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Springtime: rapid growth, 900% gains and "what is DeFi?"

BostonCoin update Aug-Sep 2020

Is crypto back to 2017? Why this time is different

Cryptocurrencies have been around for over a decade, but most people first saw bitcoin enter the mainstream back in 2017 when stories of phenomenal gains finally made it through to the mainstream media. There were many people who made returns of 1000% or 10 000% back in those days, and some who got in late, made losses of 90% or more. It was all extremely exciting, and terrifying, as any new technology can be. In the final days of the horse and buggy, a new motorist described her first trip in a car as “terrifying… travelling at break-neck speeds…” The vehicle was doing its best, and got up to 17 mph. Within a few years, cars would go triple and quadruple this speed, and even race each other for money. The new technology of electricity was also seen as scary when it first emerged, as was the telegraph and even the printing press. Today it is hard to imagine a world without these tools, operating at ever-faster speeds. There are so many new crypto projects emerging this year, and some have seen phenomenal price increases. Are we repeating 2017? Will it all crash down, or is it different this time? Bitcoin bypasses bank transfers

Remember when bank transfers used to take three days, regardless of whether you were transferring internationally or just next door? The banks had been profiting from short-term money movements for decades, despite the advances of technology. Even three years ago, when you transferred $100 from your account, it would leave instantly, but not get to the recipient for 3-5 days. Why was the system so slow, when we had had the internet for over twenty years? Imagine the trillions of dollars circulating in the system, and a bank having control over hundreds of millions of dollars for that three days whilst both you and the recipient did not have access to the money. Banks were using the old rules to profit from your money, and because “everyone did it”, there was no alternative. The banks got richer and ordinary people got screwed. Once bitcoin was invented, it was possible to bypass the banks and have money sent and received in minutes, not days. This idea caught on slowly at first, and was an underground secret known only to computer nerds. But by the time bitcoin became mainstream in 2017, suddenly, the banks released Osko and other options, showing that they could indeed, make instant payments. It was a great idea for the banks to try to compete with the speed of cryptocurrency transfers, and they may have succeeded in staving off a small crypto-led bank run in 2017. The banks could now transfer just as fast as crypto, but they still held the upper hand in a couple of areas; namely, the bank currency was more stable, and the banks would pay interest on deposits. Crypto, being a system designed for the people and by the people, was able to pivot and compete, faster and better than the banks. Crypto is truly like owning your own bank

Yes, bitcoin prices were volatile, not just during 2017. This may have been great whilst it was going up, but the dips or how the price could drop 10% in an hour made bitcoin untenable for paying suppliers and business invoices. Ever adaptable, crypto experts developed “stable coins” which were pegged to an underlying currency, eg. The USD, AUD, GBP, CAD and so on. These were always in the ration of 1:1 with the underlying currency and had zero volatility. This solved the problem of rapid price changes and ensured that business transactions could be more predictable. OK, so crypto now had near-instant transfers, and stable and predictable currencies, just like the banks it sought to oust. The next step was for crypto to start competing with bank interest. Unbank yourself with DeFi

If you haven't heard of the new buzzword #DeFi, that's OK. "DE-centralised FI-nance" is basically how you #UnbankYourself. You can store funds (as crypto) and earn interest, from 2% up to 12%. Sure, cryptos like bitcoin can be volatile and their values may fluctuate wildly, but #stablecoins such as USDT, TUSD, TGBP or TAUD are locked in at 1:1 value with local currency. No ups or downs, ever. It is possible to earn 2% to 12% from DEFI (vs. 0.1% you get from a traditional bank). As of April 2020, over 4 Billion dollars has already left the traditional banks to go to DeFi. There is a very strong possibility the funds will never go back to traditional banks; not when you can transfer funds via your phone to merchants or across countries in seconds, not when you can earn hundreds of times more interest for sitting on your cash. When big banks lose billions from their deposits, this means they can lend out less, and will make less money. Banking stocks may fall. Banks may become the "horse and buggy" while stablecoins and DeFi grow into the new cars and highways. With rock-solid security, currency stability and higher earnings, this is a crypto revolution even grandma will like. It is stable, secure, predictable, and just like a term deposit, only with better interest rates.

We covered one of the first movers in the DeFi space twelve months ago, when we interviewed the Celsius Head of Strategic Partnerships (link to video interview) At the time, Celsius was one of only a handful of crypto projects which would pay interest on crypto whilst you were holding it. Since we covered the story, CEL tokens are up over 900%, which is a testament to how powerful it can be when you own the bank. Now there are hundreds of copycat DeFi projects, and this is OK. When the first banking licenses were issued, there were a plethora of banks, and some even printed their own currencies. Over time, the larger and better ones took over the smaller ones, which may have killed a little competition, but did bring more reliable services. Where to next?

We cannot predict which DeFi project will be the biggest and best in the next ten years, any more than we could have predicted which car manufacturer or mobile phone company would be the biggest and best when they first started. You may have fond memories of your Nokia 3210 or Grandpa’s Morris Minor, which are no longer around, but the industry as a whole still powers ahead. BostonCoin has done very well through our investments into CEL, but we cannot guarantee that a newcomer may become bigger and better. As with all new advances in technology and investments in general, it is best to diversify. In 2005 when Nokia was king of the phones, nobody knew that Apple would not only overtake Nokia & Ericson but take over half the market. This is why it is good to have a few eggs in your basket.

Regardless of who wins in the ultimate fight, the DeFi industry is taking off and making a big difference to how banking will be done in the 21st century. Crypto has already shown itself to be a viable competitor in the field of instant payment transfers, stable currencies, and interest-bearing deposits, how else can they serve you? Owning stable coins and gaining yield for “staking” is just like having a bank deposit with ten times more interest. Owning some of the crypto project’s coins or tokens is just like owning bank stocks. What next? There are already projects which will compete with banks on insurances and other traditional bank-dominated services, so feel free to familiarise yourself with what is coming up in DeFi. To find out more about earning interest at a much higher rate, you can watch the YouTube video here Start earning interest like you own the bank. If you like growth and can handle stock-market-like volatility, you can invest into some coins or tokens and earn interest whilst you hold them for longer-term growth. If you (or your grandma) prefer currency stability and bank-like security, then encourage your friends and family to invest into stable coins and earn interest at a higher rate. How did we go this month?

You may have heard rumours about a certain DeFi project which went from $3 to $30 000 in one month, but we were not in that one. Aside from the fact that the creator of the token itself stated that “it has zero value”, the supply is severely limited and there may be liquidity problems for those who wish to sell. We expect many “flash in the pan” projects to emerge as crypto gears up for another bull run, and we are also well aware that over 90% of the projects which emerged in the 2017 bull run turned out to be scams or went bust. We continue to use the four-step “C.O.I.N.” process to select our investments, and whilst we occasionally miss out on the moon-shots, we also avoid investing into duds. As mentioned above, we got into Celsius around twelve months ago when it was a first-mover in the DeFi space, and we continue to do well from this investment. Other opportunities will come up as the DeFi sphere evolves, and we continue to run the ruler of logic over all new projects before believing any promises.

This month’s winners

Cosmos 106% Bitcoin 113% GO Chain 113% Origin 119% BAT 125% DOT 140% NIMIQ 149% WAN Chain 150% XYO 156% LEND 172% Celsius 914% LINK 1266% BOS NAV as at 31/08/2020 39.0833 BostonCoin Price 42.9916

If you have any questions, please feel free to get in touch with us through the website, or chat with others in the Facebook group “Cryllionaire” See you next month


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