What are Crypto Currencies



Crypto currencies are relatively new products in the financial sector which present tremendous opportunities (and risks) for investors. They are internet-based currencies (although they can be stored in a variety of physical forms, including printed) which have some significant advantages over classical (or “fiat”) currencies.


Among those advantages are:

  • virtually instantaneous and no-cost money transfers from any point on the planet with internet or mobile phone access to any other point
  • practical micropayments, including internationally
  • international payments without exchange risk (for products and services priced in crypto currencies)
  • zero or de minimus transaction costs
  • no inflation risk as the maximum number of each crypto currency is fixed
  • high portability; crypto currencies can be stored and carried on any electronic medium, including in the cloud

Some of the disadvantages are:

  • high price volatility
  • limited (but quickly growing) acceptance
  • can be very secure – or highly unsecure


The disadvantages are being steadily reduced as trading volume expands, more companies accept crypto currencies, in particular bitcoins, for their goods and services and more applications are developed to work quickly and easily with crypto currencies.


Crypto currencies are traded on exchanges like any other foreign exchange pair. They can currently be directly exchanged for approximately 50 different fiat currencies. The first fully regulated crypto currency exchanges will appear in New York in October.

There are too many advantages of crypto currencies for them to be ignored; they are not going away. As a result, the potential from an investment standpoint is too great to be ignored.


The private equity community is in avid agreement: in 2013, there was approximately $110 M investment by PE and VC funds into crypto currency-related projects in companies; that total was exceeded in Q1 2014 alone and continues to increase rapidly.



Some of the well-known companies which accept bitcoin are: Dell, Expedia (hotels only at present), Virgin Galactic, Chicago Sun-Times (11% of new subscriptions are already paid for in bitcoin) Overstock.com (over $1 million per week in bitcoin sales), TigerDirect, NewEgge, Gyft (which sells gift cards for thousands of companies, including WalMart and Target) etc., and hundreds are announced each day. (The site spendbitcoins.com maintains an extremely good, and ever-growing list of companies which accept bitcoins, sorted by country.) Even the very traditional French retailer Monoprix has announced that it will soon accept bitcoin in all of its stores worldwide.

In addition, there are a growing number of gateways through which tens of thousands of retails accept bitcoin: Shopify (70,000), Bitpay (30,000; 100,000 estimated by the end of 2014), Gyft (20,000), etc.

All rights reserved. © 2015, Enneking Asset Management.