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Investments and Blockchain: How Blockchain Helps to Simplify the Process of Investing and Creating a Profitable Portfolio

  By : , ,       22.5.2018         Mail Now

The investment market offers vast opportunities for profit, and yet the sad reality is that only 3-7% of traders are able to consistently earn an income on the market, while the remaining 93-97% of investors falls behind. Why does this happen?

This may happen because of many reasons: lack of proper risk management, unwillingness to develop one's own trading strategy, failure to understand the market's behavior at the moment, and so on.

In my opinion, these statistics could be made more favorable to investors if they had an access to a verified information and strategy, as well as to a fully-fledged ecosystem bringing together all the participants of the financial market.

For example, if an investor prefers to invest for the long term, but he or she only understands the stock market, his or her investment portfolio will be limited to stocks. After all, if a trader tries to enter an unfamiliar market with complex financial instruments, he will probably crash and burn.

In this way, investors miss their opportunity to profit from investments in commodities, forex, and cryptocurrency. They're also missing out on the ongoing rise in oil prices from $50 a barrel to the current $77, and Bitcoin's record-breaking surge from $1,000 to $20,000, and the Euro to USD exchange rate's rise from 1.03 to 1.25. As for novice traders who haven't had a chance to explore the market, they, too, have to depend only on their own intuition and not much experience. In that case, a solid investment portfolio is out of the question.

Artificial intelligence as an investment strategy underwriter

However, modern informational and digital technologies could help traders both create investment portfolios and strengthen existing ones by applying new strategies and ideas. Now, we're not just talking about some unified platform: we are now able to move on to creating an AI-based ecosystem that would tie together traders, investment consultants, exchanges, and brokers, and simplify their interactions.

And blockchain in this scenario would serve as a method for verifying and auditing all types of digital assets and transactions, from trading ideas and algorithms to smart contracts and ratings.

Let's take a relevant example. Suppose a trader believes that the EUR/USD rate will grow to 1.35, but doesn't want to lose the chance to profit from the correction that he expects to take place at 1.20. Since markets are full of information noise, it's a challenge to track when a given technical trading idea could have a factual confirmation.

But all the investor will have to do is go onto the unified blockchain-based platform. The platform's AI is constantly gathering and analyzing the information flowing in from financial markets, builds appropriate trading strategies, and makes suggestions on how to create a successful investment portfolio, or offers a ready-made option. So all that is left for the investor is to choose a suitable trading strategy from the list and implement it via broker or exchange.

Novice traders in the ecosystem are able to get in touch with more experienced traders or platform participants and follow their trading strategies and ideas. This makes it easier for them to get into the market, understand the principles of how it works, and see how successful investment portfolios are created in practice, rather than just in theory. And all the interactions between ecosystem participants are transparent and protected by blockchain. Blockchain verifies exchanges and brokers

Another problem in trading, beyond strategies and ideas, is choosing a broker and an exchange. The financial services market has thousands of brokers offering essentially the same terms. It can be very difficult to choose the best one. But within a single ecosystem that would be simpler. The most important thing in broker is reliability. For example, we have developed the platform so that brokers are evaluated and verified by the system's own participants, which lowers the risk of choosing a “bad” broker. Furthermore, investors don't have to get used to the complicated interface of the brokers’ trading platforms, since all operations can be done in our platform's app or browser version.

This blockchain-based ecosystem will undoubtedly simplify the process of creating an investment portfolio and increase the share of successful investors in the financial market from the current 3% to 30-40%, or even higher, thanks to developments in artificial intelligence.

Blockchain companies for managing private capital could become fundamentally significant hubs for the industry, since they have the ability to bring together in a single platform cutting-edge technologies like platform-dependent digital currencies, digital asset markets, and AI-based analytical tools. They also help in creating a professional community by implementing transparent ratings and incentive systems. Such a blockchain platform will become the foundation for a new digital system for managing capital.

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