Grainger says there are “literally millions” of cryptocurrencies. “There are very low barriers to entry to creating a cryptocurrency. You could create a Prosperity [Project] coin tomorrow … it’s pretty much just code, a piece of software open to anyone.”
However, she says Bitcoin is in a category of one. “It was the first-ever digital currency created. It developed the technology that all these other cryptocurrencies now run on and it has the mana and the longevity that I think it stands the test of time as a currency. It really acts like a store of value – like a digital gold.”
Bitcoin can act as a hedge against inflation, she says, because it is scarce. “There’s only ever going to be 21 million Bitcoin. That’s a really small number. The expectation is that this is actually deflationary – over time, Bitcoin becomes more scarce as more people want it.”
Grainger warns that cryptocurrencies classed as “meme coins” can be particularly risky, and even Bitcoin remains volatile. “You could have Bitcoin drop 10% in a day, go up 5% in a day – these moves are not uncommon. You need to have the tolerance and the horizon for that.”
However, she believes digital assets can be a useful way to diversify your investments. “People could look at putting up to or around 5% in digital assets. If you have a high risk tolerance and you’re more risk seeking, you could go for more, but you definitely wouldn’t want to put 100% of your assets into cryptocurrency.”
Listen to the full episode of The Prosperity Project for more.
