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Can your advisor tell you which cryptocurrency to buy?

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Whether it’s going up or down, bitcoin is attracting a lot of attention: In 2021, 94% of financial advisors answered customer inquiries about cryptocurrency, according to Bitwise and ETF trends vote. According to the same survey, 47% of advisors had crypto assets in their personal wallets. However, only 16% of advisors have dedicated cryptocurrencies in client accounts.

Even as investors are interested in holding cryptocurrencies, advisors may seem reluctant to suggest a digital asset class. Whether your advisor will help you with your cryptocurrency investments will depend on how they feel about the future of cryptocurrency, the resources available to them, as well as your tolerance for risks and financial goals.

In this article, we explain why your advisor is reluctant to suggest cryptocurrency, what questions to ask your advisor about cryptocurrency, and what to do if your advisor refuses to advise on investing in cryptocurrency.

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Basics of investing in cryptocurrency

In order to ask better questions and be more willing to evaluate the answers, you must first understand the cryptocurrency investment environment.

First, there are several ways to invest in the blockchain and cryptocurrency industries. Real digital currencies like bitcoin and ether are available for purchase, although you don’t need to buy them directly. Indirect exposure to cryptocurrencies through specific stocks is also possible, such as:

  • Coinbase, a cryptocurrency exchange and wallet service.
  • Getting started with digital payments. Bitcoin trading is supported by Block’s Cash app
  • MicroStrategy Analytics Corporation (MSTR). The company’s balance sheet shows a significant investment in bitcoin.

Alternatively, you can invest in exchange-traded products related to cryptocurrencies. Some crypto funds simply invest in crypto stocks, while others track the value of various cryptocurrencies and/or derivative contracts.

Why some financial advisors may be wary of cryptocurrency recommendations

Unfortunately, for a number of reasons, your advisor can refrain from providing advice on direct or indirect exposure to cryptocurrencies. He may lack the knowledge or time to keep up with the rapidly developing world of crypto. Or perhaps your cryptocurrency risk profile will bother your attorney. After all, advising on a highly volatile asset could put advisors in awkward situations. Most of the time, customers will either be elated or angry. Both parties are undesirable.

Counselors’ salaries are a different problem. The major brokerages do not (yet) support trading in cryptocurrencies. You may have to make the trades yourself if your advisor advises holding the digital currency live. In addition, any crypto assets created will be kept in an account separate from the control of the advisor.

In this case, your advisor’s compensation for giving advice on cryptocurrency is either zero or negative. When you remove funds to purchase cryptocurrency, your advisor’s annual income will decrease if they charge a percentage fee based on your account amount. Moreover, commission based advisors will not make any money from these trades.

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To add crypto oversight to your service offering, your financial advisor likely won’t want to charge lower fees or even stay at the same price.

Ask your current financial advisor these questions about crypto

The easiest way to determine if your financial advisor is willing to manage your crypto assets is to ask them questions. Start by asking general questions to gauge response. If your advisor doesn’t finish the conversation, be more specific. for example:

* What do you think of the cryptocurrency?

There are many potential solutions to this. Some financial experts compare cryptocurrency trading to gambling. Others believe that over the next five to ten years, the value of Bitcoin will rise.

* Can you describe how encryption works?

A knowledgeable advisor with experience in the cryptocurrency field should respond with a comprehensive explanation.

* What degree of exposure to cryptocurrency would you recommend?

Unless you want a solid, high-risk investment, you should expect a single digit ratio here.

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* What is the best strategy to invest in cryptocurrency?

Rather than having a single answer, this question should spark a dialogue. If your advisor doesn’t already know you very well, they will want to know more about your goals and the reasons why you are interested in investing in cryptocurrency.

* Can you handle my crypto assets?

Advisors can manage your crypto holdings using technologies such as HeightZero and Onramp Invest. They are referred to as TDAMPs, or Turnkey Digital Asset Management Platforms. These are mostly intended for independent cryptocurrency advisors. They can significantly speed up the consulting process.

* Describe the services you can provide in connection with investing in cryptocurrencies.

A pro-crypto advisor should tell you about your investment potential, provide a target exposure level for your crypto holdings, and explain how this level will affect current exposure levels. Additionally, you want a financial advisor to easily recommend you to buy, sell or hold crypto assets. The advisor should ideally be able to examine your crypto assets and deal with them directly if they have the necessary tools.

* Taxing cryptocurrency transactions?

Cryptocurrency transactions are taxed similarly to stocks in the United States. Depending on how long you’ve owned the asset, you’ll pay either the short-term or long-term profit tax rate when you record a gain. Your advisor should advise you to document all your transactions carefully. Working with someone who advises you to hide your cryptocurrency trading activity is not something you want to do.

Your advisor should not suggest coding

You have two options if your current attorney won’t help you with cryptocurrency. You are able to trade on your own. You may work with an advisor for a short time who can teach you about cryptocurrencies and invest in them. Find consultants, advisors, professionals or experts in the cryptocurrency field to locate these experts.

The second option is to find a new advisor who has knowledge of cryptocurrencies. One of the best ways to find pro-crypto money managers is to use industry designations. Certified Digital Asset Advisor (CDAA) and Certified in Blockchain and Digital Assets are two titles you should be aware of (CBDA).

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1. Certified Asset Advisors for Digital Assets

The certification curriculum for Bitcoin, ether, blockchain, cryptocurrency wallets and exchanges, as well as crypto-legislation and compliance, consists of 12 hours. They must also maintain their education. Here, you can perform a CDAA search.

2. Certificate in Digital Assets and Blockchain

The Digital Asset Council for Financial Professionals offers a program called “Certificate in Blockchain and Digital Assets” (DACFP). It is intended for financial advisors who want to advise their clients on ways to invest in cryptocurrencies. Certificate holders are required to complete 11 educational courses and sign a code of ethics each year.

Online searches for CBDA certificate holders are not yet available. However, you can contact the DAFCP to see if someone has CBDA accreditation. Be prepared for several applicant interviews. You want someone familiar with personal finance in general, traditional investments, and cryptocurrency. In addition, the ideal advisor will be reliable and friendly. Learn more about screening potential financial advisors here.

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Working with a coding consultant

The function that cryptocurrency plays in the end must be determined by your financial plan. Unless you have a compelling reason not to do so, follow the advice of your advisor in this case. Don’t ignore their attorneys if they claim that cryptocurrency is too volatile for you and your goals.

At the moment, you can always trade small amounts of cryptocurrency alone. Over the coming years, both the tools that advisors have access to and the crypto industry as a whole will likely evolve and mature. When cryptocurrency is a widely used asset class, you can discuss it again with your guide.

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Blockchain

NFTs can help solve fraud in diamond certificates

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Diamonds may be a girl’s best friend, but unfortunately, the billion dollar diamond industry is riddled with scandals and scams. There have been a number of cases where lab-grown diamonds have been classified as natural. An example of this was seen last year when the International Gemological Institute analyzed and gradual A lab-grown diamond measuring 6.18 carats, which was previously claimed as a natural diamond in a Gemological Institute of America (GIA) report.

was too mentioned In 2005 it was reported that the Gemological Institute of America – one of the most trusted sources for evaluating gem quality – was accepting bribes to update its GIA reports. According to sources, a lawsuit was filed against KIA in 2005 for accepting payments to “upgrade” the quality of diamonds submitted for classification.

Additionally, consumers may resubmit diamonds for examination at KIA for any reason. This is known as a follow-up service. As a result, diamonds can be associated with multiple appreciation reports. This can be a problem for consumers because they may not receive genuine diamond certificates upon purchase.

NFTs as the only source of truth

Unfortunately, fake diamond certificates are becoming more and more common. Regions like India have developed new frameworks to combat fraudulent activities, as we saw with the Diamond Charter drafted last year. While the industry experts are innovative, they are also starting to look into blockchain technology to help solve this growing problem.

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specifically speaking, Non-fungible tokens (NFTs) It may act as a solution when it comes to preventing counterfeiting of diamond certificates. Mike Moldowsky, founder and creator of Diamond Dawn, told Cointelegraph that reports of diamond certificates should be placed on a public blockchain network to ensure that the documents have not been tampered with. “Having a diamond certificate as an NFT certificate on the Ethereum blockchain can ensure immutability, proof of ownership, and visibility for both retailers and consumers,” he said.

In order to prove this, Moldawsky explained that Diamond Dawn is a high-tech NFT project that will place 333 GIA-certified diamonds on the Ethereum blockchain as ERC-721 tokens. The invited private participants will then be able to purchase these diamonds as NFTs. According to Moldawsky, participants will be able to buy one NFT diamond border, weighing between 0.4-0.8 carats, at a price of 4.44 ether (ETH). Once an NFT is purchased, the smart contract will automatically send the GIA Diamond Certificate to the Ethereum blockchain as proof of ownership and verification.

due to height NFTs are linked to their physical counterpartsMoldawsky further noted that NFT holders will have the option to create a tangible art piece containing a GIA-certified diamond via the Diamond Dawn website.

“NFT holders will start with digital rough diamonds and develop the NFT on the blockchain (on-chain) through a process that accurately mimics the process of real-world natural diamonds. Ultimately, the collector will need to decide whether they want to keep the diamonds digitally or burn and convert them to their physical form.”

Example of a Diamond Dawn material piece of art – Box comes with a GIA certified diamond. Source: Diamond Dawn

According to Moldowski, this process is also intended to raise awareness around the idea that digital NFT technologies can become scarce over time, and therefore more valuable. “As more collectors decide to claim physical art and burn NFTs, this will reduce the total NFT supply. As a result, digital NFTs will become more scarce,” explained Moldowsky.

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He added that the digital diamond artwork was created by artist David Ario, who recently sold his first artistic work at Sotheby’s Contemporary Art Evening for $224,000, along with famous artists like Banksy and Basquiat.

Either way, though, Moldawsky made it clear that Diamond Dawn’s diamond certificates will remain on the Ethereum blockchain. “If a user chooses to create a diamond art piece, they will receive a paper GIA certificate in addition to the certificate on the blockchain network. The aim of the project is to establish the ownership, transparency and immutability of diamond certificates.”

Olivia Landau, a GIA-certified gemologist and co-founder of The Clear Cut — a digitally authentic diamond engagement ring and fine jewelry company — told Cointelegraph that her company is also using NFTs for diamond certification after launching an NFT platform on the Authentic blockchain in January. She said:

“NFTs give couples who buy an engagement ring the option to have all of their diamond certificates, insurances, photos and even their proposal story securely stored on the blockchain for years to come, eliminating the worry of holding onto hard-to-replace paper copies.”

Landau added that the purpose of the NFTs offered by The Clear Cut is to digitize and certify the GIA’s report and insurance policies for diamonds. “Clear Cut’s NFT products are not intended for resale in secondary markets,” she said.

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An example of Clear Cut’s NFT portal. Source: The Clear Cut

According to Landau, customers who purchase a diamond ring from The Clear Cut will have the option to purchase an NFT for an additional $500, which must be paid in fiat instead of cryptocurrency. She noted that existing customers will also have this option.

“In the beta testing phase, more than 90% of customers have expressed initial interest in this new NFT functionality. Customers will receive a hard copy of their GIA certificate and a copy of it will be stored digitally, ensuring its lifetime value,” he said.

Will NFTs replace traditional diamond certificates?

NFTs such as digital diamond certificates may be innovative, however it remains questionable whether this concept fits into the mainstream.

For example, Moldawsky noted that he believes more education is needed about blockchain so that traditional organizations can understand the potential behind NFTs. “We need to ask the GIA why they haven’t gone digital yet. Once we start this conversation, we can explain why blockchain technology is going digital.”

Although this may be the case, it is worth noting that GIA is open to digital transformation. Stephen Morisot, director of communications for the GIA, told Cointelegraph that early next year, the GIA will begin porting all gem lab reports into digital forms. “This should be completed by 2025,” he noted. Moreso added that all GIA’s printed reports have several security features, noting that information in any report can be verified using online security. GIA Report Inspection Service.

The adoption of NFTs in the diamond industry may gain traction once mainstream retailers start implementing the technology. For example, De Beers is currently using the Tracr blockchain for Trace the origins of diamonds.

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Jason McIntosh, chief product officer at Tracr, told Cointelegraph that NFTs are likely to be part of the platform solution in the future. “The diamonds on the Tracr platform are ‘NFT-ready’ in the sense that the Tracr diamond registry can easily be integrated into an NFT shell,” he said.

Given this level of innovation, Landau believes that in the future, all diamonds will be authenticated via the blockchain network. However, she noted the importance of ensuring that consumers don’t have to worry about the technicalities behind NFTs:

“Customers do not need to have any crypto or blockchain expertise to access our NFTs. Everything is handled effortlessly for them. I believe this will lead to mainstream adoption.”