Are Blockchain Investments Сhallenging the Status Quo?

When traditional investments are thought of, there can be many that will initially be thought of. This has happened because of their place in history.

Stocks and commodities are usually the first thought of. Other financial assets, such as pensions, have also become a first thought when asking about investments. This in addition to investing in fiat currencies or materials that are tied to them. However, as the investment market has continued to change and evolve, so can invest in new things. Today, it’s possible to invest in blockchain-backed assets.

What are blockchain assets?

Blockchain assets are digital assets, or tokens, that are created, stored, and transferred on a blockchain network. Primarily, they will often be thought of as a type of cryptocurrency. It’s not uncommon to think of Bitcoin as the first one, given its status as the undisputed king.

However, with this new crypto and the many others that are starting to emerge, they have become more and more popular to invest in. They offer potential investors an opportunity to rewrite the rules of Wall Street.

Indeed, it’s not just cryptocurrency in its traditional form that can be classified as blockchain assets. Non-fungible tokens (NFTs), stablecoins, utility tokens, and tokenized commodities have also been created in recent times.

Why have blockchain assets become popular to invest in?

Blockchain assets have become popular investment opportunities for many reasons. Their uniqueness and newness have been among some of the key favorable factors.

They are yet to fully mature, meaning that there is a significant amount of potential that could be achieved. Everyone has seen what can be achieved with cryptocurrency in relation to the prices that Bitcoin and Ethereum have managed to reach. With this in mind, it’s made it very exciting.

Of course, it’s important to remember that blockchain assets aren’t physical things. As they are located on the blockchain and use its technology, they are completely virtual. They may represent something that is digital (money, art, etc.), but they aren’t available in a physical capacity.

This is why they have started to disrupt the status quo of traditional investment and why so many are looking at these as alternatives. As mentioned, most investors will have looked at physical commodities like gold and oil, but with a new player in town, it seems the excitement around them is just as appealing as established methods.

Should blockchain assets be invested in?

As with all investments that can be made, there is always going to be an element of risk associated with them. In fact, it’s possible to argue that there are more potential challenges and risks faced with blockchain assets than there are with traditional investments.

Given their newness, there can still be a lot of unpredictability and unknowing with virtual assets. While investing is all about making decisions based on predictions that have been worked out based on math and probability, it can be difficult to do this with something that has very little data behind it.

At the same time, they continue to remain unregulated. This can be a huge concern for investors. Without a regulatory framework in place, the future truly is unknown as anything could happen. They aren’t protected against anything, and while this could have a positive impact like we’ve seen with few digital assets, it could also be extremely negative for some.

Without regulations, assets can become extremely volatile, which increases risks. As the risks grow, the less likely investors are going to be willing to take a chance with their money. Equally, they could still be banned in locations, which could have huge ramifications for their potential. Countries have already banned certain blockchain assets, with China among those to have made cryptocurrencies illegal.

If that weren’t enough, environmental factors can play a role in how investible they are. As the world is looking to be greener, digital assets require a lot of energy. This can have a huge impact on the global climate, and investors won’t want to engage in something that can be seen negatively if it can impact the returns that may be achieved.

Will blockchain investments challenge the status quo fully?

It’s possible to see instances whereby the status quo of traditional investment has been challenged. There has been a growth in the investment being shown toward familiar digital assets, like cryptocurrency.

This suggests that there could be an opportunity in which the industry is disrupted fully in the future. However, with so many risks still available, perhaps it won’t be for a little while longer until we see a bigger shift take place toward blockchain investments.