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Are cryptocurrencies the new gold? Should you build a digital currency portfolio and, if so, which ones should you choose? Kunal Sawhney, CEO of Kalkine Group – a multinational equity research firm – spoke to BizNews from his headquarters in Sydney, Australia about Bitcoin and alternative cryptocurrencies like meme-inspired Dogecoin. He shares how mathematicians and computer scientists are likely to replace traditional equity analysts at investment firms as younger investors embrace the digital economy. – Jackie Cameron
Kunal Sawhney on Kalkine Group:
Kalkine started about eight years back in Australia. Today, we have offices in Australia, New Zealand, UK, Canada and the US. We are equities research business. We cover a number of equities and listed companies all over the world. Now, we are also covering a lot of cryptocurrencies. What we have realised is that different investors have different styles. They like different ways to invest. So we have got research on the big, blue chip companies and we have got research on the small penny stocks. We have got research on growth companies, technology stocks and biotechnology companies. We cover the whole range of these companies. The good thing is we give people the freedom to choose what they really want to invest in. We have different research products covering different sectors and people can choose what they really want to invest in.
On the demand for cryptocurrencies:
We are finding that more people are speculating on cryptocurrency. The reason I use the word speculating, is that right now we are not seeing a lot of usage in real life. I haven’t seen people buying coffee or breakfast with cryptocurrency – but people are trading it quite a bit, using platforms like Coinbase and Luno. There is a lot of trading and speculating happening on these currencies right now. There’s also a lot of fascination with cryptocurrencies because people have read about others making billions or millions of dollars on cryptocurrency.
On whether cryptocurrency is a bubble:
We don’t believe it’s a bubble. We believe it’s here to stay [and that] it’s for the long term. The world’s leading cryptocurrency, Bitcoin, has gone above the $50,000 mark recently. I think it went as high as $60,000 after Elon Musk invested in it. Cryptocurrencies are being looked upon as the future of payment and [the] of future of settlement systems as well – where people can settle a big amount of transactions using cryptocurrency.
The other thing that we are seeing is [that more] central banks want to regulate it. That is also coming into play – it might become mainstream in a in a very short time span. The international apex authority of banks, Bank of International Settlements and other central banks have concluded that there is no harm to monetary and financial stability in the coexistence of a conventional dollar or pound based system and digital currency. This is a very good thing which has happened lately, where the central banks are saying that these things can coexist.
On building a cryptocurrency portfolio:
I think it depends on how much you plan to invest. Obviously, everyone knows Bitcoin. Bitcoin is one which is the most expensive. Then we have Bitcoin cash, Litecoin, Ethereum and Stellar. The key thing over here is that cryptocurrencies are for different kinds of investors – someone who can take a high level of risk and who can basically have the appetite to lose 25%-30% value in a day. They are very speculative still. One has to be very careful. I would not use the word investment, I would use the word speculation – because right now there is a lot of speculation happening on cryptocurrencies.
The main reason is most cryptocurrencies listed have limited supply of coins to keep the balance in check and to reinforce the value of these things. There is a fixed number of Bitcoins as decided by the creators of Bitcoin – though some remain to be mined. That’s where there’s a lot of mining happening. One of the disadvantages that people talk about of Bitcoin mining – or of cryptocurrency mining – is the CO2 emissions, because you need a lot of computing power to do that. There is a limited amount of cryptocurrency and hence the value for them keeps on going up. They say cryptocurrency is the new gold, because it’s very similar to gold They’re saying it’s a safe haven asset, limited amount. People are more inclined to invest in cryptocurrencies rather than gold.
I think the first step in investing in Bitcoin or any cryptocurrency is that you need to have a good platform. Coinbase is one of the best platforms. Once again, the US listing shows the amount of interest there is in Coinbase and in cryptocurrency. What we have to look at, besides Bitcoin, there are 95 other digital assets that have a market cap of about $1bn. I think Coinbase is really going to take advantage of all these 95 digital assets. This is really going to help the cryptocurrency market, having a good, solid coin broker/player in the market.
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