Researching in DeFi Matters More Than You Know
This is an open letter to investors thinking about investing in the Decentralized Finance (“DeFi”) sector of the cryptocurrency market. We hypothesize that DeFi represents a capital creation opportunity not understood by classic retail investors and the press. This opportunity represents a “white space” within which gains can be realized at much higher rates than in the non-digital world (i.e. the“fiat” or “real currency” world).
This opportunity is not without risks — and in this piece, a research approach is presented that could prevent people from unwittingly placing their capital in risky or non-viable cryptocurrency coins or protocols.
Isn’t it Just Bitcoin?
First, let’s compare and contrast DeFi investing with the “Bitcoin” craze of the last decade or so. To understand this we must first acknowledge the definition of a cryptocurrency. Bitcoin is a cryptocurrency, but there are also about 7,100 other cryptocurrencies on the market, according to Coinmarketcap. So, when someone tells you that they want to look into cryptocurrencies, resist the urge to blurt out “Bitcoin” and instead ask for clarification with a simple “which one?”
