Blockchain technology has revolutionary potential for the world of international trade, according to a financial adviser.
Ric Edelman, Founder of Edelman Financial Engines, joined Yahoo Finance Live to discuss new developments in the crypto market, as well as the broader implications of blockchain technology in financial markets.
New digital assets, like Bitcoin (BTC-USD) are currently not well enough understood by financial professionals, he said. This caused them to miss out on opportunities to improve business practices using technology.
“Most financial professionals have been in business for a long time, are very successful, are very talented and experienced, but the more experience you have, the more talent you have, the more professional titles you have, the more you have. college degrees in this space, the harder it is to understand bitcoin, ”Edelman said. “And I use Bitcoin as a proxy for all digital assets. There are thousands of them. And it’s important to recognize that this is a completely new and different asset class that has nothing in common with anything we know.
Digital assets like bitcoin, Edelman said, are different from stocks, bonds, real estate, oil, gold and other traditional assets because they are not correlated. This resistance to larger market fluctuations makes it a valuable investment opportunity for investors looking to diversify their portfolios. “This is the first truly new asset class for about 150 years,” said Edelman.
While Bitcoin’s price volatility has been unpredictable, there is enough upside potential in a 1% or 2% allocation in most portfolios, Edelman said. “This can be a materially beneficial way to improve your overall returns over the long term,” he noted.
Bitcoin and other cryptocurrencies aren’t the only potentially revolutionary examples of blockchain technology, either.
Non-fungible tokens, or NFTs, have emerged over the past two years as one of the hottest new uses for blockchain technology. NFTs can numerically represent non-fungible physical assets. They have been used to represent assets ranging from music and video games to images and art. These assets are then stored as tokens on a larger blockchain.
“Blockchain technology and its derivatives of digital assets and NFTs, CBDCs and tokens… [are] the most impactful business innovations since the development of the Internet itself, ”said Edelman. “It’s huge. It’s going to have a huge impact on world trade.
Ihsaan Fanusie is a writer at Yahoo Finance. Follow him on twitter @IFanusia.
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