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Cryptocurrencies and Other Digital Asset Investments

In: The Palgrave Handbook of FinTech and Blockchain

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  • Andria Merwe

    (Compass Lexecon)

Abstract

The current generation of cryptocurrencies provides a medium of exchange and trading in the crypto-economy. Cryptocurrency shares the scarcity of non-renewable commodities—in the case of cryptocurrency the limited supply is rather artificial because scarcity is embedded in the protocol design. Cryptocurrency may add diversity to an investment portfolio because of its low correlation with more traditional assets but a potential investor should recognize the risks typically associated such as the high price volatility and the unique market structure. Billions of dollars invested in the crypto-economy are tied up in what is essentially a digitally stored, random number. While an understanding of the value behind cryptocurrencies is in its infancy, the possibility of a positive return could be sufficient to be included in an investment strategy.

Suggested Citation

  • Andria Merwe, 2021. "Cryptocurrencies and Other Digital Asset Investments," Springer Books, in: Maurizio Pompella & Roman Matousek (ed.), The Palgrave Handbook of FinTech and Blockchain, edition 1, chapter 0, pages 445-471, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-66433-6_20
    DOI: 10.1007/978-3-030-66433-6_20
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