that report their gold reserves .
Although the supply is known and fixed , the demand of Bitcoin can vary significantly from a scale of fear-and-doubt to greed-andeuphoria . Human psychology is therefore portrayed in the form green and red candles as the market tries to value this unique asset .
What You Need to Know ! Since Bitcoin , the cryptocurrency space has been flourishing with innovation . Ethereum improved on the programming capabilities of the Bitcoin Blockchain . It comes with its own programming language called Solidity , which allows anyone to write software on a platform that is immutable and censorship resistant . As with any new technology , it formed a bubble that ended badly for many investors looking for the new hot ICO during 2017 . But as it marched through the hype cycle Trough of Disillusionment , it became stronger and today we are truly climbing a Plateau of Productivity . Specifically , a concept called “ Decentralised Finance ” ( DeFi ) has been steadily built using smart contracts .
This can be regarded as the next phase of cryptocurrency , which takes it from a store of value and / or retail utility to a complete banking solution . It allows anyone to borrow / lend money , make payments , use a decentralised exchange , or even sell their digital art . Economic attributes such as interest rates , incentives , asset support and risk management rely on democratic governance processes by market participants .
“ Cryptocurrencies and Blockchain technology are here to stay .”
There is no doubt that cryptocurrencies and Blockchain technology are here to stay . They are at the cusp of disrupting every aspect of global finance , including banking , accounting , insurance and trade . Other industries will follow , but only after we burst other few bubbles . The cycles will remain violent while regulators discuss their strategies . If you do decide to invest in this new asset class , you should know that there are no guardians that will save you from bad decisions . Do your homework , get educated , choose reputable service providers and be prepared for a wild ride .
SOURCES Blockchain Academy
CAREL DE JAGER Chemical engineer in the energy industry . He now works as a Consultant for The Blockchain Academy .
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