Over a decade after the release genesis block on the Bitcoin network, blockchain technology has changed how people invest their money, with many platf
Over a decade after the release genesis block on the Bitcoin network, blockchain technology has changed how people invest their money, with many platforms in the crypto space having much more relaxed requirements for investors when compared to traditional finance.
It’s easier for investors to buy into cryptocurrency when compared to traditional assets. Anybody can download a free Bitcoin (BTC) or multi-crypto wallet and sign up for one of the many available cryptocurrency exchanges. Many exchanges still don’t require users to verify their identity, while others only require ID verification once certain limits have been reached.
Compare this to buying stocks, where almost every platform has Know Your Customer (KYC) procedures that users must complete before buying their first stock. On top of this, users can only buy stocks from publicly listed companies and cannot own any shares from a private company.
On the other hand, crypto investors can invest in tokens that public or private companies have created. Investors in the crypto space can also participate in early-stage funding rounds, including seed stage funding.
In traditional markets, usually only accredited investors and high-net-worth individuals are allowed to participate. In contrast, seed-stage funding in crypto projects can allow anyone with a wallet to take part. It’s all at the discretion of the founding team.Jeremy Musighi, head of growth at Balancer — an automated portfolio manager and trading platform on Ethereum — told Cointelegraph:
“Crypto investors have access to a level of transparency that goes way beyond what’s possible in other asset classes. In contrast to stock market investors who can analyze quarterly reports written by a self-reporting company, a crypto investor can permissionlessly dig into data on a decentralized protocol’s performance and track key metrics in real-time or on a historical basis.”
Musighi continued to say, “The transparency of communication between a crypto project’s core contributors amongst themselves and with the wider community is also lightyears ahead of the way publicly traded companies operate. Access to accurate and thorough information is key to investing and I think that’s night and day when comparing crypto to any other asset class.”
Due to the lack of centralization and lower barriers to entry for crypto investors, the industry has seen a lot of popularity in developing countries. In Nigeria, for example, 35% of the population aged 18 to 60 (33.4 million people) have owned or traded crypto this year, with 52% (17.36 million) holding half of their assets in crypto. This is due mainly to the lack of access to affordable traditional financial services in the nation. Cryptocurrency is an easier and more widely accessible alternative to traditional financial (TradFi) services. TradFi usually comes with restrictions and red tape that make it different for the average joe to partake in.
Cryptocurrency has also attracted younger investors into the space, with competition between friends and family being one of the driving factors behind this. Unfortunately, many of these young investors mistakenly believe that the crypto market is regulated, despite its low barrier to entry. Easier access to financial tools may attract younger investors who may not meet the requirements to participate in traditional finance.
Musighi, believes that younger investors are more inclined toward cryptocurrency since they have grown up around technology, saying, “Younger investors are more tech-native; they spend more time online, they recognize the value of digital assets more naturally, and they more easily grasp the concept of cryptocurrency. It’s no surprise that the digital generation is more attracted to digital money.”
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Misha Lederman, director of communications at Klever — a decentralized crypto wallet — told Cointelegraph, “Anyone with a smartphone and a passion for learning can invest in cryptocurrencies. Wall Street has played the stock market and commodities markets by different rules than Main Street for decades. With Bitcoin and crypto, a new generation of average investors is able to participate, compete and accumulate early and fairly in the most exciting industry of our time.”
How investors are making money in the crypto space
Cryptocurrency isn’t just easier for investors to access and provides multiple avenues for investors to make money. There are different sub-sectors within the crypto market, including token sales and decentralized finance (DeFi).
Token sales were one of the first sub-sectors to increase in popularity within the crypto space. Token sales are fundraising rounds where investors can buy a crypto project’s native tokens before they hit the open market. The idea is that investors can “get in early” and make a profit once the tokens are listed. This is due to the expectation that…
cointelegraph.com