Interested in adding cryptocurrency to your KiwiSaver LEARN MORE

Crypto is coming of age (and we don't want you to miss out)

How many times have you heard financial commentators warn people against crypto investing like it’s something too hot to handle or worse, too difficult to figure out? Well, at Kōura,…

Join Kōura Wealth today, it only takes a few minutes

The right KiwiSaver choice today could be mean a big difference to your future

17 May 2022

Crypto is coming of age

How many times have you heard financial commentators warn people against crypto investing like it’s something too hot to handle or worse, too difficult to figure out? Well, at Kōura, we want to change this way of thinking.  

It’s true that crypto assets are highly volatile investments, and only appropriate for investors with a long-term investment horizon who can withstand significant volatility. It’s also true that, at this point in time, crypto assets are largely unregulated and to a certain extent unproven.  

However, there are also signs that the traditional finance world is taking notice, and cryptocurrency is becoming more and more mainstream. Plus, investing fundamentals and modelling show that, in small amounts, crypto can play an important part of a well-balanced portfolio. So, we believe that Kiwis should have the opportunity to choose, and that’s why we’ve launched our new carbon-neutral crypto currency fund. Read on to learn more. 


  • What is a cryptocurrency asset? 

  • How are new coins created? 

  • How is Bitcoin priced? 

  • Crypto and the traditional finance world 

  • Why we’re embracing crypto 


What is a cryptocurrency asset? 

In short, cryptocurrency assets are digital currencies that are typically stored on a blockchain and maintained by a network of users, rather than a centralised figure. This means that there’s no central clearing house. No Government or bank. Nothing that sits in the middle. This results in there being no regulator. In other words, they sit outside of the traditional world of finance. 

Gone are the days when Bitcoin was the ‘new kid on the block(chain)’. Since its establishment as an alternative currency in 2009, Bitcoin has paved the way for lots and lots of different types of crypto assets.  

Some people estimate that there are over 12,000 cryptocurrencies in circulation, others as many as 16,000. Besides Bitcoin (BTC), the largest ones include Ethereum (ETH), Tether (USDT), Binance Coin (BNB), US Dollar Coin (USDC), XRP (XRP), Cardano (ADA) and more. 

Each cryptocurrency serves a slightly different purpose. For example, Bitcoin was launched to replace traditional money printed by the US government: the idea is that one day it will become just like any other currency (it already has its own credit card).  

Then you have crypto assets like US Dollar Coin or Tether, which are called ‘stablecoins’. This means that they are tethered to the US dollar, the Chinese Renminbi or other currencies. And being tied to a traditional currency but still outside of the traditional banking system, they tend to be less volatile than other options.  

Lastly, other large currencies like Ethereum and Solana are set up to create open-source decentralised networks that facilitate smart contracts – a digital agreement between two parties, which runs on a blockchain (a system that records information in a way that makes it difficult or impossible to change, hack, or cheat the system), is stored on a public database, and importantly, can’t be altered. Theoretically, decentralised finance (DeFi) ecosystems like these eliminate the need for a central bank or Government agency to approve financial transactions. In other words, two or more parties can exchange, lend, borrow and trade directly using smart contracts and blockchain technology, without the involvement and costs of a middleman.


How are new coins created? 

This is where things may get confusing. Many cryptocurrencies, including Bitcoin, are actually computer networks that have been built to run applications using the blockchain technology. People who help maintain the network and verify transactions are rewarded with new coins.  

This process is called ‘mining’ and is how new coins enter into circulation. Basically, it’s a virtuous circle where miners maintain and secure the blockchain and the blockchain generates new coins, providing an incentive for miners to maintain the blockchain.  


How is Bitcoin priced? 

 Just like all other cryptocurrencies apart from stablecoins, Bitcoin is subject to constant price fluctuations. It’s a highly volatile asset that has its value determined by a non-traditional supply and demand model.  

The fact is that Bitcoin is not an easy asset to price, because it has no utility – there’s no obvious use case (similar to gold). So, it comes down to demand/supply. When demand increases, price increases; when demand falls, price falls. In addition to this, the price is also influenced by the cost and rewards for mining, the number of competing cryptocurrencies, and so on. 

If Bitcoin, or other crypto currencies become more mainstream and start to be used for payments and / or as traditional investments then the demand will increase which is likely to push up the price of the asset.


Crypto and the traditional finance world 

Thanks to a slew of factors, including ease of access and progressive institutional adoption and interest, crypto is becoming mainstream. Whilst still highly volatile, and not for the faint-hearted, there are signs of increasing acceptance of cryptocurrencies as an asset.  

According to the 2021 Institutional Investor Digital Assets Study from Fidelity Digital Assets, 44 per cent of investors surveyed said 2020 market conditions increased the likelihood of investing in digital assets. Adoption varies widely around the world, with Asian nations reportedly leading the world in retail crypto investments – but there’s no doubt it’s growing.  

A 2021 Pew Research Center survey found that 16 per cent of US adults (and as many as 31 per cent of those aged 18 to 29) had personally invested, traded or used some form of cryptocurrency. For context, that’s about one-third of those who are investing in the share market (56 per cent in 2021, according to 

So, it comes as little surprise that hedge funds are starting to take notice as well. An EY 2021 report on the global alternative fund industry found that nearly one-third of hedge fund managers plan to add crypto to their portfolios in the near future. This goes to show that the institutionalization of the crypto-space has already started, and the market is moving towards its next leg of growth and maturation. Which brings us to the next point… 


Why we’re embracing crypto 

With more and more Kiwis already investing in crypto, we see no reason why they shouldn’t be able to do that with the largest investment account they are likely to have – their KiwiSaver.  

This doesn’t mean being oblivious to the high level of risk that cryptocurrencies carry. But for investors who are willing to take a long-term view, rather than treat it as a short-term speculative option, crypto may make a good investment.  

Though it is important to point out that Cryptocurrencies (and in particular Bitcoin) can add value to a KiwiSaver portfolio.  Over the past 10 years they have had a relatively low correlation with stocks (when stocks move one way, often crypto currencies move in different directions) this makes them a useful tool to diversify a portfolio.   

In building an investment portfolio, we want to maximise every dollar of return for the amount of risk that we are taking and Bitcoin can help do this. Modelling shows that a 3-4 per cent allocation to an investment portfolio is the sweet spot where volumes are optimised.  Though this is based on long term historical data and may change over time. 

In a nutshell, we know that both institutions and individual investors are increasingly turning to the crypto world to capture the potential upside of this asset class. Plus, we know that investment fundamentals support the case for using cryptocurrencies as a diversification tool.  

So, it’s about time we allow KiwiSaver members to be grownups and have the freedom to make some of their own decisions. Of course, we won’t leave you alone. We’ll help you navigate this space with confidence by prioritising education and putting protections in place. At the end of the day, we’re here to help you make better, more well-informed and educated choices with your money and your future. 

Hopefully, this inspired you to think outside the box or at least gave you something interesting to think about. If you’d like to take an informed look at your retirement prospects, you can try using kōura’s digital advice tools to help you see how things could look. Advice for KiwiSaver is available for everyone (check out our article on the value of advice), if you want help with your KiwiSaver come and talk to us at Kōura or reach out to your scheme or adviser.


Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.