Forbes: three rules for exploring bitcoin, block chain and encryption currency mania

Forbes: three rules for exploring bitcoin, block chain and encryption currency mania

Encryption currency (Cryptocurrency) the word four years ago was included in the Oxford English dictionary, and often appear in the cocktail party, golf courses and other places in the dialogue. With the digital currency imperceptibly become our daily topic of discussion, new supporters began to buy the currency and push up their price. In fact, digital currency like bitcoin using encryption technology to manage the new record, transfer of funds and operating outside the scope of the traditional banking system. But investors seem to be more concerned about the price fluctuations, rather than block chain is successfully changed the transfer of money of our economy in a way. This kind of fanaticism is more reminiscent of the BeanieBabies bubble, not Wall Street asset fad.

Many people enter the encryption currency market may depend on the strategy division, these people can predict which currency will flourish as well as the market price trend to. Unfortunately, those who claim to know the future claims often contradictory. At the same time, people’s greed and fear of missed opportunities will make the psychological blindly into the field. As a consultant, I encourage you to identify risks, a better understanding of digital currency, and carefully consider the so-called expert advice. To this end, I summarized the exploration of the 3 rules of encryption currency boom.

Risk identification

Before a decent return into temptation, we need to recognize, buy a digital currency at present is more like playing roulette gambling in Las Vegas, rather than investing in stocks, bonds or traditional currency. Although the future of encryption currency could completely change the traditional banking business, but has become the mainstream technology in the block chain before will be faced with many challenges. At present, buy the blockchain is purely speculative, which means that the price of the currency now reflects a herd mentality, rather than its intrinsic value. Like the BeanieBabies toy, if people pay attention to the transfer, so the currency prices may fall sharply.

To be honest, a lot of money itself has almost no intrinsic value. For example, the dollar is not other than the government issued currency is more valuable. But unlike blockchain currency, dollars to hundreds of years of economic strength and stability as the basis, so as to have the authority. Any encryption currency to achieve this level will experience a struggle, and will face more and more government interference (such as the IRS tracking) and hacker attacks and other problems. We should recognize that these variables will only increase the risk of price fluctuations.

Again, focus on Technology

We should focus on understanding the underlying technology again, and not just for a quick profit in the crypto currency platform specific to gambling. Block chain in the future application of this technology seems to have unlimited potential, has proved its value through the basic function to avoid the traditional banking, allowing the buyer and the seller exchange value in the absence of intermediate people who participated in the case. Although we have to rely on private banks and the central bank to control the currency, but the great depression and the recent revelations of fraud and other events have caused customers to lose confidence in the system. Although faced with many challenges, but this pattern clearly indicates that appear to the center of the transparent block chain.

In order to better understand the blockchain and related disorders, we analyzed the encryption currency can not only consider the price, but should be its ability to create actionable security platform and appropriate supervision, tax management and network security problem based on. In other words, we should pay more attention to the possible long-term success of the encryption currency, rather than short-term price highest currency. With the surge of ICO, many new money as a scam to enter the market, in order to quickly raise money easily, the trading system instead of creating a successful and lasting. Investors should consider the use of the new ETF block chain to enter the market, in order to reduce the platform risk and extensive contact with the chain block.

Do not superstitious expert

Every so-called experts have their own views on the future price of encryption currency. Unfortunately, these experts argument contradict each other, leaving some inconsistent and biased interpretation of information to people. For example, the chairman of JP Morgan and chief executive officer of JamieDimon said that people buy bitcoin is foolish. At the same time, the International Monetary Fund (ChristineLagarde) President Lagarde says it is unwise to ignore the virtual currency. We need to recognize that, although experts are very powerful, but no one can predict the future of encryption currency.

Investors should first create a global diversified portfolio, rather than worry about whether they should buy encryption currency. Do we accept I cannot predict the future of some asset. Our investment portfolio should reflect our goal, liquidity requirements, risk tolerance and time range, and not as in the case of Las Vegas once tried to win the bet. In the case of portfolio diversification, we can give the digital money in risky assets such as appropriate investment, so as not to endanger our financial situation in the investment facing the overall losses.

Diversified and long-term investment strategy can help us to suppress due to fear and greed impulse, this impulse will lead us to take unnecessary risks, and make a disastrous investment decision. Although encryption currency is very attractive, but we need to be aware of these risks, the renewed focus on the understanding of block chain technology, do not rely on the opinions of experts. No matter the blockchain is going to be the next BeanieBabies foam, or will change our economy, we should all take a deep breath, it was found that financial strength in the broader investment strategy, and do not become victims of crypto currency boom.

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