Blockchain is the happening true, long-term breakthrough, and it’s all too frequently confused with digital currencies. It’s critical for investors to concentrate on firms that are working to deliver the advantages of blockchain technology.
“I think it’s important to point out that blockchain is here to stay,” stated New Constructs CEO David Trainer. “The companies that build applications on top of blockchain may not be because the whole design of the blockchain is decentralization. So, the idea that a particular corporate entity is a gating force in allowing the individual users to access the benefit of the blockchain goes against what blockchain is about. Blockchain is about getting rid of toll takers.”
Trainer also urges traders to stop investing a large amount of capital into any one digital currency at this period. Elon Musk of Tesla (TSLA), stated he wanted to test the liquidity of bitcoin in a sector that previously traded $53 billion is ridiculous, according to Trainer. “He was using it to juice earnings, there’s no other reason, and you can do that with a lot of other assets.”
In a digital transformation forum funded by VanEck (OUNZ), Trainer and the other panel members agreed that traders should check the fluctuations and do their thorough research until investing.
“It’s a marvel how much people are willing to trust the Musk narrative no matter how ridiculous it might be,” Trainer stated.
The open-source phenomenon isn’t going away, and blockchain is a fundamental part of it. Companies, by definition, are meant to make a profit by coming in and taking a toll between those two items, and open-source suggests it goes directly from innovation to society.
“Businesses like Coinbase (COIN) and other digital currency exchanges don’t really have an advantage other than being first to market. Other companies are going to be able to do the same thing because they can also access blockchain technology. So, that’s where investors need to be discerning. Understand what you’re getting into and understand the price in which you’re entering so you’re not just buying into something because it’s popular” noted Trainer.
As per John Patrick Lee, CFA, product manager for VanEck, the value of Coinbase is determined by the number of users who use its service. “Anybody can open up an exchange, but Coinbase is valuable because so many people are using its exchange. But, the network effect is a moat.”
Investors must be able to distinguish between digital currencies and blockchain, which newcomers often misunderstand to the digital currency sector.
“I’ve been in rooms on Clubhouse where there are arguments over the value of a specific cryptocurrency and cybersecurity experts chime in saying that there are applications for cyber that can save certain amounts of money. And, I asked them if you need bitcoin to do those things or blockchain specifically to do it. It’s not so much about the specific cryptocurrency, but more so the blockchain,” stated Zev Fima, research analyst with Action Alerts PLUS.
If you want to get into this field and purchase some bitcoins, there are lots of ways to do so. However, if you wish to gain entry into the blockchain technology network, you must distinguish between the two.
“You could have been very bullish on the internet in 2000, but if you bought the wrong dot com then it’s the same as being bullish on blockchain and buying the wrong cryptocurrency now,” Fima added.