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Thoughts on Investing in Bitcoin

Thoughts on Investing in Cryptocurrencies

The value of Bitcoin is the result of consensus (social construct). The more users who know, buy, sell, and use it, the stronger its value base.Here are some thoughts on investing in Bitcoin.

  • Bitcoin, already considered a store of value, is moving into payments, both geographically and in more blockchain applications.
  • Bitcoin is becoming a reserve currency for cryptocurrencies.
  • Various encrypted digital currencies appear and disappear, only Bitcoin has maintained a growth trend.
  • The blockchain public chains that are emerging in the market such as Cardano and Polkadot have their own tokens. These tokens become the native currency in these ecosystems.
  • Newly-emerged tokens either adopt inflationary or deflationary models. Each with its own advantages, and its value cannot be judged solely on this basis.
  • Encrypted digital tokens should be either similar to currency or similar to stocks. Tokens that do both are difficult to circulate.
  • The design of the token economic model will determine its success in the market more than the blockchain or DeFi itself.
  • Cardano’s token distribution is more decentralized than Polkadot’s. The two ecosystems will attract different market groups. But both will have their own development space.
  • The alliance chain ecology represented by Diem will form a differentiated competition with the public chain ecology such as Cardano and Polkadot.
  • There will be at most two survivors in each product segment. It is best to invest money only in the first place.
  • In view of the globalization of blockchain applications, it is difficult for any initial project that is too localized to achieve maximum development space.
  • The long-term value of the token lies in its leading position in the segment. It is difficult to maintain a long-term competitive advantage in mass sectors such as lending and DEXs.
  • Investing in the earliest stages of the project will get the most benefit, but will also lose the entire investment. The ratio of the investment portfolio is the most critical.
  • Investing funds according to the timeline will yield greater benefits than investing at the same time now.
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