Now is the time to educate yourself in cryptocurrencies

We are still in an early stage and we are witnessing a first entry of institutional participation in the digital asset market.

Many of the people who decide to take the first step into the fascinating world of cryptocurrencies do not take the time to learn about blockchain technology. In general, they have heard of Bitcoin, perhaps Ethereum, DAI, price volatility, but they do not fully understand how they work or why it means a breakthrough.

Blockchain technology remains for the vast majority of people something unknown, cryptic, that seems difficult to access, and that generates distrust like everything unknown. Naturally, the adoption of a new technology requires time, they are not processes that happen overnight. That is why the current stage of cryptocurrencies is usually compared with what that technological revolution of the 90s called the Internet was, when there was no connectivity today, there were no smartphones, and if we do the exercise of remembering those years it was Unimaginable to think that in a few years we would order food or a taxi from a cell phone application.

If we take into account that the Bitcoin network began to function in 2009 and that the Ethereum network – where decentralized finance (DeFi) was born – has just turned 6 years old (07/30), it is understandable that blockchain technology can indeed be going through a stage similar to the Internet in the 90s. Not to mention the more solid DeFi platforms such as Maker (2016), Aave (end of 2017) and Compound (2019). There is a great ecosystem under construction, and if we look at everything that happened in the 6 years of Ethereum’s life, it is difficult to imagine everything that can advance in the next 5, 10 or 15 years.

What we do know and can see today is that DeFi is paving the way to turn cryptocurrencies into a usable tool in all kinds of daily transactions such as savings, credit, payments, sending remittances, investments, beyond mere financial speculation. All this without any type of intermediary or bureaucratic obstacles. We can also see how non-fungible tokens (NFTs) are revolutionizing the world of art, video games and sports in general, and how blockchain technology is beginning to be applied in fields such as the traceability of food, medicine and even in public administration.

A very common mistake is to analyze cryptocurrencies only as financial assets, if the price of bitcoin rises or falls, when the real value has to do with the advancement and adoption of the technology that sustains them. Because blockchain technology was born with the premise of being decentralized and therefore impossible to censor. It is a large network distributed in thousands of computers around the world without a centralized entity that has it under its control. And it is also an immutable and incorruptible registry but at the same time open source, so it provides total transparency and can be easily audited.

Since last year we have been facing a turning point, because institutional investors and large corporations at a global level decided to get fully involved in the cryptocurrency market. It is clear that there is still a long way to go towards mass adoption, but the fact that major players such as Mastercard, Visa, JP Morgan, Goldman Sachs, Blackrock, PayPal and some of the most prestigious banks in the world have decided to get involved in the world of Cryptocurrencies is a milestone that represents a before and after in finance as we know it until now.

It is very likely that in the next 2-3 years a large part of the institutional segment will carry out its first operation with cryptocurrencies, and that they will progressively begin to consider them for their operation actively and frequently. Especially in Latin America, as it is a region that suffers daily scourges such as inflation, periodic devaluations, high transaction costs, and the lack of saving and investment tools. It is the moment, we are still in an early stage and in which we are witnessing a first entry of institutional participation in the digital asset market. The last year and a half has provided us with clear signals that the movement has begun.