Investing in crypto

The rise of digital possession

With the rise of the internet, digital possession has become an increasingly important part of our daily lives. Our CDs and DVDs have been replaced by streaming services, and we use Google Maps instead of the road map. Other possessions such as ID details, medical records, diplomas, concert tickets, and our money have also been digitized.

In the physical world, do you give possession to another person? Then the other person is the new owner and you no longer own it yourself. In the digital world, this works slightly differently. Underlying this is the double-spend problem. When you share something online, for example, a photo, the recipient gets a copy. Duplication is fine with a photo, but not with digital assets. This was solved by a central administration, run by central parties such as notaries, government agencies, financial institutions, and tech companies.

The most disruptive technology of the 21st century

Centralization comes with risks. What if the counterparty ceases to exist or goes bankrupt? Then we could lose our digital assets just like that. Moreover, central organizations have the power to change the rules of the game in the interim, just as central banks can increase the money supply. Because of their position of power, they can determine who can join the system and who cannot. In the Netherlands, for instance, we have seen used car dealers being refused as customers by banks.

The essence of Bitcoin's innovation is that for the first time, it is possible to transfer something digitally from one person to another, without a central party keeping the books or records.

The future is decentralized

Following digital money, new initiatives are emerging that enable the decentralized organization and digital ownership transfer. Built on decentralized protocols such as Ethereum and other blockchains, crypto projects enable DeFi (decentralized financial services), where your counterparty is a smart contract rather than a company. Thanks to NFTs, all kinds of digital assets get an existence independent of a government or company. Web3 enables you to regain control of your online assets yourself, from avatar and profile to identity and content.

1. Decentralized Finance (DeFi) is a form of financial service based on blockchain technology. DeFi makes financial services, such as buying and selling and (borrowing and) lending, possible without the intervention of a central authority, making it an open and decentralized alternative to traditional financial services.
2. Stablecoins are crypto assets that are linked to the value of another asset, such as the dollar or euro. Therefore, the value of stablecoins are stable, and they are often used as a way to reduce the volatility of other cryptocurrencies and are suitable as a means of payment.
3. The infrastructure refers to everything that is necessary to make the network function and process transactions, such as hardware, software and protocols. In addition to the so-called 'layer 1' blockchains, such as Bitcoin and Ethereum, it also includes protocols that link networks and physical objects.
4. Central crypto exchanges are online platforms that enable users to buy and sell crypto assets using traditional currencies. They are centrally regulated and play an important role as a gateway to buying and selling cryptocurrencies.
5. A Non-Fungible Token (NFT) is a digital proof of ownership that can be transferred to another. NFTs are non-exchangeable and unique and are used to verify and represent ownership of digital goods or assets, such as (online) artworks and digital access cards. Digital property plays an important role in the metaverse (virtual worlds you can enter through virtual reality).

Digital assets as an investment category

We are convinced that digital assets, such as bitcoin and other cryptocurrencies, have the potential to create an open, transparent financial infrastructure. Innovations in this ecosystem have already produced many new opportunities. We believe that the ecosystem of digital assets offers a opportunity for innovative investors looking for new investment opportunities and to diversify their portfolio. The crypto market has become professionalized in recent years. Many risks have been eliminated at the technical and legal level, and central parties are paying more attention to compliance. Market risk has also declined sharply; liquidity is now sufficient to enter and exit with hundreds of millions of dollars. However, investing in crypto assets is still not without risk. It requires technical knowledge, understanding of the market, and expertise to evaluate the quality of different assets.

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