How & why investing in a blockchain platform

in #bitcoin6 years ago

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It seems that nowadays everybody - from the best global brands and the most valuable enterprises to small private investors and simple curious - want a piece of blockchain. The ETF world launched the trend and everybody else asked himself "Why don't putting money in there too?". Ultimately, Blockchain is the last and biggest disruptor to the managed investment industry since the personal computing in the 1980s, Internet in the 1990s, mobile in the 2000s, and social in the 2010s and, bearing in mind that if one would have put some money in that now would be a (m/b) illionair, it worth to spend a bit of time understanding how all this works.
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First of all, Blockchain could be easy money but not sure ones. If it's true that its peculiarities are efficiency, privacy, transparency, security, reliability, this doesn't mean investing in it is 100% successful: one could think that Bitcoin (blockchain's first viable application) is a kind of money created out of thin air, but the truth is that the real value comes out of tokens.
download.jpgWith cryptocurrencies, the most direct way to invest, the risk is betting not only on the success of technology but also on a valid business model. But with tokens, you're also betting that they won't get hacked, tricked, blackmailed, or subpoenaed. Basically, you're making a Wall Street joke, so the best option would probably be buying different coins across different platforms, putting them in your wallet and waiting (and hoping) to find them redoubled in about ten years.
images.jpgWith tokens, you send some money to a project or company and get tokens return, like a kind of profit shared with other contributors. The startup world is filled with them: more than $800,000,000 worth of Tokens were bought in September 2017 and new cryptocurrencies are being issued every day.
But how to understand if it worth investing in them, how much and in which project?
download (2).jpgWell, the answer is: follow your instinct but don't forget to use your brain. Be smart. Gather knowledge. Try to catch their mechanics. And when you think is all clear, inspect everything again and put your money in the project that you think is the most successful, but also that can demonstrate to be trustworthy
shutterstock_fintech-1168x657.jpgTokens are just a Smart Contract, a piece of code issued on Ethereum platform which stores a list of people wallet addresses and their balance of that token. Once someone is transferring the token the sender's balance is reduced and receivers increased. Then, the transaction is recorded in the Smart Contract storage. Anybody can create a new Token, issue it, share it or sell it. They are, basically, a promise of profit: once the platform is ready and profitable, the team will start distributing profits to its token holders (security tokens).
Other tokens (utility token) are, instead, a promise of a future use within the platform. But why should token demand increase over time? Well, cryptopreneurs are creating various ways to integrate their token into their platform so that the demand of a token would increase with a success of the project and this would lead to a huge price increase above all for early token holders.
This is a key point: Token total supply cap should always be defined!
crypto-exchanges-are-charging-up-to-1-million-per-ico-to-list-tokens-its-pure-capitalism.jpgWith ICOs you are facing the inflow of a lot of money into a single source simultaneously: ICO's which do not declare and write their total supply cap within their Token Smart Contract or even do not issue any token at all puts potential investors into a risky situation, because the team can actually issue more tokens after some time and therefore dilute your token value. Many investors are, indeed, attracted by ICO because they often are a short-term profit: ICO participation is based on speculation, with the goal to sell the token at least 3 X once the token hits the exchange. Listing tokens to the exchange and get the needed liquidity is something all the contributors should have clear. A Token should implement a standard interface such as ERC20 for Ethereum so that exchanges would be able to easily list the token from a technical standpoint.
download (3).jpgThere is another way of investing in blockchain, and it's investing in startups that exploit blockchain technology. Yes, because Blockchain is not Bitcoin; Blockchain is the technology, not the application of the technology.
But what exactly are blockchain startups and how and why should you invest in them?
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Many blockchain startups are just startups using blockchain to produce coins, tokens, or transfer coins or tokens for a purpose, while others are tech startups that are pivoting to blockchain because they have no other option. There are a lot of new, innovative and interesting startups, focused on all the possible sectors: pharma, finance, real estate, food, games, basically anything that needs to be tracked diligently and openly in massive quantities.
So, as in anything else, do researches, find out a unique project and hyped community around the project, check for the company reliability, calculate the amount you can afford to lose and give it a try!

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