Kirill Bensonoff’s 7 Points to Analyze Before Investing in Cryptocurrencies
How do you get started investing in cryptocurrencies?
With the massive growth in the crypto market, investors have increased their interest in investing in digital tokens. However, speculation around the current state and the future of the industry is everywhere and knowledge can be difficult to find from experts with real experience in cryptocurrency investing.
Kirill Bensonoff, partner at Caviar, offers a beginner’s guide to navigating this space. As a serial entrepreneur and crypto investor since 2013, Kirill has been involved in dozens of ICOs, provided capital and advisement as an angel investor for over 20 companies and hosts the series. First and foremost with crypto investing - be aware that as a virtual currency it is not legal tender nor backed by a government and accounts and value balances are not subject to consumer protections.
Based on years of crypto investing, offers the below key points to consider before investing in cryptocurrencies (Note: these tips are for informational purposes only, not financial or investment advice or offer to invest):
● Understand the Blockchain: While Bitcoin and other cryptocurrency are getting most of the attention, the truly disruptive technology in the crypto market is the blockchain. Blockchain is the technology that manages transactions for coins such as Bitcoin and provides a digital ledger so all token activity can be decentralized and verified.
● Understand ICOs: Using blockchain technology, companies and other organizations can create digital tokens as a fundraising process or other method of investing. Initial Coin Offerings present valuable opportunities for investors looking to get involved with blockchain startups and other potentially valuable investments.
● Understand the Cryptocurrency Market: As an emerging market it is important for crypto investors to familiarize themselves with the landscape. One of the biggest things to understand about the cryptocurrency market is the high correlation to Bitcoin. Because of the reputation of Bitcoin and its of the global crypto market, other coins have a high correlation to the fluctuations of BTC.
● How To Safeguard Against the Bear Market: While the cryptocurrency market can be extremely volatile, there are steps to take to safeguard against a bear market. Paying attention to the market is key to reading any coming trends. Diversification is also important.
● How to Diversify Crypto Investments: The high Bitcoin correlation makes it difficult to diversify crypto investments. Rather than focusing entirely on Bitcoin, Ether and others, diversify through ICOs and tokenized assets.
● How to Choose the Right ICO: Initial Coin Offerings can be a great opportunity for investors. Choose an ICO that has a clear plan for how the funds will be spent, comes from a team with a strong reputation and is extremely transparent about the process.
● How to Invest in Tokenized Assets: Tokenized assets are the future of blockchain technology. Creating tokens to represent physical assets such as real estate or commodities adds liquidity to investing in these assets. This liquidity allows for further diversification of tokens and makes it easier to respond to trends as they occur.
As a serial entrepreneur, Kirill launched the token sale for his blockchain startup Caviar in late 2017, and offers this advice based on his experience:
● Leverage Established Markets: Caviar has seen success because it operates within the established real estate market and solves problems that are seen in real estate and in the cryptocurrency market. This also makes it easier to find a market for the business rather than trying to build one from nothing.
● Experienced Team: Caviar is made up of a team of experts in real estate, finance and technology. Each team member is able to take custody of specific aspects of the startup and the team is able to leverage their experience. The startup concept should be built around the experience and advantages of the founders and then any gaps should be filled with additional partners, advisors or new hires.
● Proven Success: Find a strong team, with previous successes - it will help your new venture.
● Look Towards Future Needs: While past success in the cryptocurrency market may be the motivation for many startups looking to enter the space, it shouldn’t be. Rather than focusing on past performance, blockchain startups need to look towards future needs to be able to predict what problems will need to be solved.
● Be Aware of Geographical Restrictions: For example, Caviar tokens are not, and will not, be registered with the SEC, and are not offered or sold to persons and entities from the USA and the Cayman Islands.
The cryptocurrency market offers many opportunities for investors and for startups looking to leverage blockchain technology. While the market can be volatile, becoming educated on recent trends, laws and new technology affecting tokens, ICOs and the overall market can empower someone who is disciplined and willing to learn to successfully navigate investing in cryptocurrencies. New trends like the tokenizing of traditional assets will have a major effect on the cryptocurrency market as a whole and offer major opportunities for investing in real estate, crypto and other assets.
The tips from Kirill Bensonoff on investing in cryptocurrencies and launching a blockchain startup should offer a great starting point for anyone looking to enter or improve their presence in this exciting and emerging market.