The crypto industry is diverting a lot of the talent that would usually end up on Wall Street away from traditional institutions. Let’s look at the trend in general and the factors driving it. We’ll also give a few predictions as to how cryptocurrencies could revolutionize the traditional finance sector.
The Adoption by the Mainstream Market
One of the normal functions of a financial analyst – click here for details – is to study the market, market segments, business trends, industry trends, and the financial state of a particular company in relation to all of these. Cryptocurrency has up to now been seen as a speculative investment best left to libertarians, tech wizards, and other people far from the mainstream. However, cryptocurrency is now becoming mainstream.
There are exchange-traded funds and ETFs that invest indirectly in Bitcoin. There are several exchange-traded funds that invest directly in Bitcoin and other cryptocurrencies. In late 2017, Europe saw its first Bitcoin “focused” mutual fund. When you have a new currency or product to invest in, you’ll see more financial analysts devoted to studying and tracking the investment sector, just as you find analysts flooding in when something new becomes a publicly traded commodity.
The Technology’s Impact
While Bitcoin itself is subject to a major rollercoaster of highs and lows that alternative cryptocurrencies mirror, the technology itself, Blockchain, is being rolled out on a far wider scale. For example, assets, from bonds to real estate deeds, are starting to be tied to unique identifiers and tracked via Blockchain. This means that reports generated by scanning Blockchain records will become a regular part of accounting functions, whether generating a report of how many vehicles you have in stock to tracking who owns what percentage of company stock to tracking deed transfers, for instance.
The Democratization of Financial Data and Services
Crowd-funding is already popular and the Blockchain creates the potential of tapping into this same market of would-be lenders and investors with far greater legal protection and documentation for them.
For example, you could see Blockchain-based algorithms used to back crowdfunding loans, allowing someone to sell their loan to a friend or someone else while having the bullet-proof documentation that they are selling the rights. Or, small businesses can use Blockchain-based digital certificates to sell shares or issue bonds, something that today requires legal teams and financial experts, along with a hefty financial outlay.
You could find financial analysts analyzing databases with literally millions of projects, small businesses, and ventures while recommending purchases based on the buyer’s goals. Do you want high risk in a narrow niche segment? Do you want to invest in your local community? Do you want to invest in a particular technology with startups? Take your pick, and they’ll narrow down the options to the few dozen for you to choose from.
Cryptocurrencies themselves are becoming mainstream investments, along with forex. We’re only seeing the beginning of Blockchain-based financial securities that cost relatively little for businesses and groups to create and then offer on the broader market, which could bring even more financial analysts into the fold.
Founder Dinis Guarda
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