Long-Term Opportunities of Crypto Mass-Adoption
A close look at how DAOs and market regulation will drive the mass adoption of crypto investments
Cryptocurrencies gained massive traction in the last years, with Bitcoin rising to staggering heights of over 65,000$ at the end of 2021.
A growing number of people are investing in cryptocurrencies in the hopes of gaining financial freedom. On top of that, stories of young crypto millionaires create a steady influx of retail investors flocking into the space. With many new faces diving into the world of these new types of investments, the demand for use-cases and utility rises.
In this article, we look at some of the aspects that drive the mass adoption of blockchain technologies and analyze how new forms of legal entities known as DAOs contribute to the long-term value of cryptocurrencies.
Drivers of Mass Adoption
Many got drawn into the crypto sector by the massive hype created around stories of young millionaires driving flashy sports cars and buying luxury goods seemingly out of nowhere.
There’s more to blockchain technology than flipping digital currencies, though. Blockchain technology solves an established problem and is profitably used by financial institutions. Transferring money can get expensive; 5% or more fees to send money across the globe are normal if using traditional finance (TradFi) companies. Making use of cryptocurrencies not only cuts out middlemen that take a cut of every transfer but also makes transfers a lot faster.
This creates an easy way to transfer remittances, for example. Where people had to use companies like Western Union to support their families, they can now send remittances in a matter of seconds from one country to another and are not bound to give up their data and pay high fees anymore.
In his 1991 book Crossing the Chasm, Geoffrey Moore explains that every disruptive technology must pass through five stages of adoption:
In the first stage, innovators tinker with new technologies; in the second, early adopters discover it; in the third and fourth stages, an “early majority” and a “late majority” — the two most prominent groups — hop aboard; and in the final stage, the “laggards” arrive. Plaguing the adoption process is what Moore calls “the chasm.”
The chasm separates the early adopters from the early majority because the demands of these two groups are often vastly different. Unable to gain a foothold in the mainstream, new technologies will fall into the chasm and perish.
One of the biggest drivers of the mass adoption of Blockchain technologies is institutional investors entering the space. Many cryptocurrencies are being deployed on different blockchains nowadays. Many of them were created to solve problems that arise with the ongoing globalization of world trade. Companies involved in trading goods make use of blockchain technology, and this trend will only continue to rise in the coming years as more use-cases for cryptocurrencies are developed.
Some are used to make shipments traceable throughout transport; other ones make it possible to create platforms for digital trading goods. The use-cases are endless and institutional investors enter the world of crypto to get a piece of the cake, creating even more interest for retail investors to join in for a quick buck.
Regulating the Crypto-Market
This gold-digger mentality in the crypto space is, of course, a thorn in the eye of regulators. To prevent another market bubble, governments worldwide seek solutions on how to regulate the cryptocurrency market without turning away institutional money.
Regulating crypto-assets seems like the worst thing that happened since Bitcoin’s first big crash in 2018, but it doesn’t have to be as bad as some deem it to be. The key elements of blockchains are security and transparency. Governments are interested in using these features to secure stability, and cryptocurrencies offer a solution to that with better scalability options in the long run.
With regulators entering the space in the last years, the image of Bitcoin and other digital assets transitioned from being a black-market currency toward being a store of value. This image change created incentives for institutional investors to invest in blockchain technologies, concluding that regulating the cryptocurrency market is another significant driver of mass adoption.
While the wild-west times might end in the coming years, investing in cryptocurrencies will become more accessible and secure for long-term investors as regulations turn off criminals and scammers.
Cryptocurrencies as Long-Term Assets
Thinking about long-term asset classes raises the question if Bitcoin itself is not a long-term asset already. Of course, one can buy bitcoin and forget about it for years. Still, as long as the legal status of cryptocurrencies is at stake in some places, there will be no incentive to hold them for longer than five to ten years.
While investing in crypto-assets might have been a good vehicle for financial freedom in this shorter-term vision, they open the opportunity to create value for investors on a much larger scale. For example, numerous TradFi companies offer a range of long-term investments like retirement funds. Still, they all rely on a small group of people making the right decisions.
This leaves investors as mere customers of these companies and creates a steadily shrinking number of yearly interest rates. While “TradFi” companies act as central entities to govern investors’ assets, a new form of legal entity enters the crypto space.
DAOs as Vehicle for Long-Term Investments
Decentralised autonomous organisations (DAOs) can be described as a collective of people with a shared bank account. These cooperatives come together to actively decide where each member’s money is invested by voting on governance issues in a democratic matter.
The transparency and traceability of blockchains make it possible for investors to come together without the need to blindly trust decision-makers. Investors can actively participate in governance and shape the course of their own and other members’ investments.
When thinking about long-term investments at Pen-X DAO, we’re thinking of investing for the years that come after fast sports cars and nightclubs. As mentioned before, where traditional finance is rarely set to hedge against inflation, our community members collaborate to make the best decisions for the sake of everyone’s savings even when traditional assets cease to perform.
Pen-X DAO provides simple DeFi investment vehicles with significantly lower risk profiles than most other blockchain assets and creates an environment for investors to truly make educated long-term investment decisions.
Pen-X DAO is in its early stages. The DAO went public on March 26th and invited investors throughout the crypto space to join the community and to participate in actively managing and investing in a crypto-asset-based retirement fund. The core team is made up of seasoned financial experts, and governance votes will be made as a community. With this governance structure, everyone knows where and when investments will be made, and members profit from expertise with the opportunity to get involved and share their own.
To learn more about Pen-X, you can visit their website and read the whitepaper here. Join the community Discord and discuss the future of crypto-investments and follow us on Twitter for the latest updates.
Written By: Falk Baumhauer | Twitter: fallek.eth