You Missed Bitcoin, Now What?

  • BTC, Ethereum, and other cryptocurrencies have created and captured a tremendous amount of value. Many new tokens, protocols, and systems are emerging to support them.
  • A DeFi system has many advantages including greater freedom & resilience, efficiency, and security. 
  • We believe that due to the tremendous growth and adoption of existing fledgling DeFi and crypto solutions, investing in early-stage tokens presents a once-in-a-generation investment opportunity.

Bitcoin has taken the world by storm with an 8,000,000% return since its inception, and  a 4,600+% return in the last 5 years. It seems everyone from your crazy uncle to your mean neighbor down the hallway wishes they had invested. Ethereum too, has minted a good handful of people a pretty penny, with over 1,000,000% return since its launch and a 25,000+% return in the last 5 years. Even Dogecoin, founded as a joke, has seen a 39,168% return since August 2014.  It’s easy to understand why several investors are asking— what is the next valuable early stage coin that can help my portfolio reach the moon?

Bitcoin and Ethereum laid the foundation for a new financial system— decentralized, transparent, secure, and free from state or corporate influence. Keeping global financial control out of the hands of the most incompetent sure sounds nice, doesn’t it?   And cryptocurrencies have helped democratize access to wealth for millions of people. The World Economic Forum reports that Africa’s crypto market alone has grown by $105.6 B in the past year.

Countless articles highlight the rise of Bitcoin and Ethereum and the new decentralized financial ecosystem that is growing around them. Decentralized Finance (DeFi) startups like BlockFi and protocols like MakerDAO offering crypto loans and savings accounts have rocketed to $5B+ valuations, each.  That seems like a great way to use an often-speculated asset  in conventional ways— lend it out and buy insurance! 

Now What

Up-and-coming startups and protocols in DeFi alone are producing hockey-stick growth and adoption curves, along with critical elements of a new decentralized financial infrastructure. These include a wide variety of financial services products, such as lending, insurance, and securities. 

While many investors may have been skeptical of cryptocurrencies and DeFi, with prominent voices like Jamie Dimon and Warren Buffet denouncing cryptocurrencies as bubbles— Buffett went as far as to call Bitcoin “rat poison”—  ouch! — developments in the global macroeconomy, DeFi and broader cryptocurrency industries over the past several years suggest that they do indeed provide value, and are here to stay. 

Major developments include rising global inflation, currency collapses in developing countries, increased ease of use and access to cryptocurrencies, the offering of crypto savings accounts able to pay interest at rates that are magnitudes greater than traditional savings accounts, the creation of non-fungible tokens (NFTs) for the storage of digital assets, a thriving crypto lending market, and many other such developments. 

It might sound prophetic, but the occasional failures of our most well-educated and successful officials and financial services providers are creating opportunities to generate wealth in DeFi.  Decentralized financial services provide numerous potential benefits that centralized financial systems do not. These include, but are not limited to:

  1. Freedom from bureaucratic error. A number of central banks, in countries as disparate as Argentina and Turkey, have watched their currencies collapse in part due to errors in monetary policy. As a result, use of Bitcoin and other cryptocurrencies, free from human mismanagement, rose significantly in said countries,, along with numerous other countries in similar circumstances. 
  2. Efficiency. The efficiency inherent in blockchain technology, requiring no validation or manipulation from third parties, helps ensure greater value capture on behalf of cryptocurrency holders than those of fiat currencies.. An example would be with cross-border transfer payments: many immigrants in the US now prefer to make remittance payments to family in their home countries using Bitcoin, due to lower fees.
  3. Security. The immutability of the blockchain, and the extreme difficulty that bad actors face in rolling back any records of payments, due to the structure and nature of blockchain protocols, helps ensure transactions with a higher degree of safety and trust than those offered by many central banks worldwide. 

We see a number of opportunities in the space that may include derivative products, credit products, securitization and tokenization products, and many other possibilities. As the DeFi infrastructure continues to grow, it may one day rival the US-dominated financial infrastructure in scale and scope but upgraded with the kind of freedom, efficiency, and security inherent in cryptocurrency and DeFi technologies. 

Investors may be in the midst of a generational opportunity, akin to investing in US investment banks or insurance companies circa 1950, but with immediate worldwide reach, rather than initial confinement to US markets, and following exponential growth curves inherent to globally disruptive companies in the internet age. Remember how US-driven financial services drove wealth creation, at first domestically and later abroad? We believe that decentralized financial services and the upgrades they provide will power a new generation of wealth creation.

Invest in Crypto Today

Brian Brooks, the CEO of Binance.US and former head of the Office of the Comptroller of the Currency (OCC)  wrote in Fortune,  “This is important and reassuring, because the growth of DeFi seems almost inevitable, for the same reason that the displacement of libraries or post offices in American life was the inevitable result of the original Internet… The need for great central repositories of information, commerce, and now finance is being reduced by technologies that allow decentralized peer-to-peer networks to perform the same functions more quickly and cheaply… Yet once again we fear a new technology revolution—and not because the status quo financial system is particularly loved. It is merely the devil we know.”

1. “Africa’s crypto market has grown by $105.6 billion in the last year”, World Economic Forum, 09/23/21

2. “BlockFi in talks to raise funding at about $5 bln valuation”, Reuters, 06/08/2021

3. “MakerDAO valuation”, Messari, 08/05/21

4. “A Crypto-Revolution In Argentina”, Forbes, 06/28/21

5. “Tales from the crypto: lira crisis fuels Bitcoin boom in Turkey”, The Guardian, 01/21/22

6. “Cryptocurrency In Cross-Border Payments: After Coinbase’s Success, Can Crypto Flourish Beyond Assets?”, Forbes, 04/21/2021

7. “Don’t fear ‘DeFi’: It could be less risky than traditional finance”, Fortune, 08/03/21

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