2020 wasn’t just the year of Coronavirus: it was the second year in recent history that Bitcoin made a lot of people very wealthy. Not just serious investors either, but individuals like you and me.
With Cryptocurrencies like Bitcoin and Ethereum finally breaking into the mainstream media and enjoying institutional investment (from organisations) and the resultant price bumps, the bulls and the bears are back to fighting again, trying to answer one simple question.
Is it too late to benefit from investing in crypto?
Whilst it’s true that if Bitcoin shot to $100,000, you’d only make a threefold return on your investment if you bought it right now, that’s not the case across the other cryptocurrencies, all of which tend to rise with Bitcoin’s tide.
Indeed, one crypto has surpassed Bitcoin’s value once before (Yearn Finance) and another, more popular coin might be about to become the second to do so: Ethereum.
Why is Ethereum the future of Crypto?
The Ethereum Blockchain is currently powering the explosive growth of something called DeFi that you’ve likely heard about. DeFi stands for Decentralised Finance and could very well be the future of the economy in a few short years (so right now is the absolute best time to get involved and that statement will always be true).
Decentralised Finance is already a game-changer, and will continue to be so as it finds unique and innovative ways to digitise assets such as:
- Company shares
- Bonds
- Non-Fungible Tokens (NFTs) like digital arts
- Online movie production and distribution
- Online concerts
And much more.
One extremely important element of decentralised finance is how accessible it is to so many people: you don’t need huge amounts of cash to start benefitting from it.
Let’s look at Uniswap as an example. Uniswap is a decentralised protocol that allows for users of tokens based on the Ethereum Blockchain to swap one token for another.
Here is the Uniswap token’s growth in the past month:
Source: Coinbase
It has nearly tripled, and is a sure-fire indicator that the DeFI craze is not only underway, but really just beginning.
The sky is the limit with tokens like this, and early investors in DeFi can see returns of over 10,000%!
Whilst seeking to emulate traditional financial models of investment, it’s important to make the distinction that results from the decentralised element.
What does Decentralised mean?
There are two types of Cryptocurrency exchanges (where you can buy crypto for money the same way you might with stocks and shares) centralised and decentralised.
Over time, decentralised exchanges have increased in popularity to a near-equal footing with centralised exchanges, which are typically run by for-profit business and charge higher fees, but bestow benefits such as increased security due to higher levels of regulation.
Decentralised exchanges and autonomous organisations (DAOs) on the other hand, are not owned and led by a traditional hierarchy of profit-seeking business people, but are run in a peer-to-peer manner by the users of the exchange through smart contracts, resulting in much lower fees, but also less volume of users and the resultant decrease in liquidity, which is quite important.
What are the benefits of Decentralisation?
There are so many benefits of decentralisation within finance that they would require their own, much lengthier post to espouse, but we will list some of them out for you below:
- Improved privacy?—?you can be fully anonymous with DeFi
- Transparency?—?without the middlemen involved in centralised finance, you can be absolutely sure what is happening behind the scenes
- Staking?—?most tokens will empower you to stake them: earning more (sometimes a very high percentage, compounding daily) simply for holding some in your wallet
Perhaps it is no surprise that the decentralised exchange Uniswap has surpassed centralised exchange COINBASE in the volume of transactions.
In summary, it is clear that DeFi is really in its infancy and already providing impressive results, so why not start getting involved now. We are here and happy to help.
*originally written as medium article*
