Sunday, December 17, 2023

Does The Bedokian Own Cryptocurrencies?

Photo credit: amhnasim from

Short answer, yes.


Some of you may have felt ironic as I had opined cryptocurrencies (or cryptos for short) to be highly speculative, and yet I had dipped my fingers into it.


So, what gives?


Speculation, for the most part, goes hand in hand with exuberance, which in turn suits one of the most basic human desires: greed. Cryptos, with stories of their meteoric rise, gave the opportunity to have a very quick growth in wealth and capital compared to other traditional asset classes and means of generating income (e.g., the 9-to-5 slog). It is this get-rich-quick outlet that attracted a lot of people and thus piling their monies into it, with some even on leveraged terms. As with most mania in history, however, the good times did not last long as the saying “what goes up must come down” went, it came crashing down in 2022, sparking the crypto winter as we knew it, exacerbated by news of crypto failures, frauds and hard regulatory actions.


Admittedly getting rich quick forms a small part of the rationale of why I went into cryptos, but on the big picture I foresee there is some usefulness in cryptos and more in the underlying technology that accompany them, which is blockchain. Some authorities around the world, while dissing cryptos as tools of money laundering, began to appreciate blockchain and its potential application on many functions. Therefore, another part of the rationale is to get some skin in the game and get a (frankly not so) early adopter entry.


Having said that much, I only have two cryptos in our portfolio: Bitcoin and Ether. The choice for these two were obvious; they were sitting at the top of global crypto market capitalization and their relative strengths to other cryptos.


Bitcoin (BTC), dubbed as the “grandfather of cryptos”, had established itself as a de facto standard for and became synonymous with the term cryptocurrency. Its planned finite supply has the advantage of being scarce, akin to the gold supply that could be dug from Earth, thus appealed as the digital form of the precious yellow metal. 


Ether (ETH), or (erroneously) called Ethereum, is the most famous among the alternate coins (altcoins, i.e., any other coin besides BTC), and unlike BTC, it has more applications than just serving as a currency, such as the ability to develop smart contracts for business processes. A very good example of smart contracts on Ethereum is the Non-Fungible Tokens (NFTs).


Despite BTC and ETH were launched in 2009 and 2015 respectively, their characteristics as investible assets were too early to call. There are still many non-believers and skeptics, and their recent rise was due to expectations of the approval of a spot BTC exchange traded fund by regulators, and the expectations of rate cuts by the Federal Reserve next year.


Now begs the question, what is the proportion of our portfolio in cryptos? It is not inside our Bedokian Portfolio, but in the trading portfolio instead, and overall constituted less than 1% of our portfolio multiverse.

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