Money in the Metaverse

I’ve been using a lot of crypto-currencies in my recent projects and I think it’s awesome, but as an early adopter of these innovations, it takes time to understand how they work, if you don’t have the resources or information to learn more about them before committing your money to them. Crypto-currencies are new to me, so I wanted to share some personal knowledge on what makes a cryptocurrency a good investment.

What is crypto?

In simpler terminology, crypto-currency is any virtual currency that works like a normal currency. When compared with fiat currency, digital currencies are generally not as powerful, not nearly as robust, and often can be used as another form of currency (often compared to dollars and euros in most countries). There are also several different types of cryptos you could get involved with:

DApps: These networks allow people to store wealth in a decentralized manner. Decentralized App Exchange (DAPP) markets that offer products or services from other users. 

This allows others to purchase crypto, which means it gives everyone something to spend and/or sell for profit. A network like this allows you to receive value in return as opposed to paying a single entity like banks. Think of DApps as being permissionless systems like Ethereum and Bitcoin where you have to provide proof of participation to use their platform.

Staking: These are usually in-progress projects that hold crypto as collateral until you pay off the amount needed to build a consensus mechanism for the token(s) you own. Staking incentivizes participants who decide to stake their coins to give up a portion of their earnings to those participating in the crypto-projects.

Trading: It turns into a marketplace where one person decides who wins at creating value by purchasing tokens and selling them. With each transaction, the exchange creates new value and increases in value as it continues with more and more transactions. You can buy crypto and trade it but if you want to keep the value the same as buying real estate or equity, you need to buy a secondary token where you will pay for a small portion of your portfolio value over time, usually called a deposit.

The best way to understand is that if a person owns 80 percent of the total value of crypto, he/she can only lose that remaining 20 percent. And if someone wants to borrow 40 percent from you and gives 60% as collateral, that leaves 30% for him/her to put behind the next round of trading. As you increase your crypto holdings, you become more valuable to anyone with less than 100 percent ownership. If that happens, the amount you lend to friends and family will decrease, since they aren’t getting the full benefit of owning 40 percent of your assets.

If that seems intimidating, there are many reasons why these markets can be very interesting with opportunities to create very high returns while having very low costs to acquire capital and maintaining a healthy liquidity pool of funds. That said, the biggest reason to invest in a crypto is to gain access to the technology necessary to take advantage of new technologies like smart contracts and AI. At Bitmain, we are always looking to make sure our clients can capitalize on the benefits of crypto and help them take advantage of these new ways to connect with people and companies. But what does that mean for investors? Let’s take a look at some of the most important aspects of crypto-currencies and what types they’re best suited for.

What type of cryptocurrency is best suited for me?

As mentioned above, bitcoin was developed with no central authority like a bank in mind, so its appeal depends on the fact that you know it will never be lost, that you aren’t going to lose your money, and that you have the opportunity to control the value you are building.

There are plenty of cryptocurrencies out there, all that differ in one way or another. Some include features such as staking which can incentivize participants to either lock up their coin for them to use or redeem for fiat currency, such as through debit cards. Others require an asset like a stock in a company, the difference between bonds and stocks. Although there are fewer than 250 crypto-currencies made, you should know that crypto-currencies come in various variations.

For example, one of the main features of Crypto-coin is that anyone can easily buy and use it. Anyone interested in investing in crypto should first decide whether it’s worth the effort to earn an initial amount on-chain rather than wait for the hard fork of the network to appear in his wallet. Then again, most crypto-currencies have built-in tools that let you quickly validate your identity or determine your identity without having to take steps such as verifying social platforms or opening a credit card. By avoiding these issues, you can build a really solid foundation for passive income.

Another feature of crypto is that, unlike stocks, it’s easy to set up automated dividend payments. Because shares are issued by the actual corporation, they often have a fixed number of shares and tend to earn dividends even when they’re not earning profits. This isn’t true with crypto because there are two forms of payments: passive income which comes from the use of the currency rather than reinvesting it back into other parts of the system, and active income, which is money earned by actually doing something with the currency such as receiving a return on investing in a business in addition to holding crypto and using other forms of capital markets like debt.

Another thing that keeps most people away from crypto is the difficulty of making money on accountants if they’re paid by cryptocurrencies open-source like paper checks and wire transfers. However, crypto-projects solve this problem because now anyone can send money without needing a third party to verify that you haven’t spent your money before sending it. Even if you use your own money, once you have enough people using your own money, you can make passive income from your crypto-currency, as long as you do have a bit of the cash to support yourself.

Another point that most people who invest in crypto have in common is that it has an open-source design rather than a centralized user control mechanism. Because of this, it has an advantage when figuring out what makes certain cryptocurrencies better. Take Zcash, which lets you choose to see everything your money has ever seen, including every transaction, is made. Or Monero, which enables anyone to conduct the same kind of activity. Now, when it comes down to picking specific crypto-currencies for you, your options are limited because each option only offers a choice, much like choosing a diet, in regards to what foods you eat. So, yes, it’s important to pick out specific cryptocurrencies that are right for you first.

What types of crypto are best suitable for me?

There are thousands of coins that exist, and most of them fall somewhere between traditional bank accounts as well as ICOs, decentralized exchanges, and other alternative financial ecosystems. All of which is great for growing your portfolio or adding additional passive income streams. One feature though that most people pay attention to when deciding which crypto-payment is best suited to their interests is security. While most crypto-currencies offer complete anonymity, and many are still very secure from hacking, many are not fully private.

If you don’t care about privacy, then DeFi’s might be a better option for you. According to DeFi’s website, “The vision of [DeFi] is one in which everyone holds their wealth equally, by design, since they know they will only get their fair share. They trust none of the parties but themselves, and no more. Every deed is traceable and is recorded by all the nodes using that contract, thereby removing the need for the majority of the population to trust anything, or anything else, except themselves — the people who initiated the transaction. It eliminates the possibility of malicious actors taking your wealth and using or lying about you or your assets. Defi has created a future in which anyone can have the same level of wealth, which feels revolutionary.”

When putting together a list of the different types of crypto-currencies available to consumers — this includes:

1. EOS — EOS is a Defi project that started as a blockchain network for enterprise applications. Today it is one of the largest Defi tokens. Users make money by offering credits to others who use their tokens and sell them. Since it’s owned by developers who manage the economy, they cannot take a cut of those who spend the tokens. Those who pay you will have to give token credits to their peers via a protocol called the 0x. All they have to do is claim them and start depositing them into their own wallets. This kind of model has proven to be more efficient and beneficial than most of the alternatives out there. Another advantage is that there is an interest-bearing supply of EOS; meaning that once someone buys in, the rate of inflation is determined based on the number of units purchased.

2. Polygamy — Originally developed as a digital currency for illegal goods in 1998, Polygamy grew quite quickly. After failing to bring forth change, regulators began working on ending polyphony. Though this token is designed for criminals, it can be bought by investors who want to find a new way to monetize their money. Also, according to Forbes, “By 2025, the size of the global economy will exceed $10 trillion annually, which includes trillions of U.S. dollars of international trade and billions of individuals”. Currently, it isn’t legal to obtain the property of multiple people due to laws around inheritance, but it can be done this way.