10 cryptocurrencies to invest in 2018

The focus on cryptocurrencies in the finance and banking sectors is gaining momentum. In this paper, we investigate the role of cryptocurrencies in modern finance. We apply a narrative literature review method to synthesize prior research and draw insights into the opportunities and challenges of leveraging cryptocurrencies. Challenges exist related to the integration of cryptocurrencies in modern finance. These include the lack of regulatory standards, the risk of criminal activity, high energy and environmental costs, regulatory bans and usage restrictions, security and privacy concerns, and the high volatility of cryptocurrencies. The current review is useful for scholars and managers, including those seeking to have a more balanced understanding of these emerging financial instruments.

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WATCH RELATED VIDEO: Top 10 CryptoCurrencies you must invest in 2018

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Try out PMC Labs and tell us what you think. Learn More. The Fourth industrial revolution has seen many innovative technologies that are now challenging traditional economies. The innovative and technological financial instruments are inspiring individuals and expert investors to investigate the broader investment spectrum, and consequently diversify their portfolios.

Going beyond the conventional portfolios and developing state-of-the-art strategies that comply with the ever-changing financial and technological advancements are the keys to long term sustainability.

Therefore, to cater to the needs of all segments of the society, the investment strategies during the fourth industrial revolution demand exposure to technological and digital financial innovations. This study investigates the impact of diversification with the addition of five cryptocurrencies from November to November on four traditional asset portfolios. The results show that the diversification increased the returns in most of the cases, and reduced the portfolio volatility in all portfolios, and also provided higher returns as compared to the traditional portfolios for the same level of risk.

This study also revealed that the results might improve when short sales are allowed. Moreover, we can conclude that the addition of multiple cryptocurrencies in a portfolio provides enhanced results for diversification, and Ethereum provides a better diversification opportunity as compared to Bitcoin.

The recent years have seen tremendous growth in innovative technologies that demand a restructuring of the traditional global economy. Many advances in technology are changing every aspect of the way that we live, work, commute or even think and process things; this is an era that is termed as the fourth industrial evolution by Klaus Schwab.

Schwab defines the Fourth industrial revolution as a socio-technical process that is affecting the digital, physical, and biological domains. This change is based on the effective and innovative exploitation of new and emerging digital technologies, through their fusion and interaction with each other.

Indeed, there is no denying that the recent digital transformation is influencing all the sectors and industries of the world, with new models and innovations that are frequently required to rely on digital technologies and systems Geissbauer et al. The financial systems are already experiencing the effects of one such technological advancement, in the form of digital currencies and blockchains Su et al. It is safe to say that these currencies and blockchains are challenging as well as changing the traditional financial system, that too rapidly.

Klaus Schwab, in a piece of recent news, 1 coined in that the concept and practice of blockchain, is at the heart of the fourth industrial revolution. His article further indicated that in order for the fourth industrial revolution to be successful, Bitcoin — which is the most famous, and disruptive digital currency - must be given its due credit and importance, as it provides an open and borderless payment protocol to be exercised.

The invention of the digital currencies in , and a sharp increase in the prices of Bitcoin during the year , sparked immense criticism around this trend in the global financial and economic circles.

The individuals who invested in the digital currencies, by buying or earning the coins, gained tremendous rewards during this period. The investment into, or the allocation of money to benefit from a financial initiative in the future is a common trait in human behavior, as an attempt to secure oneself against any uncertainty that one might face.

To many, investing and managing an investment portfolio is a profession. To some, however, it is a hobby, and to many, these investments provide financial security after retirement. Most often, employees in different companies are allowed to invest in retirement or provident funds. These funds are developed and managed to earn good rewards while also keeping their risks low in order to avoid any significant losses. Moreover, non-profit organizations utilize additional income from the endowment fund investments in order to operate and manage their activities.

Investment, therefore, becomes a societal need, especially when it comes to managing or investing for one's retirement or endowment funds. As we are hovering in the fourth industrial revolution, the investments and their management has become an even more challenging task, especially with the advent of innovative technologies and sound financial systems.

It is imperative to take advantage of the technological revolution, the upcoming financial systems, and the worldwide web in order to make wise investments to secure bright financial prospects and for the betterment of the society. However, firstly, we need to get down to the basics of what cryptocurrencies are.

The basic definition of cryptocurrencies states that it is a medium of exchange, but unlike traditional currency, it is independent of national borders and central banks Maese et al. Cryptocurrencies are strings of complicated computational bits and blockchains that are designed to work as a means of payment or exchange of value.

These blockchains that were first introduced by Nakamoto , function as building blocks of the digital money system s , with usually no central authority overseeing the ledgers, wealth creation processes or the security systems, and also have negligible counterparty risks involved. Cryptocurrencies have caught much attention from industry participants, individuals, and experts. Interestingly, Bitcoin has taken the lead, as of now, with a market capitalization of billion USD, making it the most popular cryptocurrency available in the market.

The cryptocurrencies and the blockchain technology, which make the digital currencies, are disrupting and challenging the traditional financial systems in many ways.

The high costs of financial intermediaries, transactional delays, and paperwork, act as an added burden on the consumers. The technological advancements, that the currencies offer, not only do not require an intermediary to verify the transactions or identities of individuals, but also reduce the time required for these transactions, hence providing a transparent system for recording the data and information.

In the same stride, the blockchain technologies are changing the banking system by possessing the capacity to facilitate smart contracts, electronic banking ledgers, and money remittances, that too on a global level Peters and Panayi, Effective electronic business models are now being proposed using blockchain's peer to peer transaction mode Su et al. In addition to this, the blockchain technology also allows firms, of any size, to raise funds through peer-to-peer, globally distributed share offerings, or the initial coin offerings.

The initial coin offerings not only brings the global investors together but also removes the requirement of any intermediaries, investment bankers, or auditors, which automatically reduces the costs incurred to the relevant companies. In the year alone, a staggering amount of million USD was raised through initial coin offerings ICO , a figure that was higher than the amount raised through any traditional channels Perez et al.

The technical algorithm that makes the blockchain can reduce transactional costs for stakeholders, eliminate the third-party intermediaries, and also improve the entrepreneurial financing ecosystem Ahluwalia et al. With a new form of crowdfunding undertaken through the advent of cryptocurrencies, the factors that drive the ICO returns are also studied in detail.

Domingo et al. This study reported that bitcoin spot and futures returns tend to have a positive effect on the ICO returns.

Over the years, the increase in the research conducted on cryptocurrencies and the underlying blockchain technology has been profound. While individuals are fearlessly using the currency for payments, mining to earn rewards, or direct buying and selling for investment purposes, the experts are skeptical of the different aspects of the currency, and its subsequent future.

With the skepticism, hype, and investments in the cryptocurrencies, the researchers have been exploring and investigating the universe of digital currencies.

Cryptocurrencies, Bitcoin, and blockchain are also considered to be a significant part of the evolving FinTech. Although the focus of the research conducted in the diameter of FinTech, from the years of to , was on the business models and mobile payments, researchers were putting in more effort into studying the blockchain and bitcoins from the year and onwards Liu et al.

While many researchers focused their research on the positives of the cryptocurrencies and blockchains, some suggested moderating the expectations regarding their benefits to the society, and the potential value that they might possess, along with the high potential of illicit use anywhere along the way Corbet et al. Furthermore, it is not just the technology behind the cryptocurrencies and the digital currencies that is disruptive for the financial systems. The leading cryptocurrency Bitcoin, and the blockchain technology, had given way to 30 percent cumulated average abnormal returns when the companies changed their names to include the buzzwords that were related to cryptocurrencies Sharma et al.

Cryptocurrencies and blockchain technologies are shaping the financial systems, and are a significant part of the ongoing global financial innovation. Khraisha and Arthur defined financial innovation as a process that is carried out by any institution involving the creation and adoption of new products and platforms. The latest products and platforms enable technologies to introduce innovative ways in which financial activities can be carried out. They further suggested that blockchain and PayPal are financial innovations that have been introduced by non-financial institutions.

Bianchetti et al. These innovations included the technology behind the blockchain or ledgers and the decentralized ways of governance. Many authors have argued that the blockchain technology that works behind the cryptocurrencies is a potential breakthrough in financial innovation Glaser and Bezzenberger, ; Su et al. In addition to financial innovation, blockchain technologies and cryptocurrencies also help in developing financial inclusion.

Financial inclusion is a process that guarantees availability, ease of access, and usage of formal financial systems, for all the members of a particular economy, Moreover, it also entails the use of financial services Allen et al.

Rodima-Taylor and Grimes Rodima-Taylor and Grimes, argued that remittances through cryptocurrencies and mobile transfers could facilitate a shift in paradigm in financial inclusion and locally innovative ecosystems. They also suggest that digital financial inclusion would be likely to provide solutions to a significant chunk of the unbanked people so that they can effectively communicate with the formal financial systems. It may, therefore, be argued that the digitalization of financial systems, through financial innovation in the form of blockchain and cryptocurrencies, provides financial inclusiveness to the marginal components of the society.

In the extant literature, various authors have discussed the effects of financial innovation on the portfolio risk diversification. The financial innovations have not only brought down the costs associated with the traditional financial systems, but have also provided a broader range of technologically sophisticated, and innovative products into the market.

Allen and Gale Franklin and Douglas, also had a traditional point of view, wherein they believe that the financial innovations facilitate the risk minimization of the portfolios, by providing better diversification features. In contrast, Simsek a , b argued that due to the speculative trading, innovative instruments, increase the riskiness of the portfolios. With the rise in the prices, interest rates, and the attention is given to cryptocurrencies and other financial innovations during the Fourth industrial revolution, research on the prospects of diversification of the products is indeed the need of the hour.

The classification of cryptocurrencies as currencies, financial assets, commodities, or other forms of a financial product, has raised a considerable amount of discussion, as well as criticism with researchers, who have varied opinions on this matter. Empirical studies in the past have shown that uninformed users have approached the cryptocurrencies as an alternative form of an investment vehicle, instead of an alternative transactional vehicle Glaser et al.

Studies show that Bitcoin does not correlate with traditional assets, such as stock and bonds, and is primarily used as a speculative investment, rather than a medium of exchange Baur et al. Some researchers argue that Bitcoin does not behave like a conventional currency, asset, or security.

However, it somewhat resembles a technology-driven product, a bubble event, or even an emerging asset class White et al. They argued that the magnitude of the long-term appreciation of Bitcoin is much higher than the paper currencies. They further discussed that the characteristics of the risk and return, and the inverse correlation with other currencies could make Bitcoin, a potentially viable portfolio investment. Researchers undertook further research, on the efficiency of the cryptocurrencies Tran and Leirvik, ; Urquhart, ; Hu et al.

The investments in cryptocurrencies saw a rise during the year when Bitcoin was brought into the limelight by an upsurge in its price. On the other hand, the experts were criticizing the speculative nature of these currencies. This emerging technological currency opened many avenues for researchers who were interested in the financial markets.

It was observed that while investing in a single cryptocurrency was considered to be a riskier deal, the fund managers and researchers explored the diversification through portfolio investment, which somewhat buffered the risk factor. They concluded that if Bitcoin is included in the portfolio, even if representing it in a relatively smaller proportion, it may significantly improve the risk and return profile of a well-diversified portfolio.

Platanakis et al. Brauneis and Mestel applied the Markowitz's mean-variance analysis, in order to test the risk and return benefits of a portfolio of the top cryptocurrencies, according to the market capitalization Brauneis and Mestel, They also provided a comparative analysis of the different portfolios, based on the data available from January to December The inclusion of Bitcoin, in a traditional hedging portfolio of gold, oil, and equities, reduces the risk of the portfolio by a considerable level.

Guesmi et al. The inclusion of Bitcoin, in a well-diversified portfolio which comprises of different asset classes, provides certain significant statistical benefits when it comes to diversification Symitsi and Chalvatzis, Symitsi and Chalvatzis provided an extensive analysis of the economic value of Bitcoin and suggested that the decrease in the portfolio risk comes from the low correlations between the assets and Bitcoin.

Also, further contributing to the literature, Platanakis and Urquhart highlighted that, given the higher potential estimation error in a portfolio of cryptocurrencies, the portfolio theory might face significant difficulties Platanakis and Urquhart, Moreover, Trimborn et al. Using the mean-variance optimization, and the risk-parity on a data of cryptocurrencies, spanning from January to December , Petukhina et al.

Additionally, in their paper, Kajtazi and Moro considered three different geographical locations, i. The results showed that Bitcoin might have played an active role in the diversification of existing, well-diversified portfolios, primarily by increasing the returns than in reducing the risk of the portfolios.

In addition to this, Borri also suggested that a well-diversified portfolio of cryptocurrencies provided better risk-adjusted, and conditional returns, as compared to the individual cryptocurrencies, when analyzing the data of four cryptocurrencies in the period spanning from January to April

What are cryptoassets (cryptocurrencies)?

In the United States, cryptocurrencies have been the focus of much attention by both Federal and state governments. While there has been significant engagement by these agencies, little formal rulemaking has occurred. Many Federal agencies and policymakers have praised the technology as being an important part of the U. There have generally been two approaches to regulation at the state level.

If retail investors buy, they need to accept that cryptocurrencies come fears of a repeat of bitcoin's spectacular price crash of

Flashback 2018: 10 cryptocurrencies that lost the most in 2018

We use necessary cookies to make our site work for example, to manage your session. Necessary cookies enable core functionality on our website such as security, network management, and accessibility. You may disable these by changing your browser settings, but this may affect how the website functions. We use analytics cookies so we can keep track of the number of visitors to various parts of the site and understand how our website is used. For more information on how these cookies work please see our Cookie policy. There are thousands of different types of cryptoassets out there — or as you might know them, cryptocurrencies. But what exactly is it?

Demystifying Cryptocurrencies, Blockchain, and ICOs

10 cryptocurrencies to invest in 2018

That may not sound like that much, but year-old bitcoin millionaire Erik Finman says that's enough to invest in cryptocurrency. In an interview with CNBC Make It , he offers this advice to other young people looking to join the crypto-craze: Invest 10 percent of your income into the top cryptocurrencies, especially bitcoin. On " Squawk Box ," he likened the cryptocurrency to "monopoly money," adding, "It's just pure gambling at this point. I mean, if you want to gamble, go to Vegas.

It was in that Akshat Gupta first decided to invest in the highly valued cryptocurrency.

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The ground realities of Jal Jeevan Mission: There is pipeline, tap. But where is the water? Regulating ed-tech firms: will the much-needed guard rails choke innovation? Playing the algo rhythm: Can codes help retail trade as smartly as institutional players? Choose your reason below and click on the Report button. This will alert our moderators to take action.

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Investing in cryptocurrencies can be a crucial task due to the availability of so many options, and studying all the cryptocurrencies can be tiring. We have combined the list of top cryptocurrency to invest in The stock market was the only investment platform where traders and investors were involved as they wished to invest their money in the market. The intention behind this investment was to park the money in such investment and carefully follow the trends to see whether they receive a profit on their investment or loss. However, from the past few years, the stock market has seen some competition from the fellow investment market- the cryptocurrencies market. Found in , with the introduction of Bitcoin, over the years, the cryptocurrency market has seen impressive growth in trading volumes.

More cryptocurrency trading goes on in Nigeria than almost sold land he owned in , he realised he needed to explore new investment.

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Why are so few women buying into Bitcoin?

Find out how digital tokens work and what you should do to protect yourself from token-related scams. Tokens are a string of computer codes. They are usually issued in pairs as public and private keys. Buyers typically pay for the new tokens by transferring commonly transacted cryptocurrencies e. Bitcoin or Ether, to a wallet address provided by the seller.

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Everyone Is Getting Hilariously Rich and You’re Not

LONDON, July 20 Reuters - Seven in 10 institutional investors expect to invest in or buy digital assets in the future, although price volatility is the main barrier for new entrants, a study by Fidelity's cryptocurrency business found. More than half of the 1, institutional investors surveyed globally by Coalition Greenwich on behalf of Fidelity Digital Assets between December and April said they had digital asset investments. This included direct cryptocurrency investments or exposure through stocks of cryptocurrency companies or other investment products. Those surveyed included high net worth investors, family offices, digital and traditional hedge funds, financial advisors and endowments. Launched in , Fidelity Digital Assets is the cryptocurrency business of Boston-based Fidelity Investments and offers institutional investors custody and execution services for assets such as bitcoin.

Bitcoin's Price History

These are the core obsessions that drive our newsroom—defining topics of seismic importance to the global economy. Our emails are made to shine in your inbox, with something fresh every morning, afternoon, and weekend. A year ago, Alex Tapscott my co-author of Blockchain Revolution and I made some predictions for At the end of the year we compared those predictions to what had actually occurred.

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