February 8, 2021 — Investing digital assets, what would it be?
One of the most commonly used words in the blockchain industry is “Consensus.” This “Consensus” is similar to the majority rule. If 51% of all nodes admit they are right about the new block, the agreement is complete and they can act as the new block.
Bitcoin currently has 60% market share based on CoinMarketCap. In other words, 60% of the market is invested in Bitcoin in the entire digital asset market. Given this as a market consensus, if you invest in digital assets, you can see that investing in Bitcoin first follows the market. In line with this trend, news recently came out that Tesla bought about 1.5 trillion won worth of bitcoin. We can see that institutions’ investment is also concentrated on Bitcoin.
Moreover, Bitcoin’s consensus structure, the Proof of Work System, is “probably quite good and perhaps even good enough now,” and coins issued by any project cannot yet keep up with Bitcoin’s influence.
What should you keep in mind when investing in digital assets other than Bitcoin?
It’s a good idea to see if there’s been a similar project (not a blockchain project) and see how much it’s priced. Not all projects in the blockchain are successful, so we need to find a baseline in the existing industry.
Even before the blockchain industry came out, there was a hot case of the market response when it was upgraded from the existing industry. Take Kakao Talk as an example. If MSN Messenger only functioned as a chatting app, Kakao Talk created a new success model by adding various functions.
It is good to see if blockchain is applied to existing industries, so the market is formed in areas where there will be development or in existing industries, and similar projects come from blockchain. In particular, tokens or coins will be issued due to the nature of the blockchain, and we need to determine how the issued coins or tokens can be consumed in the real business, not in the virtual world.
Furthermore, it is a good idea to look at projects that function as assets, new forms of financial services. Essentially, an asset generates revenue where it is used. Therefore, it is important to look for projects that provide new forms of financial services using digital assets.