Mark Tencaten | Can Cryptocurrency be Considered an Asset Class?

In Mark Tencaten's opinion, Cryptocurrency possesses all the characteristics of a new asset class. The characteristics include certain valid use cases as well as maintaining value over time and space. He thinks the use cases for cryptocurrencies could be much greater than those for the Internet, which won't be relevant until later in the digital revolution. Another key characteristic of this asset category is volatility, which is a necessary component of any asset class that is expanding, as was the case earlier for oil. He thinks that their volatility will decrease as virtual assets become more well-established.

Mark Tencaten believes that early investors have a disproportionate amount of cryptocurrency assets in their possession and have become richer due to the subsequent years' exponential price growth of cryptocurrencies. They were able to hold it for a long period due to their high-risk-taking attitude. He also states that price volatility won't go down despite growing financial literacy among cryptocurrency fans and a corresponding increase in crypto purchasers and traders over the past five years. As cryptocurrency consumers mature, the Fear of Being Left Out will continue to decline from its previous level.

Mark Tencaten, however, does not believe that volatility and the decentralized nature of cryptocurrencies are related in any way. He firmly believes cryptocurrencies are fundamentally decentralized, with people defining the rules and exercising power, making them the most coveted and distinctive asset class. He thinks a completely decentralized system reduces the possibility of misuse and manipulation. This asset class's recentness and 24-hour trading schedule add to its appeal.

What types of developments cause volatility, and how speculative are crypto assets?

Mark Tencaten offers three justifications for this viewpoint. First, in the quest for development and exploration, every fresh technology passes through the era of fast conjecture, whether it be shipping lanes or the Internet. Second, in countries where its access is being controlled, Cryptocurrency is regarded as a source of intrigue and a realistic source of money. Thirdly, the imitation of equities and currencies by bitcoin may also be the reason. Despite bitcoin's dominance, there is still a lot of speculation about cryptocurrencies. This may be because of bitcoin's perception as a gambling asset, the sincere search for business prospects, and the extensive accessibility of the Internet. All of this calls for more financial literacy among the populace.

What qualifies cryptocurrencies as an asset class?

Is Cryptocurrency a decentralized blockchain with applications, a peer-to-peer electronic cash system, or a way to make quick money? Does it qualify as an asset class? Mark Tencaten refers to Cryptocurrency as a fantastic asset class, with Bitcoin and Ethereum acting as, respectively, a store of value and a reservoir of use cases. These have grown to maturity and will continue to do so. People who choose long-term gains over speculative trading are the reason why Bitcoin, in particular, has emerged as an asset class. Not to be overlooked is the decentralized network, a revolutionary concept that may soon displace social networks and other platforms.

Decentralization and cryptocurrencies as a class of assets

Mark Tencaten emphasizes that decentralized finance (DeFi) is a crucial component of the cryptocurrency ecosystem and that cryptos are required to make transactions on DeFi. For instance, the compound token in the DeFi Compound network is a cryptocurrency token created on top of the blockchain of other cryptocurrencies. This similar crypto ecosystem gave rise to new use cases for Cryptocurrency, like DeFi borrowing and lending Dapps and other blockchain applications.

Is it possible for Cryptocurrency to be widely adopted as an asset class globally?

The rapid expansion of cryptocurrencies is a sign of further popularity, but there are certain obstacles. Mark Tencaten claims that the initial wave of transformation has already happened. He supports the inevitable and inevitable rapid rise and adaptation of cryptocurrencies by highlighting modern necessities like the refrigerator, television, and Internet, all of which were revolutionary, cutting-edge inventions that went against the grain at the time. The widespread use of cryptocurrencies would result in numerous transactions that did not involve the purchase of tokens or the use of cryptocurrency ATMs. It would involve a lot more and go beyond that, such as the metaverse, games, Web 3.0, and local inventions, which would alter social media and communication technologies. According to him, the transformation will happen in two years and will draw in a large number of younger groups.