Distributed Ledgers and a Blockchains. Where should you put your money?
With the increasing popularity of digital currencies, a lot of people have become curious about their functionality and have in many cases come across terms such as distributed ledgers and blockchains. Because of how widely used are blockchain technologies in modern digital currencies, words such as “blockchain”, “private ledger” and “digital asset” are often used indistinctively by individuals as well as companies. However, these are widely different concepts and it is very important for investors to understand them, because they’re bound to change the financial markets as we know them.
A distributed ledger is a database of transactions shared across multiple locations and actors. It requires peer-to-peer networks and consensus algorithms to allow nodes (devices) distributed amongst individuals, institutions or sites to replicate digital data. The reason why private ledgers are so popular is because they avoid the need for intermediaries and central authorities by providing a verifiable data history to its participants, in which each file is given a unique signature and timestamp. This in turn allows for greater accountability with lesser overall costs.
A blockchain, on the other hand, is one among various types of distributed ledgers which, as its name implies, functions through a chain of blocks. These are growing lists of cryptographed records of data which cannot be modified due to the way they’re designed. Each new entry of the blockchain must be confirmed and encrypted and is dependent on all previous entries. Although some might argue that blockchains offer better privacy than other types of distributed ledgers, their dependence on chains of blocks often comes at the cost of requiring very high computing power, which ultimately makes transactions more costly.
With all of this said, if you’re an investor chances are that you’re not as interested in technical jargon and definitions as much as you’re interested in the way these technologies can affect you and your finances. The world is constantly moving towards their use, to the point where governments across the world have started to implement them into their financial systems, finding that they can increase productivity and efficiency radically. More important is the fact that financial technologies (FinTech) represent an immense investment opportunity for you, which takes us to the following question:
Where should you put your money?
The last few years have seen an emergence of many different companies employing modern financial technologies, whether it is to improve transaction speeds and costs at an internal level or to provide more efficient financial services to customers. When it comes to investments, however, it is a mistake to be driven by sheer novelty and put money in whatever is giving other people easy and short-term returns. The cryptocurrency craze is a clear example of why it’s so important to distinguish between a true investment and a simple speculation tool. In order to make real money it is not enough to just buy blockchain tokens in the hopes that they will increase their price out of thin air, as this will, more often than not, result in losses rather than gains.
To make a true worthwhile investment you need to identify the companies that are employing new financial technologies in ways that will revolutionize the financial world to an extent similar to how Apple and Microsoft revolutionized communications. What made such companies unique is the fact that they took new emerging technologies that seemed too technical for the average user, streamlined them and turned them into everyday objects that most people cannot even live without now.
Today financial technologies are a part of many people’s everyday lives, as internet purchases have come to be the norm. However, exercises such as trading, funding and capital-raising are still seen as inaccessible by the majority of people. Many platforms allow trading and fundraising from a phone or a personal computer, but in most cases these processes are poorly integrated with other more mundane services such as remittance, in addition to requiring all sorts of intermediation and having very complicated interfaces. There is, however, one startup company that intends to change all of this by providing an interconnected distributed ledger platform for the whole financial industry to operate. From individuals and businesses to institutions such as central banks and regulators will be able to participate, using cutting-edge technologies for banking, remittance, capital raising and trading. This company is called Konzortia Capital and might very likely become the next home run opportunity for investors.
Konzortia Capital is a private holding of three FinTech companies Novabank, InveStart and Capitalista. These companies will provide services that will all be interconnected in a private ledger platform. They will employ a New Asset Class called Koura, which not only acts as their transactional currency but also represents 99% of the consortium’s equity. This means that, as more people use the services in the platform, the company’s asset is expected to become more valuable. Novabank will allow users to make cost effective transactions such as online purchases and money transfers using Koura, whereas InveStart will let small companies start capital raising campaigns which others will be able to fund regardless of location, size or jurisdiction. Finally, as companies succeed raising capital on InveStart, they’ll be able to issue their equities as liquid stock-like assets and trade them using Capitalista. This is all intended to result in new global index of stock-like tradeable assets called NAO (New Asset Offering), which aims to become an alternative to the current stock markets and its inherent restrictions.
This may sound as an unbelievable and almost impossible project, but so did enterprises like Microsoft and Apple when they were in a startup phase. Those who had the vision to invest in such projects early, are now some of the world’s wealthiest people. So, if you’re still wondering how you can diversify and grow your portfolio with financial technologies, look no further. Konzortia Capital’s business model is designed in a way that allows investors to easily liquidate and still make very good returns within just a year thanks to the properties of their New Asset Class. This is therefore one of the best investment opportunities for this year, especially in the current economic turmoil.