In the last 3 months, popular cryptocurrencies have seen returns as below;
- •Bitcoin: 83%
- •Litecoin: 576%
- •Ethereum: 930%
- •Ethercoin: 472%
- •Ripple: 821%
At the NSE, Cooperative Bank of Kenya (COOP) shares which are among the best performing at NSE so far have returned about +44% during the 3 month period.
T-Bonds/Bills and money markets which are both averaging between 8% – 10% in annual returns can be pro-rated to returns of about 2.5% during the comparative 3-month period under review.
In practical terms what does this mean to you and your personal finance? Let’s take an example of a normal Kenyan young man/woman who took Ksh. 700,000 in Jan/Feb this year to buy a car. What Ksh. 700,000 opportunities did he/she miss out on?
1. Had you bought Bitcoins, you could have sold them today and bought that car, and still remain with Ksh. 581,000 in your account
2. Had you bought Litecoins, you could have sold them today and still bought that car, then remain with Ksh. 4.732M which is more than enough to get you 6 more such cars and still have over 500k in your account.
3. Had you bought Ethereum, you could have sold them today and bought your car and still remained with Ksh. 6.51M which could have bought you a house somewhere in Nairobi
4. Had you bought Ethercoin, you could have sold today and bought that car and remain with Ksh. 3.3M which can afford 4 more such cars and still remain with 500k pocket change
5. Had you bought Ripple (XRP), you could have sold today and bought your car and still remain with Ksh. 5.747M which could still get you 8 more cars and still leave you with almost 200k to take your girlfriend/boyfriend to Kempinski for a good meal in a chauffeured limo…I think.
With the current tech-savvy generation that’s always online, rebellious to mainstream ways (they prefer dealing with decentralized systems where there is no authority but public control…which is why they love crypto/virtual currencies thanks to Blockchain Technology). This is bad news for banks, insurance companies, fund managers etc. who will need to rethink new strategies on their products lineup especially money markets, fixed deposits, CMS, retirement benefits etc due to their low returns, risks notwithstanding.
The stock market is slowly becoming the new safe investment option with money markets clearly being pushed into obsolescence. Treasuries (T-Bills & Bonds, M-Akiba) are here to stay because they are government-run though they may still end up being a preserve of the super-safe investors, especially institutions with conservative approach towards asset management strategies.
The new class of attractive fund managers will be those touting blockchain-based products, because that’s the future. With all the big names like Richard Branson, Bill Gates etc supporting blockchain tech, more stores accepting settlements/payments through bitcoins and most central banks now opening up to blockchain adoption, the value of cryptocurrencies in our future financial ecosystem is getting harder to ignore.
Justifying his huge investment in bitcoins during a recent conference in Miami, John McAffe, a cyber-security legend and CEO of MGT Capital Investments, is quoted saying; “The recent appreciation of Bitcoin supports my belief that Bitcoin is now being utilized as a viable alternative to fiat currencies. Most recently, we have seen India and Venezuela remove their larger notes from circulation and Bitcoin offers citizens liberty from these State-controlled monetary policies. Moreover, the Blockchain will be central to nearly every aspect of future cybersecurity solutions, including wire transfers, authentication, and secure voting systems. It will become the cornerstone of virtually all digital transactions.”
Article By George Mangs
Twitter; @george_mangs
