Cryptocurrencies as a New Asset Class

Dear Reader,

Cryptocurrencies turn out to be the first new asset class in decades.

Through Initial Coin Offerings startups like Telegram, for example, could offer cryptocurrencies to early backers of the company in exchange for legal tender or other cryptocurrencies, often bitcoin or ether.

Basically, cryptocurrencies are stocks on steroids in terms of volatility. Cryptocurrencies are very volatile since through them you cannot participate in the profits of the company through dividends and you do not have a residual claim on the company's assets after senior and junior bondholders and preference shares in case of bankruptcy.

In essence, a cryptocurrency issued by a start up is tied to the fortunes of the start up in the same way as stocks. However, since cryptocurrencies do not have a residual claim on companies' assets and claim on companies' dividends from net profits, cryptocurrencies are much more volatile than stocks. 

The profit opportunities from cryptocurrencies, however, are also much larger that those that can be obtained from stocks. Issuing cryptocurrencies is much easier and much more accessible for young start ups than doing an Initial Public Offering of shares of the startup. Usually, Initial Public Offerings are done by much more mature start ups than the ones which could issue cryptocurrencies through Initial Coin Offerings.

Basically, any start up in any form of development can do an Initial Coin Offering and issue its own cryptocurrency provided it finds investors willing to buy it.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich