What’s Behind the Personal-Family Office Interest in Bitcoin?

The widespread appeal of digital currencies like Bitcoin seems to only be growing as time goes on. While traditional currencies are regulated by central banks, digital ones like Bitcoin are “mined” by both individuals and specialized companies which run complicated computing procedures. Bitcoin technology and the blockchain ledger system it utilizes have been hailed by financial skeptics and seasoned investors alike as transparent, fast, secure, and more. Still, many investors believe that the full potential of Bitcoin as a potential asset class for wider investment purposes has yet to be realized. So how come more and more family investment offices are adding Bitcoin holdings to their portfolios…or other Digital Currencies like DasCoin.

As Digital Currency Acceptance Climbs, So Does Interest!

In its early stages, Bitcoin faced some concern among potential investors about its usefulness. After all, as the currency was first becoming known, it was difficult to find places that would accept it. Now, more and more companies and business are transacting in Bitcoin. As a result, the practical element of being able to use the currency for something other than collection has started to resolve itself. A growing number of “personal-family offices” are investing in asset types including Bitcoin. There are a number of overlapping rationales for these personal-family offices to invest in Bitcoins. For example, there’s a fixed supply of Bitcoins, more businesses are accepting the currency, and more and more investors from hedge funds to institutional players are looking at Bitcoins as a way to diversify a portfolio.

Bitcoin Seen as Diversification Option

Increasingly, Bitcoin is seen among potential investors as a way of diversifying a traditional portfolio. That being said, there are still certain risks, says David Berger of the Digital Currency Council. “Bitcoin will either be a grand slam or it’ll crash–and there will be lots of volatility along the way. I don’t view Bitcoin as suitable for a family seeking wealth preservation, but see it more similarly to a high risk high reward venture investment and as a way to diversify a portfolio.” One lesson to take away from Berger and other Bitcoin skeptics is that it may not be wise to invest too heavily in the digital currency, particularly considering that it represents essentially uncharted territory in the financial world.

Beyond Bitcoin itself, there is a growing industry of companies that are working to build and improve on digital currency technology and infrastructure. DasCoin is one of them. This is providing a secondary area of investment within the broader digital currency area. Whether or not Bitcoin and its imitators will remain the driver of these other companies, or if the digital currency will come crashing down, will require that the financial world wait and see.

Original Content By Nathan Rieff: 28.2.17. Edited by Wayne McCarthy