We are publishing the well written piece below by 20-year old University of Michigan student Bennett Stein today because we want our readers to understand just how passionate the millennial generation is about digital currencies. Bennett first contacted us through a friend to see if we would be interested in publishing his bitcoin trading videos. We said no, but we would be interested in hearing WHY he is so passionate about bitcoin, because we feel our audience - which is mainly comprised of wealth managers, hedge funds, VCs and the like - need to understand why they have to get with it on the whole digital currency craze for their next generation of clients. So read this well-written piece below - and if you do want us to feature his videos in the future - let us know.
(Cindy Taylor/Publisher)
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By Bennett Stein
I wanted to offer my perspective on cryptocurrencies.
In full disclosure, as a 20-year old current University of Michigan student many might discount my perspective as naive or inexperienced. But as an economics major that has been trading since he was 15 years old, and a recent convert to the world of crypto, I would like to think I have something to offer on the topic. And readers should keep in mind that it will be my generation that will be the most involved in, if not affected by, the acceptance and use of these currencies.
My introduction to cryptocurrencies largely came by accident. I began trading stocks in the eighth grade after I had devoured several books on the psychological aspects of investing, and wanted to explore this for myself. I began as many do, by investing passively in stocks. But I hungered for an investment experience that involved more immediate feedback (please note I did not say “gratification”). So after trying my hand at short-term trading in equities, I gravitated to the currency markets. FX at the time was perfect testing ground as it was global, 24 hours a day (meaning very few gaps), no dividend dates to contend with, and deeply liquid.
However, upon learning about Bitcoin, and opening my first account, I sensed that I had an “edge” that I did not seem to enjoy in short-term FX trading. But more about that below.
Before sharing my experience as a new crypto trader, however, I think it is important to address a potential fundamental criticism of these markets. After immersing myself into the cryptocurrency world, I happened to be confronted by a family friend, a lifelong traditional investment advisor. With the best of intentions, he mounted his best arguments to persuade me that Bitcoin was essentially a lottery, and I was making sucker bets. I likened this to having my first glass of fine wine only to be told that it was just grape juice. Was crypto really a type of asset, or was I just taking part in some enormous lottery scheme?
I may be relatively new to markets, but I’m aware that there is “investing” and there is “trading”. Markets that offer short-term trading opportunities must also have longer term investors. So do the cryptocurrencies have these? Do they comprise an investment asset class? In my opinion, Wall Street and the asset management industry have kept investors living in the past. By purposely blurring the lines between different types of asset classes (e.g. stocks and bonds, real estate, gold, etc) investors have been kept in the dark about what type of asset truly addresses their needs (or fears).
What is an “asset class” and which ones serve as a “store of value” may be more important question now than ever. Many G10 countries are now anticipating both a stock market correction and - for the first time in decades – a potentially lengthy bear market in bonds. In considering all the candidate assets in the marketplace, it would be foolish to reject newer weapons that could be added to the arsenal. The investors that will be celebrated in the coming years may very well be those who were brave enough to adapt to new assets and new technology. The consensus among modern academicians is that there are basically three types of asset classes:
(a) Investment assets, where price is determined by future income stream;
(b) Consumable assets, like grains or food (or water and gasoline, if you’re a fan of “Mad Max”); and