The world of digital assets is more similar to traditional investing than you think. As a CFO, you’re familiar with conventional financial models – stocks and dividends, property and real estate, commodities, investing in private businesses, and leveraging these assets to genere yield/passive income. These are all foundational elements of sustainable wealth creation in the traditional finance world.
You probably aren't aware that you can do the same thing with crypto, blockchain and digital assets.
Crypto, blockchain and digital assets are not a scam, although there are many scam and useless projects that do exist in the space. It’s unfortunate that the industry's reputation is one of mafia cowboys out to make a buck. Sadly, you do have those people, but you have them in every sector. Let this not deter you. There is genuine innovation happening in the digital asset space, and if you dig deep enough, some fantastic technology and investment opportunities, and you must be in the know as a CFO.
Any investor will tell you the same thing: Research + Time In The Market = Profit. The same applies to the world of digital assets. It’s about accumulating assets, generating a yield where possible, and reinvesting it in the compounding cycle, whilst knowing when it’s time to sell down a portion of some assets.
You will be comforted to know that:
Just like traditional investments, the digital world has exciting projects you need to pay attention to
As with conventional investing, many digital asset projects are coming out almost daily. Like buying property, you look to buy in areas with high potential growth and impact.
These digital projects have massive potential.
When you invest in anything correctly, it doesn’t matter if you invest at the top or the bottom of a curve as long as you have a reasonable time horizon.
Money is always made long-term in a growing asset class or niche, whether it’s property, the stock market or gold. The same thing can be said about digital investments. It's certainly not a get-rich-quick-scheme, and when approached responsibly, can become one of the highest yielding returns in any business or investment portfolio.
Blockchain is empowering three global revolutions that you need to be aware of:
- The monetary revolution: This is Bitcoin, the first ever self-sovereign, unconfiscatable form of money. According to Fidelity, Bitcoin is a more representative form of money than Gold or Fiat.
- The financial revolution: More efficient and transparent financial capability – largely through Decentralised Finance (DeFi). More accessible, lower cost, efficient, and automated, without intermediaries. Smart contracts are used to connect end users with service providers without all the middle layers.
- The Internet revolution: Web 3.0 is the 'user-owned' Internet – you own and control your assets. Giant corporations like Facebook and Google came in and put the Internet back into the hands of corporations; Web 3.0 is bringing it back to the people.
It’s all about research
As specialists in this field, we have a team of researchers dedicated to investigating viable projects in the digital asset space. Researching crypto and blockchain projects is somewhat similar to researching companies in the TradFi (traditional finance) world. We assess the problem/idea, product/solution, uniqueness, utility (does it need blockchain?), team, investors/partners, community and tokenomics. The latter, tokenomics, is the biggest differentiator between TradFi and DeFi (Decentralised Finance) entities.
Tokenomics refers to the ‘economics of the token’ which is typically where value of a project/protocol is recognised, and what drives the economy of that project/protocol. Tokenomics can make or break a project and there are actually very few legitimate projects in this space, and even fewer projects with solid tokenomics - this is a key area of our research. Apart from this, there are some other slight differences that make assessing projects unique; however, the overall evaluation process is very similar.
The difference is that most people are often exclusively monitoring technology companies and micro-caps in the TradFi space who have the potential to flourish in their respective industries, and are (not yet) putting any attention into projects and protocols in the digital asset space - this is where the massive opportunity lies for digital asset investors, and for curious newcomers to the space like you.
The key in this space is the need to balance the high growth (and higher risk) projects with more stable and yield-generating investments. It is hard to find actual sustainable yield-generating blockchain projects and digital assets, but they do exist, their growth potential is huge, and we know how to find them.
The potential long-term rewards are substantial when combining yield generation with capital appreciation opportunities.
Yes, it’s volatile, but so was every other revolutionary technology
We are still VERY early in digital assets and every revolutionary asset class has huge amounts of volatility in the early days. During the DotCom bubble, Amazon lost 90% of its value, but investors that held on still became rich.
Investing in digital assets is going to be much the same, it is a long-term strategy that requires investors to get in at this early stage to reap the massive potential for investment returns.
Regulation is coming, and that’s a good thing.
Any early-stage industry is raw and experimental until it proves itself to a certain degree. Blockchain has achieved that. The regulatory eye is now on the industry, which is ultimately a good thing. It will eliminate the 'cowboys' from the space.
We are of the belief that fair regulation will leave appropriate room for continued disruptive innovation.
Investing in crypto, blockchain, and digital assets is not as daunting as you think. The potential is vast and a worthwhile consideration for your business.
