When you think cryptocurrency, chances are you think of the zeitgeist of the 2017 boom: Bitcoin soaring to $20,000 after opening the year at $1,000, with “Altcoins” (any cryptocurrency other than Bitcoin) following closely behind on the exponential rise. It seemed like everyone and their cousin was buzzing about cryptocurrency and looking to make a quick buck.
As cryptocurrency markets have cooled in recent months, that chatter from newcomers and inexperienced players is absent. In a sense, that’s cause for celebration; it’s silences like these that yield the best investment opportunities. By the time mainstream media outlets publish the next headline about a cryptocurrency bull run, buying in will come at a markup.
In August 2017, I decided to channel my passion for cryptocurrency into a full-time practice. I spent countless hours teaching myself how to analyze and predict cryptocurrency market trends. I learned how to leverage this knowledge in cryptocurrency exchanges to turn triple-digit percentage profits in a day. And for the first few months, I taught myself using only free online resources. This is the future: an increasingly digitized world where P2P exchange and information-sharing is the norm, where I can learn the complexities of an entire trade without setting foot in a classroom.
Cryptocurrency is a tool molded for this kind of future: it’s a publicly verifiable, decentralized information-hosting network controlled not by any central governing body but made up of a network of global nodes. Computers around the world verify every transaction and lock them into an immutable public ledger called a blockchain, thereby eliminating fraud or mismanagement by a single player.
Cryptocurrency transactions are anonymous (or at least pseudonymous, transacted with 30-character identifier codes), yet the open ledger of the blockchain enables radical transparency. Some have called this next-generation paradigm “triple-entry bookkeeping,” as cryptocurrency transactions consist of a debit entry, a credit entry and an entry into the blockchain. Had blockchain been the standard in 2001, Enron’s fraud might not have escalated into the then-largest corporate bankruptcy in American history.
Cryptocurrency’s remarkable computational power allows nearly instant transfers, whereas traditional banking solutions take several business days to finalize the transaction. From our current vantage point, it’s difficult to envision a reality in which we are no longer beholden to financial intermediaries like banks. However, try time-traveling to the 1970s when the military was using primitive packet-switching to communicate between computers — and then explain how consequential the Internet and connected devices are in our daily lives. Cryptocurrency represents a paradigm shift that enables nearly immediate currency transfers, even across international lines, that incur no processing fees and require no middlemen.
Every time you use your credit card, whether you’re buying a car or a bottle of water, you extend the merchant access to your entire credit line. The vendor initiates the payment and “pulls” from your account once you’ve provided the info. Meanwhile, the cryptocurrency model returns the power to the consumer with a “push” model. Pay the designated recipient exactly how much you intend and retain the autonomy of your account.
No other electronic cash system grants you the power to own your own account. PayPal and Venmo can place a freeze on your account for a variety of reasons, and so can banks. These services can alter their terms and conditions at will. Even non-electronic money management systems are debatably not your own; fiat currency is created, controlled and manipulated by sovereign governments and their central banks. In 2013, this governmental oversight ran amok in a belly-up Cyprus; the central bank wanted to seize uninsured citizen deposits larger than $100,000 to help recapitalize the island. While central banks can increase or tighten the money supply at will, most cryptocurrencies have a fixed supply.
The autonomy inherent in the cryptocurrency model and the incorruptible security of blockchain suggest consumer privacy implications. Lessons learned from cryptocurrency could take some of the onus of consumer data protection off of businesses, dodging costly disasters like the Equifax hack of 2017. IBM reports that the average data breach in 2018 is nearly $4 million, but many major enterprises spend nearly that much on prevention.
Cryptocurrency has myriad applications beyond use cases like international payments and data privacy. The true potential of blockchain remains relatively untapped; its ability to secure intellectual property, financial assets and sensitive data spans industries. In healthcare, blockchain could keep patient data secure but accessible. In manufacturing and supply chain management, blockchain can facilitate reduced fraud, improved inventory management and immediate status updates.
Some cryptocurrencies enable “smart contracts”: digital contracts that self-execute given provided conditions are sufficiently met. Smart contracts can improve traceability, accountability and security of transactions with vendors and clients. Smart contracts could also empower small businesses to compete on a more level playing field with larger competitors; self-executing contracts reduce time and resources otherwise devoted to invoicing, settling interest fees, managing fulfillment, filing, verification, arbitration and legal processes.
Granted, crypto still has some problems. User interfaces are convoluted and not user-friendly; it would be hard for most people to imagine their parents navigating the transaction process. It takes an expert trained in analysis of financial markets and with an understanding of the crypto ecosystem to navigate and interpret candlesticks and trend lines. Plus, as any cryptocurrency skeptic will leap at the chance to tell you: The market is risky, speculative and volatile.
That same volatility can be an asset that skilled traders can leverage to their advantage. I’ve built my love of cryptocurrency into a hedge fund called Astra Network that creates wealth for clients across New Orleans and beyond. Cryptocurrency is here, not only to stay, but to revolutionize the financial sector as we know it. I’m excited to see how the market changes as cryptocurrency matures beyond these Wild West days of deregulation and becomes a standard. Whatever’s next for the cryptocurrency space, I’m along for the ride — but I’ll be driving.
Will you?
Adam Kinyon is the CEO and managing partner of Astra Network, a cryptocurrency hedge fund founded in New Orleans. His experience in cryptocurrency trading and business management, as well as his personal experience in the cryptocurrency and blockchain world, gives him unique insight into the current and future markets of cryptographic technology.
