It's always interesting to compare trends between traditional investment methods, and those of the cryptocurrency space. Slowly but surely, what we call "traditional" investments such as stocks, bonds and forex are adopting similar practices to those of the cryptocurrency space.
The internet has developed these markets beautifully. They've gone from requiring an insider such as a broker or professional trader, to having information and analysis readily available. For example, markets like 1Broker and SimpleFX permit bitcoin and fiat deposits, enabling anyone with computer access to invest.
Exclusively online trading platforms are taking share away from active stock pickers, as retail investors have an easy in. This has also led to the rise in popularity of ETF's which track the market using quantitative data analysis instead of an active picker strategy. These funds have consistently outperformed stock pickers, and are becoming the popular destination for investor's money.
The majority of stock picks are handled electronically, which means firms no longer need workers who are well connected, and tapped in with the markets on which they trade. Each trade can be recorded through transactional records on the computers, allowing for data collection. Businesses need academics who are skilled in mathematics, statistics, and computer science to better analyze the data that is given to them.
The rise of big data has erased much of the mystique around investment markets. Stock secrets are no longer held between close circles, swapped in cocktail parties or given by your broker. The secrets to stock success simply lie within the data. Finding these secrets lies within having a skilled quantitative analyzer.
Cryptocurrency markets have emerged as a direct result from computer based technology. In fact, blockchain technology on which these currencies are based relies on accurate, consistent archival of transaction data. This gives people with technical and analytical skills an inherent edge in crypto markets.
The mechanics of cryptocurrencies are vastly different from those of traditional markets. For a time, stock pickers could be successful by studying the fundamentals of the corporations they invested in. Cryptocurrencies on the other hand, are more volatile, and price movements are less dependent on geopolitical events.
However, computers have become a household product, found within pretty much every modernized home in the U.S., as well as much of the world. The playing field has become slightly more even, and investment firms are adapting quickly to regain the edge they have over retail investors. ETFs are a way to retain this edge, and still maintain mutual benefit for investors and firms alike.
At the end of the day, I prefer cryptocurrency markets given their lack of fees and middlemen. In the future, decentralization will be much more widespread and people will eventually realize that brokerages and large investment funds are an unnecessary evil.
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