fbpx
Connect with us

CryptoSpace

Where to invest during a recession? (or where to invest in general)

Published

on

Where to Invest

Where to invest during a recession?

40% of Americans do not have $400 in their savings to meet an emergency.

Let that sink in for a second.

Average rent expense in the US is around $1050, that means, 40% of Americans cannot afford to pay rent for two weeks if they lose their job.

The emergency fund was not even talking about cases of a job loss or these pandemic times that we are facing.

It was referring to unplanned expenses like car repair, illness, etc.,

Nevertheless, the stat is quite staggering.

Good news is that the pandemic has forced people to increase their savings by 33%. 

Whether this savings is voluntary change in habit or forced by lack of spending is something we have to wait and see.

We have to do whatever we can to get by this wave of the pandemic.  

However, once we are on the other side of this we all have to think about being prepared, financially speaking, for uncertainties that life throws at us

Investing in recession

Here are the assets we think will bode well whether the economy bounces with full vigor or we face another crisis like this in the future.

  • Cash, specifically the US dollar
  • Gold & Silver
  • Farm land
  • Bitcoin
  • Upgrading skills

Sure Weight Loss

Why these assets?

Everyone has a reason to be invested or avoid investing in a certain asset.  We have our own reasons.  We enumerate them below.

Why Cash?

moneyIn the current market, you cannot go into a grocery store and buy stuff with gold or silver coins. 

While many places have started accepting Bitcoin and other cryptos, they are not easy to integrate into daily usage, yet.

For these reasons, it is easy to see why having a reserve of fiat cash is common sense.

However, we think that as the global fiat system starts falling apart, the US dollar will outlive most fiats.  

This is why when we say cash we are particularly referring to the US dollar.

If you live in a country where USD is not something you can get hands on easily, you could look into reliable stablecoins to get exposure to the US Dollar.

Eventually, the US Dollar may head for the same ill fate as the other global fiat currencies and that is why it is important to have exposure to other assets.

How much cash should I hold?

Personally, we think a 6 months safety fund is a good aspiration to have.  If you can manage a year worth of expenses in savings, that is quite astounding.

A minimum we would start with is 3 months expenses.

Whatever those mean to you from a dollar perspective should be your ‘goal’.

Why Gold & Silver?

invest in gold and silver

Gold is considered god’s money. Whether Gold is god’s money or not, it withstood the test of time and has been a successful store of value for ages.   

Silver has been used in variety of fascinations (including references to the use of silver in weapons against witchcraft, vampires and other fictions).

More importantly, Gold has been a metal of royalty while Silver has been long used as the metal for commoners.

Together, these two metals have been used as store of value and medium of exchange since we moved away from the barter system. 

How much Gold & Silver should I hold?

Answering this for the Gold is tricky since it’s more expensive.  Silver may be easier to answer.  For instance, you could start buying 1 ounce silver each month.

Depending on what your ‘end goal’ from an investment outlook is, a 3-5% allocation to Gold & Silver might be an appropriate mix.

Why Farm Land?

invest in real estate

There are only few things that could exceed the confidence you acquire by growing your own food.

By farmland we do not mean acres and acres.  There is a guy who sought to use the empty backyard space of his neighbors to grow vegetables on a ‘sharing’ basis.

You could grow greens like Spinach that don’t need a lot of space.

As you keep digging into this area, you can come up with creative ideas on how to become self-sustained.

You do not have to turn into a farmer to invest in farmland either.  There are many solutions that help you own a piece of a big farmland through crowd sourcing.

Companies like AmericanFarmInvestors helps you invest in farmland through 401(k).  

There are other companies like FarmTogether, FarmFundr, etc. that make investing in Farmland easy and affordable.

If there is a power outage or if China stops producing or if there is a famine in the countries that supply the food, cash or gold or bitcoin will mean not much.

Food is obviously a basic necessity and as such – having it as part of a sustenance plan is a good one.

We are not talking about it from an apocalyptic preppers point of view.

We are talking about it from an ‘I am ready for all possibilities’, the good ones and not so good ones, point of view. 

How much land could help?

How much land could help you produce your own food and basic supplies? That depends on your family size, appetite, your fancies, where you live, how expensive the land is, and more.

You do not have to become a farmer or buy entire acreage. There are many solutions that help you invest in a Farmland through crowd sourcing.  

So you could be investing a few hundred bucks each month or have an annual ‘goal’ for Farmland investment.

how to lose weight

Why Bitcoin?

bitcoin-gift cards

We are a crypto site, that’s why.

We are just kidding.

Bitcoin has the potential to lay the foundation for the future internet.  

Unlike the internet itself where one could only invest in the companies behind the technology, with Bitcoin you can invest in the technology itself.

If all else fails, your Bitcoin holding will be a great souvenir of ‘history in the making’.

Bitcoin is Gold 2.0.  Or in Robert Kiyosaki’s words “Gold is god’s money and bitcoin is people money.”

We will take that explanation.

What makes bitcoin better than gold is that you can take it anywhere with you. You can transfer, use it to buy things and divide it into fractions.

If those who proclaims that Bitcoin will one day reach a Million dollars turn out to be right, your $100 investment today could be worth $10,869.  That’s 100x return.

If you do lose it all, you would have lost $100.

Except for the startup investment (which is accessible by the wealthy) no other investment we know of comes closer to Bitcoin in its upside potential.

We buy bitcoin for the upside potential and stay in to become part of the history itself.

How much Bitcoin should I hold?

Answer to that question for this particular asset class is quite simple: How much are you willing to lose and not care?

We are not kidding.

Bitcoin as a relatively new asset class has almost unlimited upside potential.

But potential is not always guaranteed to become a reality.

If you invest a small amount $100 here and $50 there and adopt the dollar cost average method, it could help hedge your portfolio well.

We personally like to be diversified irrespective of our portfolio size. You do what fits your risk appetite. 

Why Upgrading skills?

invest in upgrading skills

This investment is the one that will keep paying you.

Let’s say you are eyeing a promotion and the only way you can get it is by earning a certification.  

You could invest your money in acquiring that certificate to land the job that can increase your income.

We are not big fans of Ivy League degrees that cost hundreds of thousands of dollars.  However, we do not discount the value you can gain from upgrading your skills.

Thanks to the internet, acquiring skills is not as hard as it once used to be.

You could save on the ‘preparation material’ by learning from YouTube or buying used books from BetterWorldBooks or Thrift Store, where you can.

You can even post questions or seek tips on the forums.

You can weaponize the internet to acquire the skill that increases your earning potential.

How much should I invest in upgrading my skills?

This is an asset that is non-tangible and yet reaps the rewards faster and more tangibly than others on this list.

How much should you invest directly depends on your next natural progression trajectory.

For instance, if I don’t have a basic under-graduate degree, I cannot think about having a Master’s degree.  

The cost obviously varies for an under-graduate degree to a Master’s degree.

Whether I am taking an online class or an evening class or a full time will also change the expense considerably.

If you already have the basic skillset to do your job, then investing in something that gets you ready for your next level (or promotion) is what we would personally focus on.

We do not believe in college degrees that are obsolete when taught and are useless in the real world.

We like technical (polytechnic) diplomas that provide hands on ‘experience’ more than theoretical-namesake degrees.

Sure Weight Loss

How do I get invested in these assets when I cannot get by?

We started this article talking about people who do not even have an emergency fund of $400, how then can we expect people to be exposed to the assets we listed here.

That is quite a challenge to overcome.

Few ways we think this could be done (we have lived through life where we did not even have $50 in reserve, so this is not pure hypothetical):

  • Reconcile expenses and cut the unnecessary.  An example could be if you have a habit of eating out once a week, maybe make it once a month.
  • Switch to alternatives.  An example could be to move away from a bundled TV package to an internet only package.  For instance, let’s say a bundled TV package costs $150 and Internet only costs $75, then you can add Netflix or Disney to this at an additional $10.  This saving of $65 ($150-$75-$10) could go into buying either a couple of silver coins or million sats of Bitcoin or just go into your savings as fiat reserve.
  • Downsizing your lifestyle.  Do you have an opportunity to move into a smaller home or use public transport (obviously after the pandemic) to go to work or make your own lunch instead of eating out. Five dollars here and five dollars there will quickly add up.
  • Upgrade your skill to increase your earning potential (we discussed this above)
  • Start a side hustle.  You could drive Uber in your spare time.  You could learn trading and make some small gains.  You could offer your skills on platforms like Fiverr.  You could start your own YouTube channel.  You could start blogging. 

The strategies we have outlined in this article are not just for investment during a recession but they are sound strategies of investment in general, in our opinion.

These are the assets we are looking to accumulate because we think this is the right mix for us.  You do what’s right for you.

Note: We personally do not invest in stocks and have not included them in this article.  This does not mean that they are a bad investment. Also, we get involuntarily exposed to stocks through 401(k) (thanks to Bitcoin IRAs the situation is changing fast).  Diversity is key to a well-rounded portfolio.

Thank you for reading and sharing this article. Stay safe and healthy!

Get ‘Week in Crypto’ news updates in ONE email.
We never
spam your inbox and we only send one email per week
with updates, news, eBooks, tax updates, and more!
Get
knowledge, not spam!  Subscribe here.

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

best Crypto Tax Software

Sure Weight Loss

CryptoSpace

Chasing the Micro Cap Crypto Gems #4 – Skrumble Protocol – Why We Changed Our View On This?

Published

on

Micro Cap crypto Gems

The tricky thing about finding micro-cap gems is that we have to find something that fits our crypto framework criteria and still be under $10 Million in the market cap.   

The project that we picked today had a few flags while we were researching and we promptly reached out to the team to clarify.   

You will see our initial views/opinions based on publicly available information and the response from the company.

What is Skrumble Network?

What is Skrumble NetworkThe core concept behind Skrumble Network is that when data is stored in one centralized location (like a Server) it poses the greatest security when it gets hacked.

However, if your data is fragmented and stored on decentralized servers, even that particular decentralized server gets hacked, your data is still secured because the fragmented piece that got hacked is usually incomprehensible.

Skrumble Network helps decentralize the communication protocol by using Blockchain technology.

Skrumble Network helps facilitate File transfers, secure messaging, Video streaming and calling.

how Skrumble network works

Whitepaper describes: “Skrumble Network is a secure, communication-centric blockchain, decentralized communication application and a communication layer for developers to add into any application. With no middle entity or centralized server host in between to censor, block or manipulate any data, Skrumble Network will enable open, global private communication and transactions that are truly community owned and operated.”

One of the distinguishing factors about this project was that it was initially developed with an established company behind this crypto that has been in the business for more than half-a-decade and they know how to deliver a product that is used in the real business world.

Applying our framework

As is our custom, let’s apply the CryptoTapas framework around this project.

Problem

The security around our communications is as old of an issue as the internet itself.

This concern has become more pronounced in the recent years with the news of hacks and breach of confidentiality, and utter disregard for privacy.

Now that COVID has completely changed the way we work (especially working from home), the security around communications is now taking the spotlight again.

If Skrumble Network addresses this issue in a novel, scalable and easy to implement way – it might have a great chance at this massive problem.

Team

Eric Lifson seems to be working on Skrumble Network for over 3 years now, and he was quite accommodative when we reached out to him with questions. 

When we looked at the team page on the Skrumble’s website, with the exception of three members, everyone who is listed on their team’s page is no longer with the company (some since July 2019) and this disappoints us that they have not updated their own team’s profile.

Skrumble Network team

More importantly, if everyone jumped the ship, who is behind the project now?

The flagship app on Skrumble Protocol, GetAlly, shows the team members that are also associated with Skrumble Protocol, however, most of these team members are no longer with Skrumble.

Question for Skrumble Team: Who is working on this project? What is the current team structure?  

[Update: The project informed us that all these people have at one point worked on the project. While the team has downsized to a team of about 6 core people, SKM has a strong brand and past and present members prefer to maintain recognition of their achievements. Moreover, several are still contributing, just not on a full-time basis. Any who do not, the team offers to remove them at any time. This is now more in line with how ongoing DAOs (Decentralized Autonomous Organizations) seem to be operating.]

Partnerships

Skrumble Network’s Ally dApp claims to have a 150K user base.  They also teased about the upcoming partnership to take the DeFi initiative forward.

We actually like the advisor profile associated with the Skrumble Network project one of whom is Anthony Di Iorio, co-founder of Ethereum.

Apart from Anthony, Skrumble has Jeff Pulver who is the co-founder of $3 Billion communication company, Vonage.

That is quite a respectable name association with Skrumble.

Question for Skrumble team: Have there been any changes in the Advisor group (similar to team changes?).

[Update: No. We also still Jin Tu – former CTO of Aion, OAN boardmember and Cofounder of Axis DeFi, who is an Expert Blockchain Architect. 

Redouane Elkamhi,
PhD, Associate Professor at Rotman
Leader in Fintech & Blockchain at the University of Toronto 

Kevin Hsu,
Founder Partner at BlockVC
Investor in Ontology, RSK & QTUM 

Jiangang Wu, PhD
Co-Founder of Fusion
Professor of Finance & Blockchain Economics at Shanghai University] 

Addressable market size

Secured communications, whether it is simple file sharing service or video streaming or chatting is a huge market.

It has only exploded in value in the past few months when people were forced to communicate over the internet instead of in-person meetings.

This trend will only become the norm as the internet becomes more accessible (Elon’s Starlink reality) and companies start restricting travel.

File transfers, messaging, video streaming and calling verticals market size is in $100s of Billions, if not trillions.

Revenue model

Question for Skrumble team: How does Skrumble Network generate revenue?

[Update: The core problem for SKM has actually been the volatility of the utility token model in general. We will address this in more detail later.]

DeFi + Communication?

Skrumble Network’s official blog was silent since October of 2019, although remained very active on Telegram, and resurfaced with an announcement that Skrumble Network is going DeFi. 

The announcement about a partnership with Juggernaut reads “unique custom financial modelling and DeFi deployment, it can enable token projects to have real, sustainable, and modular business models built around their utility model.”

Is this another attempt to exploit the market craze around DeFi?

We asked the team this question directly.

Skrumble Network Roadmap

Question for Skrumble Network Team: What drove this decision to look at DeFi and what unique attributes do you think will help Skrumble succeed in this space? 

How does this Juggernaut help Skrumble’s vision?

[Update: Really, we see two sustainable business models so far in the space – 

  1.     platform tokens (for exchanges) with only room for a few like Huobi or Binance
  2.     DeFi due to the collective staking, lockup and general collateralization of new directions and ability to focus on new industries.

A two-token solution is the only way to do something meaningful and sustainable in my opinion with a utility token. One for utility and one for profit sharing. They are missing the sustainable business model. They don’t have enough usage to reach a critical mass and the DeFi synthetic at least has a chance to have something closer a traditional ‘share’ balanced approach. 

Most proof of stake with inflation models will reach a point where one has to ask where any utility token can be able to sustain beyond initial interest 

This is why we must change the game. 

Basing anything on a pure utility token that fluctuates is basically unsustainable. This is because when people are in the money they just leave to the next hot project. People who operate in DAOs want something more stable to base their livelihoods on. They want something closer to USD that can be more stable and scalable. 

This is an overview of how we see DeFi becoming a crucial component going forward:https://medium.com/juggernaut-defi/skm-partners-with-jgn-to-develop-first-defi-communication-network-20ba9a3ccf38 

What do we like about Skrumble?

We like the fact that Skrumble Technologies has been a technology company since 2014 and it has leveraged some technology and strategic guidance from them in their initial inception.  It has real business with actual clients in the market.  How many of the 6500 cryptos can claim that? 

Additionally, the company has patents to its name and helps them deploy proprietary solutions in the market. 

In addition, we like that the co-founder is quite active in working on building Skrumble Network up. 

You can go to the Telegram and see him responding to the questions posed by the community. 

When we reached out to Eric, he provided a quick ‘highlight’ of Skrumble for someone who is new to the project, we have reproduced what Eric shared with us below (we have not independently verified this information): 

Skrumble Network is reshaping freedom of speech and data privacy with a communication-centric blockchain due to our unique PoA architecture, formidable global community, robust proprietary chain, accomplished advisors, and top-tier exchanges. 

🤝PoA consensus model: Aligning incentives and encouraging active community participation

💪Innovative chain and base layer: Enabling other dApps to be built on top of Skrumble Network. First dApp- Ally already has 150k+ users with more coming soon

🙋🏻‍♂️Industry-leading advisors: Including Anthony Di Iorio (Co-Founder of Ethereum) and Jeff Pulver (Co-Founder of $3B Vonage), Jin Tu (CTO of Aion), Redouane Elkamhi, PhD (Lead of Fintech & Blockchain at the University of Toronto), Kevin Hsu (Partner, BlockVC)

🥇Trusted and premier exchanges. Won Huobi FastTrack vote last week with over 40 million votes. Counting Gate.io, Huobi Global, Bittrex, LBank, Coinbene etc as our exchange partners

🎖Ranked by ICO Drops for both top 5 global community and ROI in Q22018

🗳Won Huobi FastTrack with 40M+ votes on June 27 19

👑Massive dApp ecosystem coming soon with innovative token economic details

🦁DeFi component / partnership incoming 

Things to consider

Apart from the general risk that is inherent with the crypto space, consider the following when you DYOR on Skrumble Network. 

Competition

Few blockchain/crypto companies have tried to take a stab at the ‘secured communication’ aspect using blockchain. 

We have not yet heard the great success story in this space. 

This is good news and not so at the same time. 

It is good news because Skrumble Network could be THE project that penetrates the ‘success resistance’ in space. 

It is not so good news because the same reasons that lead to the failure of previous projects could plague Skrumble Network. 

Team changes

Exodus of team members from the Skrumble Network is a point of concern for us.  We are going to update this section with the response from the Skrumble Network team (without removing this concern from here). [Update: It seems that several are still involved in a part time basis, and they claim to have streamlined their operation. They are also actively working with the Juggernaut (JGN) team to implement the DeFi rewards system. For more details on JGN please see here: https://jgndefi.com/ 

Token supply

While the market cap is what matters the most in terms of the potential multiples, crypto space seems to be very touchy about the token supply. 

Token supply on Skrumble Network (SKM) is 1.5 Billion and might be looked at as quite high.

All tokens have been released to the market. In this space, the actual token supply amounts are becoming far less important. This was a pretty standard number in 2018 and was advised to the team. 

Team is expected to release more token utility and use cases as per the information alluded to by Eric and depending on the future use cases the market might respond positively. 

Moving to a more stable way of incentivizing operators may innovate the DeFI space beyond pure finance and into other industries as we rediscover how we share and perceive value. 

This is an overview of how we see DeFi becoming a crucial component going forward: https://medium.com/juggernaut-defi/skm-partners-with-jgn-to-develop-first-defi-communication-network-20ba9a3ccf38   

Conclusion

Our first impression is that Skrumble Network looks like a project with a lot of potential.  However, potential means nothing until it is ‘realized’. 

Will Skrumble Network realize its potential?  We do not know and that is the dilemma we have to ‘risk’ when dealing with micro-cap gems.

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

best Crypto Tax Software

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

 

Continue Reading

CryptoSpace

5 questions we want XRP army to answer!

Published

on

xrp investing news

What follows is our opinion.  

Let’s not be hostile.  

Top 5 Cryptocurrencies 2020

We are simply posing some questions based on the information we came across and our own limited interpretation. 

It is quite possible that the sources we are referring to are at fault or our interpretation is. Either way, just answer these questions for us so that we can learn new things about XRP that we did not know.

Our readers know that we have been anti-XRP for a long time. We got trolled, mocked and called ignorant. Well, to each their own.

Our questions to the entire XRP army are simple, here they are:

Question 1: If crypto was to replace (or at least reshape) the entire banking business then what does a token whose sole business model is based on ‘accommodating’ banks have any future?

To put differently, when the world starts conducting commerce via text messages why do we need banks and Ripple which wants to serve banks?

Our basis for this question: 

In the future when we will start doing business with each other over text messages, wallets and email signatures, why do we need a payment gateway from Ripple?

We know that WeChat payment enables users to transact over chat.  Other companies are trying to catch up with this (primarily why Facebook was looking at creating its own currency, Libra).

However, once we have a digital dollar, we do not even need an outside stablecoin since one could, in theory, use the digital dollar directly.                  

Question 2: Why do you have to pay businesses to use XRP if it is so superior?

Our basis for this question: 

Financial Times reported that Ripple paid Moneygram to use Ripple technology.

Here is a direct quote:

It turns out Ripple has been paying a significant amount of subsidies cash to MoneyGram’s business since buying into the company in June. In the third and fourth quarter alone the Ripple benefits amounted to $11.3m.

What’s more, until a consultation with the SEC**, MoneyGram had been more than happy to book these cash flows as revenues. Due to the SEC guidance, however, it has now had to restate fourth-quarter guidance to account for Ripple payments as “contra expenses”.

XRP Twitter

Question 3: What is Ripple’s revenue worth without the ‘selling’ XRP?

Our basis for this question: 

The question seems to be answered by the XRP’s CEO himself. Here is an excerpt:

Asked if XRP was keeping everything cash flow positive at Ripple Labs, Mr Garlinghouse answered: “Well XRP is one source. I don’t know how to answer that because if you took away our software revenues, that would make us less profitable. If you took away all our XRP, that makes us less profitable. So I don’t think about it as one thing.” 

He clarified later: “We would not be profitable or cash flow positive [without selling XRP], I think I’ve said that. We have now.”

In our opinion, we think that the only reason Ripple (XRP) is even operational is because of the billions upon billions of XRP tokens that they keep dumping on the unassuming investors.  

Is this a wrong assumption?

Question 4: If Ripple does not need XRP, why is XRP needed?

Our basis for this question: 

This is based on our understanding that Ripple’s technology can be used by the businesses without having to use XRP.  It is recommended but not ‘required’.

Is this accurate?

Ripple’s solutions can work without XRP (its native token).  So, if XRP is not a utility token in strict sense, how are its creators able to mint and sell them at will without tripping any security laws?

Question 5: If Ripple [XRP] is to act as the ‘stable’ value while the transactions take place on Ripple network, why should anyone trust XRP which is backed by nothing instead of stablecoins like USDC that are backed by real world assets?

Our basis for this question: 

We would personally trust USDC more or even Facebook’s Libra rather than XRP which is backed by nada.

This is what Demelza’s opinion was during our interview:

“The main point is that if XRP were able to back their currency with financial assets and stabilize the purchasing power of the currency, then that would mean XRP coins should have no price appreciation. In fact, only the equity shares of Ripple Labs would profit from XRP’s adoption as a global reserve currency. But Ripple Labs is a privately held company. After fully understanding what XRP is, one realizes that XRP’s investment pitch does not make sense at all.”

Conclusion

We are trying to convince ourselves as to why we need Ripple in the crypto space if:

  • Future of payments is going to be ‘self-bank’ & over the chat
  • There are better stablecoins in the market 
  • Ripple itself as a technology doesn’t need its own native token, XRP

For this very reason, our opinion is that the money will flow out of XRP and the creators will keep dumping their bags into the market until the market can no longer absorb it and then it will be ‘lights out’.

We await for the XRP army to provide us insights that we did not know and our opinion changes…

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

best Crypto Tax Software

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

Sure Weight Loss

 

Continue Reading

CryptoSpace

DeFi is Not the Holy Grail of Crypto, Here is Why

Published

on

Defi Yfi

DeFi has been making millionaires overnight and turning millionaires broke at the same speed.

Those who are on the bandwagon are rejoicing and those who either missed out or got burned by one of the fake projects are yelling ‘Scam’ at DeFi.

Top 5 Cryptocurrencies 2020

Our views are a bit different on the subject.

We do think DeFi is going to be a successful vertical among the blockchain (and crypto) solutions.

It will not be THE holy grail for the redemption of crypto status though.

Supply Chain, Crypto Lending, Insurance, Financial Services, Accounting, Identity, and many more verticals will collectively take blockchain and crypto to the masses.

Shifting our focus back on DeFi, here are some of our thoughts on the current state of DeFi. We do appreciate you dropping any insights you have that we might have missed.

DeFi is not a ponzi, here is why

If the DeFi project you are eyeing meets the following conditions, it is not a ponzi:

  • Audited code: Is the code on which DeFi runs is audited by reputable blockchain auditors? 
  • Reliable team: Who is behind the project? Do they have the know-how? Do they have a history of running scams or leading successful projects? 
  • Actual (sustainable) revenue model: What is the revenue model?  Is it too ‘scammy’ sounding or is it based on sound mathematical (and algorithmic) models?
  • No lock-in periods: Is it easy to get in and out of the platform without any restrictions or lock-in periods?

If you answered yes to ALL of these questions then there is a 100% certainty that the DeFi you are dealing with is not a ponzi (or scam).

However, a caveat is due here.  

Just because the project is not a ponzi doesn’t guarantee its success. Lot of well intentioned companies fail, that’s just the nature of business.

So, do not be one of those guys who sells their home to invest in crypto or DeFi (and that itself is not advice, just an opinion).

If you don’t want to hear it from us, listen to what Yearn Finance creator has to say about DeFi tokens (not all, obviously) having ZERO value.

Source: Crypto Culture

DeFi on Ethereum is not sustainable, here is why

Ethereum DefiMost, if not all, DeFi projects that are making the news today are on Ethereum. 

Ethereum is not a reliable blockchain when it is overloaded.  It gets choked and crashes.  

People are already complaining about exorbitant fees on the network due to the DeFi craze.  

DeFi itself as a crypto vertical is quite new and we are sure there are going to be a lot of ‘killer apps’ that will show up on the scene.

We are currently looking at the DeFi solutions that are being built on other blockchain networks (subscribe for free to know when we post that article).

PolkaDOT is not the end all be all, here is why

Polkadot Defi EcosystemMany are turning to the DOT as the next big thing after Ethereum.

It may very well be.

However, it has not had the chance to prove itself, not yet.

Ethereum’s resilience (or lack thereof) was revealed only during the ICO craze (and then later during CryptoKitties debacle).

What monsters lie in the DOT’s belly?  We don’t know and we would be weary of anyone who claims to know with certainty.

Other things to consider

Entire DeFi space is pretty new and we do not know what we do not know about potential vulnerabilities.

While this is true of Bitcoin itself, Bitcoin has withstood assault for over a decade and still stands stronger.  

Same cannot be said about DeFi.  

Can you imagine someone investing their life-savings into DeFi only to have funds taken because of a bug in the code?

Needless to say, many folks are exploiting the looping system in the DeFi where they take loan against their deposit then lend it back to the platform to take another loan against their deposit, and ad infinitum.

This is causing the DeFi systems to show more liquidity than what truly is.

Conclusion

We think DeFi is an exciting development, however, we still put it alongside ICO craziness for now.

When this space matures and we see reliable solutions emerge – DeFi has the potential to drive a trillion dollar vertical on its own.  

That is just the potential, all the trials and tribulations that we have to go through to get there is going to be one hell of a ride.  

So buckle up and enjoy (and please do not lose your shirts on the ride)!

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

best Crypto Tax Software

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

Sure Weight Loss

 

Continue Reading

Trending