This former financial advisor now educates advisors on crypto
6/30/2022, 06:05 AM
Ric Edelman, founder of the Digital Assets Council of Financial Professionals, is a firm believer in cryptocurrency. In his opinion, a very low asset allocation, 1% or 2% or 3%, is enough to materially improve the overall return of the portfolio. While there is always the risk that bitcoin could become worthless, Edelman believes that the potential upside outweighs this risk.
Edelman points out that investing in digital assets doesn't necessarily mean directly in cryptocurrencies. There are a great many ways to invest in an industrial sector without a direct investment. For example, instead of buying bitcoin, investors can buy stock in companies that are facilitating and building the technology behind cryptocurrency.
What are the most common misconceptions around crypto that you hear? The most common is that there's no way to value bitcoin, that bitcoin has no intrinsic value. This is an extraordinarily common mistake, often perpetuated by very well-respected people in the financial field, such as Jamie Dimon and Warren Buffett. Jamie Dimon is infamous for saying bitcoin has no intrinsic value. The problem with economists and market analysts who make this statement is that they're applying traditional economic modelling of stocks to crypto. What they fail to understand is digital assets is a brand-new asset class that has nothing in common with the stock market. And trying to apply traditional methodologies of stock valuation to digital assets leads you to the wrong conclusion.
As a market analyst, you would look at a company's product, you would look at its competition, at its management, at its products. You would examine its revenues and its profits
Edelman points out that investing in digital assets doesn't necessarily mean directly in cryptocurrencies. There are a great many ways to invest in an industrial sector without a direct investment. For example, instead of buying bitcoin, investors can buy stock in companies that are facilitating and building the technology behind cryptocurrency.
What are the most common misconceptions around crypto that you hear? The most common is that there's no way to value bitcoin, that bitcoin has no intrinsic value. This is an extraordinarily common mistake, often perpetuated by very well-respected people in the financial field, such as Jamie Dimon and Warren Buffett. Jamie Dimon is infamous for saying bitcoin has no intrinsic value. The problem with economists and market analysts who make this statement is that they're applying traditional economic modelling of stocks to crypto. What they fail to understand is digital assets is a brand-new asset class that has nothing in common with the stock market. And trying to apply traditional methodologies of stock valuation to digital assets leads you to the wrong conclusion.
As a market analyst, you would look at a company's product, you would look at its competition, at its management, at its products. You would examine its revenues and its profits