Hot Topics
Coin Gecko

Advertisement

BTC Developer: “Cryptocurrency Diversification Makes Little Sense”

 
BTC Developer: “Cryptocurrency Diversification Makes Little Sense”
Breaking News / Bitcoin

The prominent Bitcoin developer Jimmy Song has made the argument in recent Medium post, that it doesn’t make a lot of sense for diversifying a crypto asset portfolio.

Song is a big believer that including altcoins to an investment portfolio allocated a certain percentage to Bitcoin will not improve the chances of receiving a higher return on invested capital.

Investment portfolios

Song goes onto explain that investors will typically diversify their investments in order to statistically reduce the risk of permanent loss and reduce the negative effects of volatility.

Even though he acknowledging that asset diversification “makes sense” for more traditional investments like acquiring shares of common stock in listed businesses, Song says:

“The reality of a cryptocurrency [and related investments] is in the code which, unfortunately, is very dense, hard to read and impossible to understand for a large [number] of people.”

He then went onto say that:

“The reality of a cryptocurrency is in the code which, unfortunately, is very dense, hard to read and impossible to understand for a large amount of people. Because cryptocurrencies exist in the digital realm, the code and the network that secures it is the reality. While the ability to analyze the underlying reality is there, it’s just not practical for most people, even experienced developers, to study the code underlying a cryptocurrency in less than a few months.”

As reported by CryptoGlobe:

“Although the ‘underlying reality’ of cryptocurrencies can be analyzed, Song believes it’s not practical ‘even for experienced developer’ to fully comprehend and determine the legitimacy of a cryptocurrency platform in a reasonable amount of time. This, as the computer code used to develop a cryptocurrency might be too complex for most people to fully understand.”

The developer said that in a lot of cases there’s “an abundance of marketing material” about numerous cryptocurrency projects.

Song says that marketing strategies for cryptocurrencies usually involve writing whitepapers “that purport to show the details of the actual system, but are not rigorously defined like code is.”

Despite all this, there are more than 500 contributors that are involved in the ongoing development of the Bitcoin protocol. This means that Bitcoin is the “largest open-source cryptocurrency project.”

You can share this post!