In this month’s podcast, our moderator and former BBC World News presenter Nisha Pillai uncovers the capabilities and uncertainties of the cryptocurrencies environment, its purposes, as well as practical use and long-term viability. Listen to her conversation with Julius Baer’s Next Generation Research Analyst Alexander Ruchti, and Esteban Polidura, Head of Advisory and Products for the Americas.
You probably have already heard something about cryptocurrencies, or you may be more familiar with its most popular version, Bitcoin. Bitcoin was the first decentralised cryptocurrency, introduced in 2009. Since then, many others have followed. There are now more than 6’000 different cryptocurrencies in circulation.
Why are there so many different versions? Do all of them have potential and value? How to be prepared for the heightened volatility in the cryptocurrencies space? Our Think Tank Podcast explains.
Listen to the podcast
Click on the player below to listen to the conversation:
Why are there so many different currencies on the market?
More than 6’000 cryptocurrencies are estimated to be in existence – and the majority of them are worthless. “One of the reasons for this high number of different currencies lies in the fact that it is relatively easy to create a cryptocurrency using the template of Bitcoin or other existing coin,” explains Alexander Ruchti. “Many of these 6’000 coins are more like hobby projects or proof of concepts, rather than actual cryptocurrencies with massive ambitions behind them. Another reason is that different cryptocurrencies fulfil different purposes. There is no single architectural setup that fits every purpose perfectly,” he elaborates.
Entering the market
Cryptos have become too big to ignore. The top five cryptocurrencies have a market cap of USD 1.4 trillion, with Bitcoin and Ethereum making up more than 90% of it. Esteban Polidura, Julius Baer’s Head of Advisory & Products for the Americas, observes that “returns in Bitcoin make most investors jealous, as it has yielded more than 8’000% over the past five years. But investors must be aware that these returns have come with a high uncertainty and volatility. Information is key when it comes to cryptocurrencies. While it can be a novel and exciting asset class, purchasing it can be risky. You must take on a fair amount of research to fully understand how each system works.”
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