With all of this new talk about fintech, tokenization, and Bitcoin, it can be easy to feel left in the dark. Our solution to this problem is gathering what we know and presenting it to you.
The world of crypto and blockchain is vast, but we have been on top of its development since it began picking up momentum, and we have even made some strong partnerships with fintech developers leading the way in blockchain technology. Alpen Partners is dedicated to keeping our clients on top of the game.
Continue reading below to catch up in the world of crypto and tokenization. Contact us today to begin your very own fintech journey.
Cryptocurrency is digital money that uses cryptography for security. Cryptography is writing and solving puzzles. With the cryptography step, it is difficult to counterfeit. The currency does not have a central authority and can be used for a variety of things such as buying goods and investing.
The history of cryptocurrency begins with Bitcoin in 2008 and, as of 2015, there were 14.6 million bitcoins in circulation. Since its launch, cryptocurrency has found its way into many aspects of our everyday lives that we may not even be aware of. There are now several different kinds of cryptocurrency.
Cryptocurrency has the ability to make transferring funds easier between two parties. The transactions don’t cost much and allow users to avoid high fees experienced when using most banks and wire transfers.
While Bitcoin is the most well-known cryptocoin right now, there are many different kinds of digital currencies, each on their own blockchain with their own advantages. Other cryptos include:
Blockchain has grown in popularity. Some even believe it’s more popular than cryptocurrency since it is applicable to many different areas of life, not just financial technology.
Blockchain shares its roots with cryptocurrency and was developed when Bitcoin was first created.
Users of the blockchain have a ledger which is a digital file of all Bitcoin transactions. The file isn’t held in a central entity server but is distributed across the world through private computers that store data and make computations. Each computer is known as a node of the blockchain network and has a copy of the ledger.
Today, blockchain is beginning to change the way we do our banking, purchase assets, and even how companies hire employees. Even if crypto fades away, an unlikely occurrence, blockchain will live on.
Managing a Crypto Portfolio
Once an individual begins collecting crypto, they will need to implement a plan for how they are going to manage their collection. When managing crypto, it is important to keep track of transactions, value, and any news surrounding the currency.
With this new kind of currency that is growing in popularity, many are realizing it is not as easy as just opening a bank account and holding the funds. Also, for those who have more than one kind of crypto in their wallet, it can be hard to manage. It can be hard to track how much of what coin one has or how much each digital asset is worth.
As one diversifies their crypto portfolio and obtains more tokens, it can be increasingly hard to manage, especially for those who are using multiple exchanges at one time.
Crypto management tools range from simple pen-and-paper and classic spreadsheets to highly intuitive mobile apps that can not only manage your crypto, but also get users in touch with each other, helping one another find success in their portfolios.
Cryptocurrency and Taxes
Each country has different taxation rules concerning digital currencies. Many countries are very strict about the taxation of digital currency. To be taxed, the coins need to be classified as currency, an asset, or a commodity. The strict countries are well aware of how they classify the tokens. Others that aren’t sure of how to classify them, as well as those that are not strict on taxes to begin with, are considered tax havens for cryptocurrency.
There are many countries around the world that proudly have no taxes on cryptocurrencies. This is more than likely due to confusion on how to classify the digital money. Bitcoin and other cryptocurrencies can be classified as a commodity, currency, or asset, so while some of the crypto tax haven countries decide, there are many other countries that don’t tax on digital currency.
Digital Assets Beyond Crypto
Not only has tokenization changed currency, it has also changed tried-and-true assets that we all know and love.
Developers who are interested in the advancement of financial activity are pushing the digitization of real-world assets and placing them on blockchain to take advantage of the perks that cryptocurrencies hold while also keeping the characteristics of the asset.
Tokenization works by taking an asset and converting the rights of a hard asset into a digital token. Popular assets like stocks, real estate, carbon credits, oil, and gold can be difficult to physically transfer and/or subdivide, leading buyers and sellers to utilize paper trading that represents some or all of the asset. Paper trading can be complex, with legal agreements that can be hard to track. One way to combat this process is by switching to a digital system.
Alpen Partners and Cryptocurrency
The shift we are seeing is that of a digital age. Tech-savvy individuals are seeking easy access, convenience, efficiency, and speed in every part of their lives, including their finances. Having the ability to make transactions from the convenience of a phone or other electronic platform is what is creating this strong push towards Fintech [link to Introduction to Fintech page].
Looking beyond blockchains, we are seeing technology have a hand in simple things such as payment and holding money, and more complex life aspects like investment advising. Some companies are even developing ways artificial intelligence can assist in hedge fund managing!