The investment in cryptocurrencies grabs headlines for falls like that of Terra, the token that fell more than 90% in a matter of days. But in these lines it is not going to discover what will be the next crypto that will make a x1000; They will cover everything that is happening behind the phenomenon of crypto assets and decentralized finance, a true revolution of the financial system as we have known it.
But let's start talking about technology, about the blockchain. Since the summer of 2020, the blockchain industry has seen tremendous growth, fueled by two trends: NFTs and DeFi (decentralized finance).
DeFi allows anyone, anywhere in the world, without the need to go through any intermediary, such as a broker or a bank, to invest in crypto assets. According to the DeFi platform Llama, one of the most important in the sector, today the total number of crypto assets hosted in decentralized protocols amounts to 110,000 million dollars (TVL - Total Value Locked). Decentralized finances make up a new financial system that could be said to have been in the making since the first Bitcoin was mined in 2009. Currently, there are platforms that also have millionaire deposits that maintain their liquidity and allow their growth. Some of them are Curve, Aave, Compound and PancakeSwap.
These figures confirm that more and more people are building in the crypto space and in the world of decentralized finance. Every day new startups emerge, more developers are requested and many professionals in the technology sector are directing their careers towards this technology.
Even professionals in the financial sector are leaving their positions in large banks or regulatory bodies to join the “programmable money” side of the blockchain. For example, in August 2021, Jay Clayton, former chairman of the United States Securities and Exchange Commission (SEC), joined in an advisory role at blockchain infrastructure provider Fireblocks, the digital asset custody company. . In Spain, startups such as Brickken (tokenization of assets) or Champion Games (which develops Web3 video games) are constantly looking for developers to cover the high demand for projects.
For its part, Meta (the Facebook company), has started working with Polygon (whose token is Matic), one of the most popular blockchain networks, to incorporate NFTs into the Instagram platform so that users can exchange this type of digital assets. These facts show that, beyond what the media can pick up on crypto market speculation, there is a new sector that is growing exponentially. What is happening in blockchain and crypto looks like the year 1998 of the internet. The infrastructure of the future financial system is being built. And as happened then with the beginnings of the internet, new projects, startups and companies will emerge where some will survive, others will succeed and the vast majority will close. In this sense, we are not faced with anything new. In all the waves of innovation there have been visionaries who have been able to better build their mission, consolidate their businesses and attract customers, as in any other sector.
So, is it a good time to invest in crypto assets? Definitely yes. Because you will not be investing only in an asset, but rather in a project with its objectives, its roadmap, its utility token and its vision of a part of the financial market.
For this reason, before investing in tokens or in crypto or DeFi companies, it is important to educate yourself minimally on blockchain, crypto or DeFi, review the projects and find out who is behind them. The same thing that is done, or should be done, when buying a share of a company that is listed on the stock market. Why do you invest in Tesla or Amazon? Because you believe that it is a company that has all the ingredients to succeed, monopolize the market and generate high returns for its investors.
The most important premise when investing in cryptocurrencies, just as it is done in traditional markets, is to do it in an orderly way, with objectives and diversifying risk. A good practice is to allocate part of the budget to less volatile and less risky securities (but with lower profitability) and to allocate another part of the budget (much smaller) to invest in a less conservative way, much more risky, but with potential for high returns. returns.
For retail investors (individuals) there have been platforms in our country for some time, such as Bit2me, Coinbase or Binance, which allow you to buy crypto assets in a simple and centralized way (you have a representation of the asset). On the other hand, there are projects that allow exposure to the market in a decentralized way, such as CommonSense Finance, which bring investment strategies and methods that work and have been tested in the traditional financial world to the world of decentralized finance. For example, creating sector and index tokens as well as tokenized algorithmic trading strategies. In this way, the traditional investor can expose himself to crypto assets in a way that he already knows and in a more conscious way and diversifying his strategies in his portfolio.
But investing, whether in a company, a crypto, or even yourself, takes time. The market does not always return results immediately. In the short term, volatility can generate uncertainty and it is at this time that it is time to be patient and look at the long term.