Cryptocurrencies as a Means of Exchange

Dear Reader,

Cryptocurrencies are the new hot asset class. I think the key to their prosperous future is that they become a means of exchange.

Much like company stocks listed on an exchange are a popular means of investing, since you can both increase your investment, but also exchange the stocks for regular currencies like USD, EUR, YEN, GBP etc. Actually stocks are denominated in regular currencies.

The moment cryptocurrencies become a stable means of exchange they will also become one of the greatest investment vehicles ever.

Now the problem with cryptocurrencies is that they are vey volatile. Once you buy into a cryptocurrency you are not sure for how much USD you will be able to exchange your cryptocurrency. However, that very same volatility contributes to the upside potential of cryptocurrencies, which can make them a great investment vehicle. Cryptocurrencies are volatile mainly because they do not qualify for a share of the company's profits or assets, if the company goes bankrupt and goes into resolution. The hierarchy for the company's assets is as follows: senior debt, which may include bonds, junior debt, preference shares and common equity. As most cryptocurrencies are loosely connected to the future of the company and the company's projects they exhibit much higher movements than commons stocks.

I think the future is the middle ground. As cryptocurrencies become more mainstream their liquidity will improve, their volatility will fall and they could become a good, albeit volatile, means of exchange.

Basically, cryptocurrencies issued by companies, are a highly leveraged bet on the future of the respective company. The more mainstream cryptocurrencies like Bitcoin, Ethereum and others are a leveraged bet on the transformation of the global financial system, which is highly dependent on the future of the underlying companies all over the world, of course.

Listed stocks that benefit directly from crypto currencies are NVIDIA, Advanced Micro Devices and Microsoft.

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