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Digital Currency Here To Stay

Updated: Sep 27, 2018

| B + T |

It has been a few rough weeks for the digital currency market, prices dropping towards where they were sometime in the fall of 2017 before the memorable winter the digital currency world won't forget. Investors or so called 'HODL-ers' may be a little nervous about the future of digital currencies.

Digital currencies (or cryptocurrencies) are not going anywhere. In fact, there are reasons to believe the digital currency and mining market is going to be an incredible long-term investment. Below are several reasons as to why the future is optimistic for digital currencies, even if the market has been bearish lately:


One major advantage that digital currency has over more traditional assets is that it has starkly non-correlated returns when related to those asset classes. For instance, Bitcoin and Ether have relatively low (closer to 0%) correlation rates compared the other asset classes listed. This is a very valuable feature for any investor or trader who deal with traditional asset classes.


Due to the low correlation of digital currencies and other asset classes, digital currency is ideal for portfolio allocation, whether that be with asset managers, retail investors, or traders. This low correlation allows for bearish markets in traditional asset classes to not have too significant an impact on the overall portfolio, as digital currencies can pull more weight during these periods. Some of the most common and successful portfolios could benefit greatly from incorporating digital currency.

The 60 - 40 portfolio (60% equities + 40% bonds) and the All-Weather Fund campaigned by Ray Dalio (30% equities + 40% long-term bonds + 15% short-term bonds + 7.5% commodities + 7.5% gold) gain enormous value by using digital currency, even if they combine lesser amounts.

For instance, by involving digital currency in the 60 - 40 and All-Weather portfolios, returns increase directly as more digital currency is added to the funds. Additionally, Sharpe Ratios increase in a similar fashion.

For instance, by involving digital currency in the 60 - 40 and All-Weather portfolios, returns increase directly as more digital currency is added to the funds. Similarly Sharpe Ratio return increase (taken from January 2016 to August 2018):


Those who are inexperienced or hesitant to act may see high volatility as a negative, those with investment and trading experience know that high volatility leaves the door open for incredible returns if that volatility is capitalized. It gives traders data access to determine how to trade in a declining or motionless market and make significant returns.


Because high volatility opens the door for potentially massive profits, it also opens the door for a large amount of innovation to take place. Digital currency trading platforms that offer users vast returns if they trade with digital currencies, will possibly be a massive success. Particularly if that platform uses artificial intelligence and machine learning technology.

An example of this project is RoninAI which is a SaaS tool launching soon. Dedicated to jumping on the volatility of the digital market and enabling their members to turn a profit by analyzing factors that contribute to digital currency prices.


A substantial portion of citizens in countries whose fiat currencies have been depreciating are in desperate need of a functional currency not secured to their government’s ability to act on the world stage.

A current example of this is Turkey’s lira falling 20% overnight as the United States imposed an additional set of sanctions. At the time, Turkish digital currency exchange usage experiences an enormous spike, as Turkish citizens realized exchanging lira into digital currency would help them avoid the imminent lira depreciation.

Anonymity, ease of conversion to digital currency, and the ability to move funds overseas gives digital currencies a very attractive alternative creating a safety valve for citizens of any country.

Roughly 30% of the entire global population lives in a country that experienced a significant currency depreciation in the last 5 years. Due to central banks’ failure to stabilize currencies during these times, undoubtedly, we will witness digital currency be relied on more in the future as such economies of these countries suffer.


The global economy isn’t offering a lot of appealing investment opportunities, especially for retail investors. As Peter Borovykh indicates in his book, “Blockchain Applications in Finance”, inflation-adjusted global rates are unappealing to investors.

Most of developed countries have neutral or negative inflation-adjusted returns on bonds, while developing countries have higher government bond returns. These developing countries do not have the sufficiently developed capital markets required to offer extensive investment opportunities to foreign retail investors. Hence, this leaves many investors with one important question in mind: How to generate wealth?

Digital currency is one of the answers to this question, due mainly to its ease of access and for the reasons previously discussed. The digital currency market may have taken a hit recently but believing that it will continue down this path goes against these mentioned reasons.

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