3 Most Important Questions to Ask Yourself Before Investing in Cryptocurrency

We asked Paul Veradittakit of Pantera Capital, the leading institutional investment firm that focuses on blockchain and cryptocurrencies, about the three most important questions to ask yourself when investing in cryptocurrency.

Here are his answers.

1) Know your risk appetite

As with any investment, investors need to consider their ability to shoulder losses. Just how much can you stand to lose in the event that things go south? To this end, Paul advises people to ask themselves:

“What’s your risk appetite? This is a new space and there are a lot of unknowns.”

We often hear about the risk inherent in cryptocurrency. When investing in any particular coin or project, it’s important to keep in mind your appetite for risk.

How much are you willing to risk? While many cryptocurrencies and related projects have what’s referred to as “asymmetric upside” (meaning the potential rewards outweigh the potential risks), that doesn’t mean you’re guaranteed to win (ever).

There have been too many failed blockchain projects to count. That’s why being diversified counts.

2) How diversified do you want to be?

The second question investors should be asking is how exactly they want to invest.

Diversification is often best accomplished via an investment vehicle like an exchange-traded fund (ETF) rather than buying a coin on an exchange or through an ICO.

“Do you want to invest in companies or projects directly, or do you want to buy into a vehicle like a fund or an index?”

This is a point many people might never stop to consider. Simply exchanging fiat for a coin on an exchange is not the only way to invest in cryptocurrency, although it might be the most common.

This also plays into the third question.

3) Are you investing in things you’re passionate about?

This one is simple. Yet most investors might never consider it.

“It really helps to understand what you’re investing into…if you’re not willing to do the research, you should invest in an index or a fund or something that is diversified.”

Legendary investor Warren Buffet is well-known for his famous quotation saying that he only invests in businesses that he understands.

Why would investing in cryptocurrency be any different?

These Blockchain Investment Houses Are Banking on a Decentralized Future

The total market capitalization of all cryptocurrencies is about $250 billion, with the all-time high surpassing $800 billion. But this figure only represents capital which has been invested directly into digital assets.

There’s an entire industry springing up around blockchain technology. And while cryptocurrencies are great, finance is only one of many areas of human discourse which can be improved by blockchain technology.

Blockchain investment houses breathe life into blockchain.

There are countless blockchain-related endeavors being forged by various business entities around the world. Investing capital in this area is crucial for the continued development of the blockchain sector.

Here are five blockchain investment houses which are banking on the future of decentralized tech.  

1) Pantera Capital

Founded in 2013, Pantera Capital is the first U.S.-based blockchain investment firm.

The team at Pantera Capital is experienced in both cryptocurrency and traditional finance. The firm focuses 100-percent of its efforts on blockchain. Pantera prides itself on building a diverse portfolio, and aspires to become the “catalyst for widespread blockchain adoption and innovation.”

Pantera foresees cryptocurrency and blockchain tech as having a more mainstream and accepted place within the global economy in the near future. Many other participants in the blockchain community likely agree.

2) Block Asset Management

Block Asset Management is the “world’s first fund of funds” when it comes to blockchain investment houses. Their investing strategy focuses on five main pillars:

1) Expertise – Their team consists of experienced experts from relevant fields.

2) Diversification – Utilizing a “multi-strategy approach” provides maximum rewards, while reducing risk and volatility.

3) Regulation –Block Asset Management is registered with the CSSF, Luxembourg’s regulatory authority.

4) Risk Management – The fund uses risk assessment models which have been custom-tailored to the cryptocurrency asset class.

5) Scale – Investor returns grow in tandem with that of the fund itself, rather than being limited to owning a single asset.

3) Applied Crypto Ventures

Applied Crypto Ventures is unique in that it has a broader focus than most blockchain investment houses.

Rather than limiting itself exclusively to blockchain technology investments, ACV is focused on several other areas of next generation fintech as well, including artificial intelligence, quantum computing, and Internet of Things devices. These are referred to collectively as “Fintech 4.0.”

Led by a team that spans three continents and has over 20 years of combined experience, ACV is a blockchain investment house in a league of its own.

4) Invstur

Invstur focuses on all things blockchain. Their main interest at present is on creating high-output bitcoin mining farms.

Mining is intended to be the backbone for further growth, since Invstur is one of the younger blockchain investment houses on the list.

5) Pangea Blockchain Fund

Pangea Blockchain Fund and its partners operate from the perspective that blockchain technology might very well become “the greatest driver of value creation in our lifetime.”

Pangea focuses its investments on four primary areas:

1) Value-Chain Investments – specific areas that fiat currency meets cryptocurrency; financial intersections that generate revenue by way of fees and could therefore see significant returns on an ongoing basis

2) Tactical STOs – investments made in startups during the private phase, or at discounted rates

3) Industrial Applications of Blockchain Technology – could help give existing companies a competitive edge

4) Ticino Labs – a Ticino-based incubator soon to be launched by Pangea, which will help new blockchain innovations grow, while providing for unique investment opportunities

A decentralized future is on the horizon.

These blockchain investment houses are helping to build a decentralized world. In addition, investors who don’t want to hold cryptocurrencies can gain exposure to the market through organizations like these, bringing additional capital to the sector.

All things considered, it’s firms like these which will help blockchain continue to grow and build new decentralized structures within society.

[Originally posted on Block Pulse: https://blockgroup.global/2019/06/24/these-blockchain-investment-houses-are-banking-on-a-decentralized-future/]