The blockchain (also read: crypto) space can be divided into two areas. Bitcoin and all others. The ‘others’ are projects using Bitcoin’s base blockchain technology to create new crypto networks that will replace the old internet and create new as yet unimagined services. These ‘others’ are also called cryptocurrencies or ‘Altcoins’. Bitcoin is the frontrunner for all blockchain and crypto projects. ‘Cryptocurrencies’ are also a misnomer as most of these crypto projects are not actual currencies in the normal sense of the word. They are crypto assets which are the underlying mechanism on how these new networks work, and how value is exchanged and stored in them. ‘Altcoins’ infer they are an alternative to Bitcoin. This again is incorrect as many of these blockchain or crypto projects are not trying to compete with Bitcoin but merely using the technology that underpins Bitcoin, namely the blockchain. Now we have got the terminology out of the way we can start to try and understand what we are trying to invest in.
You should as a rule have some Bitcoin in your portfolio. We now live in a networked society and economy. Bitcoin was invented as the fluid currency of this network. Cards have not transitioned onto the web well at all. Internet fraud is increasing at alarming rates each year. The fact is, Bitcoin is now less of a currency and more of a store of value in our new networked economy. This is store of value theme that has played out over the last few years and is a testimony to how trustworthy and amazing Bitcoin is. A global network treated as valuable as gold in just over 10 years since its inception.
In our new networked society we are driven by new apps and websites where we can communicate, shop and discover all sorts of goods and services in a way never possible before. This is a fundamental shift in cultural behaviour. And for entrepreneurs, markets with hundreds of millions of consumers who are ready at a tap or click to buy their new goods or services is unparalleled. Social media had a strong hand in migrating a whole generation online. So now shopping, communicating and creating are as common as real life. This is all great but why is this in an article about investing in crypto you ask? Well, it’s important to understand this fundamental change before seeing the opportunity ahead.
The opportunity is actually because there is a big problem in all of this. The current internet is fragile. Its architecture wasn’t built for all the activity we now see in it. Hackers are all over the internet.Their hacking activities and the costs of fraud are skyrocketing. Cyber security and compliance for enterprises are rising. People and companies’ data are vulnerable and getting breached on a daily basis. Countries are in a determined cyber war in the internet. Corporates have run rampant with private data over the last few years unhindered. Trump and Brexit are a direct result of flagrant misuse of customer data with unsolicited, highly targeted ads. On top of this there’s growing government surveillance and as a result you have a toxic mix. So, this new shiny new network has not one problem but many. The current internet cannot really keep growing without these issues being resolved and this will require a new shift. Blockchain can solve all these problems and be the transformational technology that the internet needs to keep growing. Blockchain can also unleash a whole level of new trustless services which have not even been invented yet. Decentralised prediction markets being one, a fairer and cheaper Betfair for example. How do you as an investor take advantage of this new opportunity? In many ways we are still in the ‘road and rails’ era of blockchain investing, meaning that the opportunity to strike some great returns for investors are all around.
These new nascent crypto networks can solve the creaking internet by its decentralised technology where data and services are split across many computers rather like the music sharing services of Napster and Kazaa in the late 1990s (interestingly the global communication application Skype still uses Kazaa technology). Our current internet carries trillions of dollars of value and we expect this value will shift into these networks. This is a huge transfer of value into a new, safer environment that is being built to last. The value of these new crypto networks is not equity, but their tokens. The token holders will benefit from the inherent governance and resultant fees that are generated, for example some of these tokens provide a monthly yield which can be converted back into fiat currency should the investor wish to do so. This means that investors have a dividend like flow as well as the potential capital appreciation of the token. Alongside this there will be many new types of service we haven’t even imagine yet. Trade and commerce without having to trust the other party removes a problem since humans started trading with currency. There will be many new and exciting projects coming out of the bigger blockchain protocols.
In the next ten years we will see a replacement of the old internet infrastructure with a new faster, safer place to shop, communicate, vote and express yourself and this will unlock trillions in value for investors. Now the time to get in and take advantage of this rare moment.
About Keld van Schreven and KR1 plc
Keld is Managing Partner and Co-Founder of KR1 plc, the London listed cryptocurrency and blockchain investment company. Keld has been involved in the tech industry since 1995 and Bitcoin since 2013. Previously, he has started several tech start-ups including SmartTrade App, a leading UK mobile payment app. Keld is true advocate for the use of blockchain technology and a regular speaker at industry events, including Techcrunch and MoneyX.
KR1 is a leading digital asset investment company supporting early stage decentralised and open source blockchain projects. Founded in 2016 and publicly traded in London (NEX:KR1), KR1 has built a notable reputation for generating significant returns by investing in many key projects that are designed to power the decentralised platforms and protocols that are emerging to form new internet infrastructures.www.kr1.io