Renowned financial advisor Ric Edelman has called for a significant shift in investment strategies, urging investors to allocate up to 40% of their portfolios to cryptocurrencies. This recommendation represents a substantial departure from traditional investment models and underscores Edelman’s belief in the growing importance of digital assets in modern portfolios.

Edelman, who heads the Digital Assets Council of Financial Advisors, has long advocated for the integration of cryptocurrencies into investment strategies. He argues that the traditional 60-40 portfolio allocation of stocks and bonds is outdated, particularly given the increasing longevity of investors. Edelman suggests that cryptocurrencies, with their uncorrelated returns, should play a more prominent role in future portfolios, alongside higher equity holdings.

The shift in Edelman’s recommendation from a 1% allocation to a range of 10% to 40% is driven by the rapid evolution of the cryptocurrency industry over the past four years. He believes that cryptocurrencies have become mainstream assets, as evidenced by the increasing prominence of Bitcoin ETFs and the billions of dollars they have attracted. This trend indicates that financial advisors and long-term investors are recognizing the potential of cryptocurrencies as a valuable addition to their portfolios.

Edelman’s call for a higher allocation to cryptocurrencies is not just about diversification; it is also about leveraging the higher returns that digital assets can offer compared to other asset classes. He views cryptocurrencies as a “wonderful way to improve modern portfolio theory statistics,” suggesting that investors are beginning to see the benefits of including these assets in their portfolios.

Edelman believes the crypto landscape has evolved beyond early uncertainties. Four years ago, institutional adoption was uncertain, government bans were a risk, and the technology lacked clarity. Today, he argues those questions are resolved. Bitcoin is no longer fringe; it’s now a mainstream financial asset, backed by billions in ETF inflows and institutional participation.

Moreover, Edelman asserts that Bitcoin and crypto assets behave independently of traditional markets. Their price action rarely mirrors stocks, bonds, or even commodities like gold and oil. Hence, their inclusion improves overall portfolio performance. Additionally, crypto offers higher return potential compared to legacy asset classes. Edelman sees this as a key reason to increase exposure. He even called predictions of Bitcoin reaching $150,000 to $500,000 “conservative” given today’s momentum.

Edelman believes financial advisors must adapt. The industry can no longer ignore crypto’s place in asset diversification. He encourages advisors to offer clients a broader range of tools for future-proofing wealth.

Edelman’s recommendation is a clear indication of the growing acceptance of cryptocurrencies as a legitimate asset class. As the industry continues to evolve, it is likely that more financial advisors will follow his lead and recommend higher allocations to digital assets. This shift could have significant implications for the investment landscape, as cryptocurrencies become an increasingly important component of modern portfolios.

Bitcoin’s evolution has been quite spectacular, especially in terms of global adoption. Recall that the asset was mostly ignored by legacy investors for its initial years, then became the laughing stock of many, before it finally started to capture the attention of previous doubters.

As prominent names like Paul Tudor Jones III, Kevin O’Leary, or even former critic Ray Dalio started to enter the ecosystem, their general advice was that people should look to invest no more than 5% in the cryptocurrency. However, the adoption curve has completed a 180-degree turn, and some financial advisors are now recommending bigger percentages. A lot bigger.

40% in BTC?

As reported by CNBC, Ric Edelman, head of Digital Assets Council of Financial Advisors, noted that a lot has changed since his initial take on the matter, which was four years ago. At the time, he advised investors, especially the more conservative ones, to allocate around 1% of their portfolios to BTC.

“Today I am saying 40%, that’s astonishing. No one has ever said such a thing,” he said now.

The reason for this monumental increase in his recommendation is the global status of Bitcoin (and some other cryptocurrencies). Most were ridiculed several years ago when it was unknown whether countries, such as China, or even the US, might move to ban them in some form. Now, the situation is entirely different as the US and a few others have presented plans on how to accumulate BTC as a reserve asset.

Old-School 60/40 Doesn’t Work

One of the most popular theories for investing is allocating 60% of a portfolio into stocks and 40% into bonds. While this classic split may have worked in the past, the landscape is different now, and it requires more risk and a greater exposure to stocks, according to Edelman.

“If you’re a financial advisor and you had a 30-year-old client who was saving for their long-term future, you would tell them to put 100% of their money in stocks, because they have 50 years to go. Today’s 60-year-old is kind of like yesterday’s 30-year-old. You need to get better returns than you can get from bonds, and you need to hold equities longer than ever before.”

Instead of such solid exposure to stocks, though, he said people should diversify with crypto and BTC in particular, which is a “wonderful way to improve modern portfolio theory statistics.”

“The crypto asset class offers the opportunity for higher returns than you’re likely to get in virtually any other asset class,” Edelman concluded.

The post Forget 1%, 3%, or 5%: Financial Advisor Recommends Up to 40% Bitcoin Allocation appeared first on CryptoPotato.

Ethereum co-founder Vitalik Buterin believes that one-per-person digital ID systems, despite using zero-knowledge proofs (ZK proofs), carry risks to privacy. ZK proof wrapped IDs offered by World ID (formerly Worldcoin) using biometric data and ZK proofs have been gaining traction, recently crossing 10 million users.

Therefore, in his blog on Saturday, Buterin suggested ‘pluralistic identity’ as the “best realistic solution” to fully preserve privacy.

ZK proof wrapped IDs use ZK proofs to establish that a user has a valid ID without revealing any details of their ID, thus promising privacy. However, Buterin argued that ZK proof wrapped digital IDs still have loopholes that could compromise privacy.

ZK wrapped IDs solve ‘a lot of important problems’

Buterin concedes that “ZK-wrapping solves a lot of important problems.” Apart from ZKIDs, all options to authenticate a user’s identity on any application require the user to reveal their entire legal ID. According to Buterin:

“This is a gross violation of the common computer-security principle of least privilege: a process should only get the least authority and information required to accomplish its task.”

For instance, if an app requires a user to prove their age, the application should not be able to access any other data in the legal ID. Therefore, ZKIDs provide a crucial and previously unavailable avenue to preserving privacy, Buterin said.

Risks associated with ZK proof wrapped IDs

The designs of current ZK-identity platforms come with constraints—they allow users to create only one ID for each application. Firstly, the one-per-person ID limit means that ZK IDs do not guarantee pseudonymity, Buterin said. He explained:

“In the real world, pseudonymity generally requires having multiple accounts: one for your “regular identity” and others for any pseudonymous identities.”

Teenagers and many others already practice having multiple accounts, calling them fake and real Instagram accounts. Buterin wrote:

“…under one-per-person ID, even if ZK-wrapped, we risk coming closer to a world where all of your activity must de facto be under a single public identity.”

The single ID constraint for each application means that the “practical level of pseudonimity” offered by ZK wrapped IDs is lower. This is because, currently, services like Google accounts allow users to create up to five accounts.

Secondly, users can be coerced by governments or companies to reveal their identities on one or more applications, thus nullifying privacy preservation. For instance, an employer can ask a potential recruit to reveal their full ID on one or more social media platforms as a condition of employment.

Therefore, Buterin said that ZK does not “eliminate the possibility” that a person’s identity could be revealed under coercion.

Lastly, ZK proof wrapped IDs also come with non-privacy risks like errors.

In extraordinary or edge cases, all forms of IDs often fall short. For instance, biometric IDs may not work for users whose features have been damaged or warped by injury. Biometric IDs could also be potentially spoofed by replicas. Additionally, government IDs do not include stateless persons or those who have yet to acquire such documents. Therefore, Buterin wrote:

“These edge cases are most harmful in the case of systems that try to maintain a one-per-person property, and they have nothing to do with privacy; hence, ZK does not help.”

Pluralistic identities are the solution, Buterin said

Buterin defined pluralistic identity as “an identity regime where this is no single dominant issuing authority, whether that’s a person, or an institution, or a platform.” According to Buterin, pluralistic IDs can be explicit or implicit.

In explicit pluralistic identity or ‘social-graph-based identity,’ a user has to prove a certain feature, like their age, or that they’re human, through attestations from others in the community, who are also each verified through the same process. Explicit pluralistic ID systems can allow users to have one or more pseudonyms, with each pseudonym having its own online presence and history, Buterin claimed.

On the other hand, in an implicit pluralistic identity system, a user can provide any ID—government IDs or social media IDs—for verification. According to Buterin, implicit pluralistic identity systems reduce the possibility of a user being coerced to reveal their entire identity.

Furthermore, pluralistic ID systems are “naturally more error tolerant,” allowing people who are generally excluded, like those without the right documents, to prove their identities.

Buterin warned, however, that these benefits disappear and the system effectively turns into a one-per-person ID system when “any one form of ID gets close to 100% market share, and it becomes realistic to demand it as a sole login option.”

The post Vitalik Buterin says pluralistic ZK digital IDs are the ‘best realistic solution’ to preserve privacy appeared first on CryptoSlate.

Renowned financial advisor Ric Edelman has significantly revised his investment guidance, recommending that investors allocate up to 40% of their portfolios to cryptocurrencies. This shift marks a substantial increase from his previous advice, reflecting the evolving landscape of digital assets and their growing acceptance in mainstream finance. Edelman, chairman of the Digital Assets Council of Financial Professionals, made this announcement during an interview on June 28.

Edelman’s new framework emphasizes a heavy focus on stocks and cryptocurrencies, suggesting that these assets can comprise up to 100% of a portfolio. Bonds, traditionally a staple in diversified portfolios, are now limited to 30% or even eliminated entirely for more aggressive investors. This change underscores Edelman’s belief in the potential of cryptocurrencies to deliver substantial returns, especially in a low-interest-rate environment where traditional bonds offer limited yield.

The advisor’s call for a 40% allocation to Bitcoin is particularly noteworthy. Edelman argues that the traditional 60/40 investment model, which balances stocks and bonds, is becoming obsolete. He cites the inefficiencies of conventional investment strategies and the need for a more dynamic approach that can capitalize on the volatility and growth potential of digital assets.

Edelman’s recommendation is based on the belief that cryptocurrencies have transitioned from a niche investment to a mainstream asset class. He advises investors to allocate between 10% and 40% of their portfolios to cryptocurrencies, with the exact percentage depending on individual risk tolerance. This range allows for flexibility, enabling investors to tailor their exposure to digital assets according to their financial goals and risk appetite.

The advisor’s stance is supported by the regulatory developments and increasing institutional interest in cryptocurrencies. Edelman notes that regulatory clarity and the growing acceptance of digital assets by financial institutions have made cryptocurrencies a more viable investment option. He believes that as more regulatory frameworks are established, the risks associated with cryptocurrencies will diminish, making them a more attractive addition to investment portfolios.

Edelman’s guidance is part of a broader trend among financial advisors who are increasingly recognizing the potential of cryptocurrencies. The Digital Assets Council of Financial Advisors, of which Edelman is the head, has been at the forefront of promoting digital assets as a legitimate investment class. The council’s efforts have helped to educate financial advisors and investors about the benefits and risks of cryptocurrencies, contributing to their growing acceptance in the financial community.

In summary, Ric Edelman’s revised investment guidance reflects a significant shift in the financial advisory landscape, with cryptocurrencies playing an increasingly important role in investment portfolios. His recommendation for a 40% allocation to digital assets underscores the potential of cryptocurrencies to deliver substantial returns and highlights the need for a more dynamic investment strategy in the current financial environment. The shift in Edelman’s guidance is driven by significant advancements in the regulatory landscape, technology adoption, and consumer acceptance, which have collectively increased confidence in the crypto market. Crypto assets have demonstrated diversification benefits and high return potential, making them an attractive addition to modern investment strategies. Market experts agree that such a reallocation underscores the maturation of digital currencies, with institutional interest in crypto continuing to rise as advisors assess the long-term viability of crypto holdings. Edelman also emphasized that portfolios including crypto often outperform those without, further supporting his revised investment guidance.

Bitcoin has undergone a remarkable transformation in terms of global acceptance. Initially dismissed by traditional investors, it has gradually gained traction, even attracting former skeptics like Ray Dalio. These prominent figures initially advised investing no more than 5% in the cryptocurrency. However, the landscape has shifted dramatically, with some financial advisors now suggesting much higher allocations.

Ric Edelman, the head of the Digital Assets Council of Financial Advisors, has significantly revised his stance on Bitcoin allocation. Four years ago, he advised conservative investors to allocate around 1% of their portfolios to Bitcoin. Today, he recommends a staggering 40%, a figure he acknowledges is unprecedented. This shift is driven by the changing global status of Bitcoin and other cryptocurrencies, which were once ridiculed but are now being considered as reserve assets by countries like the US.

Edelman argues that the traditional 60/40 portfolio split, with 60% in stocks and 40% in bonds, is no longer effective in the current financial environment. He suggests that investors, especially those saving for the long term, should consider allocating 100% of their money to stocks due to the need for higher returns and longer holding periods. However, he advocates for diversifying with cryptocurrencies, particularly Bitcoin, which he believes can enhance modern portfolio theory statistics and offer higher returns than other asset classes.

Edelman’s recommendation to allocate up to 40% of a portfolio to Bitcoin is a bold move that challenges conventional investment strategies. It reflects the growing acceptance of cryptocurrencies as legitimate investment assets and their potential to outperform traditional investments. However, such a high allocation to a single asset class carries significant risk, and investors should carefully consider their risk tolerance and investment goals before making such a decision. This recommendation is likely to spark debate among financial professionals and investors, as it pushes the boundaries of what is considered prudent investment strategy.