Cryptoassets is a book about cryptocurrency, the blockchain technology underlying it and how these innovations are impacting traditional financial markets. The authors discuss the economic underpinnings of crypto assets as well as their many speculative uses cases such as decentralized games, virtual currencies and digital art commissions.
“Future of cryptocurrency 2021” is a book summary by Chris Burniske & Jack Tatar. It discusses the future of cryptocurrencies, and how they will be used in the near future. Read more in detail here: future of cryptocurrency 2021.
Are you seeking for a summary of Chris Burniske and Jack Tatar’s book Cryptoassets: The Innovative Investor’s Guide to Bitcoin? You’ve arrived to the correct location.
After reading Chris Burniske and Jack Tatar’s book, I wrote down a few significant takeaways.
If you don’t have time, you don’t have to read the whole book. This book synopsis summarizes all you can take away from it.
Let’s get this party started right now.
I’ll go through the following points in this book synopsis for Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond:
What is the subject of Chris Burniske and Jack Tatar’s Cryptoassets?
The book includes a short history of Bitcoin as well as a comprehensive reference to cryptoasset investment.
The book covers the origins of blockchain technology and is intended to assist investors better comprehend cryptoassets.
Who Created Cryptoassets and Why?
What’s the Deal with Bitcoins, one of the earliest books on the topic, was written by author Jack Tatar. He has over two decades of experience in the financial services business and is an angel investor in cryptoasset firms.
Chris Burniske is the cofounder of Placeholder, a cryptoassets consulting business. He was instrumental in establishing cryptoassets as an asset class on Wall Street.
For Whom is Cryptoassets by Chris Burniske and Jack Tatar Intended?
Chris Burniske and Jack Tatar’s Cryptoassets is not for everyone. If you are one of the following folks, you may like the book:
- Entrepreneurial investors
- Students in information technology
- Those who are interested in the financial world
Cryptoassets Book summary by Chris Burniske and Jack Tatar
Introduction
The subject of cryptocurrencies is now trending. Cryptoassets are believed to be the way of the future, and now is the time to invest. Others argue that Bitcoin is a craze and that investing in it is a waste of money.
Who has the correct response? If you’re not familiar with crypto, what precisely is a cryptoasset?
These insights give some answers, including historical information on Bitcoin and blockchain technology, as well as investing and cautionary advise. Finance has already arrived in the future; the only issue now is when the rest of the world will notice.
Because the cryptoassets ecosystem is continually evolving, the author recommends doing your own study.
Lesson 1: The word “cryptoasset” refers to a new asset class that combines software and a currency.
Unless they’ve been living in caves on abandoned islands, most people have heard about Bitcoin. Cryptoassets, along with a few other digital assets, have made headlines in recent years, promising unique investing prospects for both experts and novices.
A cryptoasset is also a commodity that consists of software and an underlying currency.
But how do cryptoassets decide on their worth?
Cryptoassets, like gold and oil, have a supply and demand component to their value. While gold and oil are physical commodities, cryptoassets are not, and their value fluctuates with the market.
Consider Bitcoin for a better grasp of how this works.
Cryptoassets, like bitcoin, are a mix of software and a monetary unit called “bitcoin,” hence they don’t fall into a single asset class.
A consumable/transformable asset (or c/t asset) is an item that is often purchased to be utilized in the production of something else. The software component of Bitcoin is similar in that it may be used for a multitude of reasons.
The money, however, is similar to gold, an item classified as a store of value. Gold has always been considered as precious due to its scarcity, beauty, and utility. Unlike government-issued money, cryptoassets work in a similar way to gold in that each cryptoasset has a limited quantity of currency.
Many individuals purchase bitcoin without intending to trade it. They leave it alone, much like gold or other precious metals, so that its value might rise over time.
As a result, the cryptocurrencies that flourish will be those that serve as both a store of wealth and a tool.
Despite the fact that cryptoassets are a distinct asset class, they also fall into a variety of other categories, making them even more enticing – and lucrative – to investors today.
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Lesson 2: Cryptoassets make use of the ground-breaking blockchain technology.
A cryptoasset, such as Bitcoin, is based on blockchain technology, which is a phrase that is more often used than understood.
What is the purpose of a blockchain?
The blockchain is essentially a huge digital database that tracks who owns certain cryptoassets.
Unlike bank databases or centralized government databases that supervise a population’s transactions, blockchain databases are decentralized. They are regularly updated and are managed by the millions of users who have the necessary software installed on their PCs.
Let’s say you want to install the Bitcoin program. What are some of the blockchain qualities that you would support?
The first feature is that it is distributed, meaning that it may be accessed from any computer, anywhere.
It’s also cryptographical, which means that all data is encrypted using an unbreakable computer-generated code.
Third, since it is constantly synchronized with a global network of computers, the blockchain is immutable: nothing can be erased from its database.
Last but not least, it continues to expand.
Each Bitcoin transaction is recorded on the blockchain, and the addition creates a new “block.” Miners are the computers that add these transactions to the blockchain database, and the miner who adds the block is compensated in bitcoin. Miners compete with one another to record new transactions quicker than their competitors in the mining sector.
Because the software that runs a blockchain must be universally authorized by everyone who uses it, it is considerably more difficult to get away with unethical behavior.
The figures do not lie. It’s almost hard for a single individual – or a well-organized gang of criminals – to hide any wrongdoing. Only once every synchronized blockchain database has validated a transaction will it take place.
Even if someone managed to illegally move a large amount of bitcoins to his account, it would only be temporary. The blockchain databases would fail to sync in no time, and he would be caught.
Lesson 3: Bitcoin was the first cryptocurrency, and several others have since emerged.
Bitcoin is the most well-known cryptoasset, and its currency has grown in value since its inception. Nonetheless, there are several cryptoassets available, and new ones are continually being produced.
Bitcoin’s beginnings are shrouded in mystery. Satoshi Nakamoto is the anonymous creator of bitcoin and, by extension, blockchain technology. Nakamoto’s identity has yet to be confirmed, and some speculate that he is a collection of persons.
The fact that Bitcoin’s birthday falls on Halloween adds to the eerie nature of its beginnings. Following the financial crisis of 2008, Bitcoin debuted on October 31, offering a viable alternative to the failing financial system. According to the writings ascribed to Nakamoto, Bitcoin was designed to be decentralized (i.e., independent of any one body) and that its operation would be based on mathematical evidence rather than faith.
Following the 2008 financial crisis, there was widespread rage and disappointment throughout the world. People were enthralled by Bitcoin because they were fed up with the global banking system, and Bitcoin seemed to be the ideal alternative. As a result, Bitcoin grew in popularity over the previous decade and matured into the money that it is now.
The Bitcoin model isn’t the only one, however. Private blockchains and cryptoassets, in addition to cryptocurrencies, serve several uses.
The most well-known example is Ethereum. Unlike bitcoin, Ethereum’s blockchain is used to distribute open-source software and facilitate collaborative development. Its “native asset,” or money, is ether.
Unlike all other cryptoassets, the Ethereum blockchain, like Bitcoin’s, is open to the world.
For example, Monero and Zcash both employ private blockchains, which means that accessing the blockchain needs specific authorization.
Financial firms have embraced private blockchains like Monero and Zcash because they want to benefit from blockchain technology’s efficiency while maintaining anonymity.
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Lesson 4: Investment and finance are evolving, and those who are knowledgeable and courageous will benefit.
Do you ever consider stock investments? It’s terrifying because neither the uneducated nor the knowledgeable can anticipate what will happen. Because cryptoassets are new and volatile, investing in them seems to be a dangerous endeavor. It’s not as dangerous as it seems.
The financial sector may be transformed by blockchain technology, which underpins cryptoassets like Bitcoin.
Traditional, centralized banking may be supplanted by blockchain technology, much as email has almost totally replaced snail mail.
Blockchain technology might be a chance for folks who missed out on eBay or Google when they were still little firms in the late 1990s and early 2000s.
Bitcoin is still a relatively new asset.
Despite bitcoin’s present high price, the author believes it will rise considerably in the future. Bitcoin’s volatility – that is, its value changes – has lessened in recent years; the asset is now a more stable asset, and although you are unlikely to make exponential returns like someone who purchased ten dollars’ worth in 2010, you are also unlikely to lose money.
Bitcoin will grow in popularity as it gets more well-known. Customers are inconvenienced since the bulk of popular establishments do not take bitcoins. When Bitcoin develops more popularity and becomes more useful, its price will grow as well.
Younger cryptoassets, like as Ethereum, are volatile, and will continue to be so until their fundamental value and support mechanisms are secure.
Before you invest, be sure you understand the dangers. Otherwise, rather of taking advantage of a chance, you will be playing with your money.
Lesson 5: Investing in cryptoassets comes with some risk.
Hold your horses tight! Let’s take a closer look at some of the risks of investing in cryptoassets before you spend your whole life savings.
Crowd speculation is one of the most serious threats. The risk is that monkeys observe and monkeys act.
If they observe others doing it, amateur investors may become subject to this danger. They have no notion how much the asset they’re investing in is worth, and they haven’t evaluated if their decision is reasonable. They are following the mob mindlessly.
It frequently occurs when professional speculators acquire an asset and are not interested in its genuine worth, unlike investors. These folks are just interested in making a profit, which is why they purchase cheap and sell high.
Speculators may be enticed to acquire a cryptoasset if a large number of people buy it at once, causing the price to climb. If the cryptoasset fails or turns out to be faulty, or if experienced speculators suddenly sell, these novice traders might lose a lot of money.
The second form of hazard is known as the “this time it’s different” mentality.
Markets, according to some who think they learn from their errors, will be more stable this time. Many individuals feel that cryptoassets are unlike anything else that has ever been, and that the traditional rules don’t apply to them.
Cryptoassets, to be sure, are unique. However, this should not be used as an excuse to disregard common sense.
It might be difficult to appraise a cryptoasset. Cryptoassets are still very new, and they differ from regular assets. Nonetheless, as will soon be disclosed, there are several rather solid methods for assessing the value of any cryptoasset.
Remember that intelligent investors are fully aware of the potential financial and non-financial advantages of cryptoassets. They’re also aware of the dangers of investing in cryptocurrency.
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Lesson 6: Ensure that your assets are neither connected or negatively associated.
Let’s move on to some of the finer elements now that we’ve looked at the risks of investing. When putting up your financial portfolio, keep correlation and diversity in mind.
All investments should function together since each asset should complement the others.
It should come as no surprise that various assets react to the market in different ways. Stocks, for example, do not respond to the economy in the same way that bonds do. When the economy is performing well, stock prices increase, but bond prices fall. What gives? Investors will put their money to work on the stock market rather than hiding it away in bonds in a growing economy.
The term “correlation” refers to how one asset’s market reaction varies from that of another.
For example, the stock and bond markets have a negative correlation, which means they respond to economic developments in different ways. This is desirable, but it is not perfect. Zero correlation is the ideal result when an economic event impacts one asset but none of the others.
Diversification is crucial in this case. It’s a smart idea to diversify your portfolio with both bonds and equities so that you can weather booms and busts.
Another kind of correlation exists: positive correlation, which is synonymous with placing all your eggs in one basket. It happens when a single economic event has an impact on all of your assets at the same time.
Because diversification is easy with cryptoassets, it’s much easier to prevent positive correlation and total risk.
Assume you have an existing stock and bond portfolio. You can safeguard yourself from conventional market failures by adding cryptoassets, which have a limited influence on cryptoassets. Because cryptocurrencies have no association with conventional markets, there will either be no impact or your cryptoassets may rise if individuals get dissatisfied with the stock market and switch to cryptocurrencies. You win in either instance.
Lesson 7: There are other methods to purchase cryptocurrencies, but be mindful of the varied trading pair diversities.
You may be ready to buy your first cryptocurrency. You understand the risks of investing, and it seems to be the way of the future.
Registering with a platform like Bitstamp or GDAX is the initial step towards acquiring cryptoassets.
Fiat money, such as euros or dollars, may currently be used to purchase ether, bitcoin, and other cryptocurrencies. Because exchanges do not want cryptocurrencies to become publicly accessible until they have been extensively vetted for stability, the bulk of cryptocurrencies cannot be purchased using fiat cash.
You may use ether or bitcoin to buy any other cryptocurrency after you’ve acquired some.
The speed with which cryptocurrencies may be moved is one of the features that makes them so helpful. Bitcoin is a money-over-internet-protocol (MoIP) cryptocurrency that can be moved from one computer to another quickly, as opposed to fiat cash, which must be transferred from one bank to another.
Before you start trading, you should have a feel of the currency’s strength.
Consider how many fiat currencies and/or cryptocurrencies are available to buy a cryptoasset to assess trading pair variety. Cryptoassets that have more pairings are often more dependable and resilient. This is particularly true when cryptoassets and fiat currencies are combined. At CryptoCompare, you can examine which cryptoassets are compatible with which fiat and/or cryptocurrencies.
Make sensible financial decisions. Don’t simply buy something because everyone else is. Do your homework and only invest when you’ve gained a thorough understanding of the market.
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Lesson 8: After investing in a cryptoasset, you have two options for storing it.
Assume you purchased your first cryptoasset and accepted the risk. That’s fantastic, but what comes next? When and where will it be kept?
You are partly to blame for it. All cryptoassets come with a private key, which allows you to send them to other persons who also have private keys. All you have to do now is keep this key secure.
This may be accomplished in two ways: making your cryptoasset more accessible while also making it less secure, or keeping it more secure while also making it less accessible.
The first is known as a hot wallet. A hot wallet is one that has an online connection. For example, your private key would be kept on the cloud or on a device with internet access.
The term “cold storage” refers to keeping your private key offline. You may save your private key on paper and store it in a fireproof safe, or you can use a pin-protected hard drive.
Both alternatives have pros and cons.
No one can access your assets unless they physically take the device if you choose cold storage. This is a good thing since hackers cannot access your assets, but it limits how fast and from where you can access them.
If you utilize a hot wallet, though, you expose yourself to hackers and criminals.
Most exchange platforms let you to keep the assets you trade there, and you profit from this since the storage format is generally part hot wallet, half cold storage, with a designated third party safeguarding your private key.
Coinbase is one of the most popular storage alternatives. You may choose between hot wallets and third-party-protected cold storage.
Not every platform, however, provides a totally safe storage mechanism. Exchanges that keep assets in them often are more susceptible to hack hot wallets.
Lesson 9: An inventive investor should think about a few extra things.
Assume you’ve already acquired some cryptoassets but are unsure how to quantify the risk associated with each fresh investment.
An imaginative investor considers a cryptoasset’s white paper and decentralization in addition to its pricing.
A cryptoasset’s white paper defines what it is. It should explicitly demonstrate how it corrects faults with existing cryptoassets, as well as how it compares to the competition and how it functions.
White papers must be precise, devoid of typos, and simple to comprehend. Vagueness, spelling errors, and incomprehensibility are all red flags.
The capacity to serve as a decentralized service is a cryptoasset’s decentralization advantage.
Consider Swarm City as an example. The Ethereum-based program enables users to pay and be paid peer-to-peer, bypassing intermediaries such as Airbnb and Uber.
Entrepreneurial investors will also consider three other factors: community, developers, and issuance model.
A cryptoasset must be supported by a qualified developer and positioned inside a reputable community to be considered trustworthy. This implies that members of the asset’s community should either invest in it or serve as miners. This implies that anyone working on the asset must have prior experience.
For a robust cryptoasset, the issuance strategy must also be fair. Models for native-asset distribution describe how much money will be allocated to miners and developers, as well as how much will be delivered to them.
Keep an eye out for issuance models that disproportionately compensate miners and developers, guaranteeing that they have disproportionate influence over the asset. Such schemes are unfair and risky to other investors due to the whims and bad judgment of the miners/developers.
You should also make sure that the initial supply of the cryptoasset isn’t high. As a consequence of the oversaturation, its value will most certainly stay low.
That’s it. It’s entirely up to you how you spend the remaining funds!
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Final Thoughts
Cryptoassets are a fantastic financial possibility that is seldom offered to newcomers.
However, before you invest in cryptoassets, you need learn about the market and how it operates. White papers should be read, and decentralization edges should be followed; trading pairs should be diversified, and cryptoassets should be stored securely.
Also keep in mind that you might lose your money. If you do your homework and understand the dangers, cryptoassets may be a terrific investment.
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