The launch of Bitcoin on the Chicago CBOE Futures Exchange earlier on in the week, showed that cryptocurrencies are increasing legitimately among the professional investment community. The move followed announcements from Nasdaq, which is the world’s second largest exchange that they too will offer similar crypto derivatives.
Most of the traditional investment world is incredibly sceptical about cryptocurrencies, with many believing that they concept and venture will fail. In a recent interview, Lloyd Blankfein, who is Chairman and CEO of Goldman Sachs said Bitcoin would not work out thanks to its fluctuating value.
Institutional investors on the whole do not like taking risks and instead look for long term, stable returns. Not only are cryptocurrencies unstable, they also have strong links to the dark web and crime.
So, how can this gap be bridged? We first need to look at the legitimacy. Whilst cryptocurrencies are often seen to be illegitimate, this is not always the case. It is merely different. Everything has to start somewhere, so it is important to begin with appreciation.
The second point to look at is the risk involved. In fact, there are so many different cryptocurrencies hat there are plenty that offer far more stable, longer returns. Bond is a great example of this – its aim is to reduce risk and enable traditional investors to enter the world of cryptocurrency with confidence and reassurance.
Finally, the third gap is trust. Cryptocurrency is decentralised and essentially unregulated, which puts traditional investors off. Cryptocurrencies need to transparently demonstrate what their unique selling points are; their strategy, and what the risks are, right from the beginning.
In truth, the entire concept is alien to traditional investors. By focusing on the three above points, it would enable a relationship between traditional and crypto investors to be born. It requires work from both parties, but is not at all impossible and can most definitely be achieved.
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