Blockchain technology has the potential to revolutionize how several industries operate. It first began with cryptocurrency, a digital currency that leveraged blockchain’s decentralized nature to offer private, secure and untraceable payments. And even though the crypto market has stumbled in recent months, blockchain is still attracting attention from a variety of industries.
Investing is one of these spaces. In the not-so-distant past, investing was a game primarily played by older, more affluent investors who could weather the risk of potentially losing large amounts of money. But now that blockchain has established itself and proven that it is here to stay, the way people invest is rapidly evolving. Blockchain has made it much more possible for younger investors with less cash to burn to get involved.
Platforms within the crypto segment have also reduced barriers to investing as they tend to have looser investing requirements compared to traditional finance platforms. Cryptos are a lot easier to purchase than traditional assets, with virtually anyone being able to download a free crypto wallet and sign up for a cryptocurrency exchange. Additionally, many of these exchanges don’t even require identity verification, although some platforms require users to verify their identity once they have reached certain limits.
In comparison, most traditional stock platforms require users to complete Know Your Customer (KYC) procedures. Customers are also limited to stocks from publicly listed companies, preventing them from accessing shares from private companies. Furthermore, only high net-worth individuals and accredited investors are usually allowed to participate in the traditional stock market while virtually anyone with a crypto wallet can take part in seed-stage funding in the crypto space.
According to Jeremy Musighi, the head of growth at Balancer, blockchain grants crypto investors a high level of transparency, much higher than the transparency involved in other asset classes. He said that while a crypto investor is allowed to analyze data on how a decentralized protocol is performing and track metrics on a historical basis or in real time, traditional investors have to wait for quarterly reports from the companies in which they invested.
Musighi said that the level of transparency offered by blockchain is “light years ahead” compared to how public companies operate, stating that the decentralized technology allows investors to access thorough and accurate information. This, coupled with reduced barriers to entry, has resulted in significant interest in crypto investment among youth in developed as well as developing countries.
In Nigeria, for example, 35% of citizens age 18 to 30 years of age (33.4 million) traded or owned crypto in 2021 while 52% (17.36 million) reported that one-half of their assets are held in crypto, while many more people are investing in mining cryptocurrencies through platforms such as those provided by Bit Mining Ltd. (NYSE: BTCM).
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