Carl Koeneman is a cryptocurrency trader, investor, and consultant. He has been trading cryptocurrencies for five years and has founded two companies in the space: Crypto4Cast and CoinGecko. He recently offered his insights into why you should invest in this new asset class.
“I am frequently asked what I think about investing in crypto assets (cryptocurrency). My answer is always the same: ‘Only if you can afford to lose your money.’”
This response might seem like common sense, but it’s essential to understand that people often make emotional decisions when investing their money with little research or due diligence on the project backing up the token. As an industry insider, Carl says there are three things every cryptocurrency investor needs to know.
First, cryptocurrencies are a new asset class, and people should only invest in them if they can afford to lose their money. This means doing your research and not blindly trusting anyone for advice on which crypto assets to buy.
One of the main concerns Carl Koeneman hears about investing in cryptocurrency is how volatile it is, but this shouldn’t put you off because there are ways you can mitigate risk while still taking advantage of the growth opportunities. Carl explains that a key element for mitigating risk is diversification. An individual Bitcoin investor should be very worried right now since Bitcoin’s price dropped from around US$20,000 two ago to roughly US$7,000 right now.
Diversification is not just good for mitigating risk; it also allows investors to take advantage of different growth opportunities in the market. For instance, if you are a very risk-averse investor, then invest your money only in safe-haven assets such as Bitcoin or Ethereum. You could even go one step further by investing in some more speculative coins with impressive tech but lacking branding recognition.
Another common concern Carl hears about investing in cryptocurrency is how difficult it can be. However, Carl Koeneman believes that buying cryptocurrencies should be easy. This means making sure there are platforms out there where investors can easily buy and sell crypto assets. He explains that if investors have an easy way to enter the market, we will see more people buying cryptocurrencies, and, by extension, we will see an increased interest in solid projects.
Finally, the government shouldn’t stifle this innovation by over-regulating ICOs (Initial Coin Offerings). There are various ways governments could do this, such as restricting who can invest in ICOs or even by forcing all tokens to be classified as securities. If this happens, it will be very difficult for budding entrepreneurs to launch a new cryptocurrency or token since they wouldn’t be able to raise funds from the crowd anymore. It could also lead to mass class-action lawsuits against companies launching STOs (Security Token Offerings), which should be avoided.
One way that governments can help foster this new asset class is by encouraging education in the space. For example, Carl Koeneman recently spoke at a blockchain conference in Melbourne and answered some of people’s questions about investing in cryptocurrencies.
In conclusion, investors should only buy cryptocurrencies if they believe in the project and research. When it comes to minimizing risk, diversification is key, and not being afraid of buying different tokens from different teams with varying levels of market recognition. Governments need to encourage innovation while also avoiding regulation which stifles competition within the industry.
By following these guidelines, the market will attract more people to buy cryptocurrencies, which will increase the growth prospects of all crypto assets. This is especially important for cryptocurrency projects that have yet to profit because their limited token supply means that there is huge potential for future price appreciation.