Investments and financing modalities in current times

in LeoFinance9 months ago (edited)

Making investments today is something very common. But most people sometimes forget what it was like to make investments before the era of cryptocurrencies. In fact, before the emergence and popularization of Bitcoin, most people did not have the opportunity to make investments.


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Wrong beliefs that still persist in many people

This is because at that time there was a general taboo or erroneous belief (which incredibly still persists among many people) that you had to have a lot of money to be able to make any type of investment. And perhaps there was some truth in it. But even in the era before cryptocurrencies, anyone who wanted to invest in something could do so even if they had no money, just leveraging themselves through bank loans.

However, this was not something so simple either, because accessing credit through banks required, in addition to logically being banked, having a good credit history and having someone to guarantee you respectively. Also, you needed to have enough property or assets for the level of credit you needed. And at the end of the day, you needed the bank to decide to grant it to you.

So with the arrival of Bitcoin in 2009 things began to change for the better in this regard. Because from then on, it was not necessary to be banked at all to get financing. Since then, anyone can have a Wallet, and transfer and receive crypto funds anywhere on the planet. This new type of facility allowed, for the first time, individuals to finance others without the intervention of governments, banks, or paperwork. Now, these were the first steps of what would be the crypto financing model as we know it today.

Then, so many forms of crowdlending and crowdfunding began to emerge in the crypto world, that simply anyone can now access the funds they need to carry out their idea or investment project without having to go to a banking entity or be banked. And without submitting to all the other requirements that banks require to be able to grant loans.


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For example, a basic way to get financing today for any cryptographic project we have is ICOs. Therefore, ICO (or initial coin offering) represents a relatively new form of investment that has been one of the most revolutionary and innovative of all time.

We could also talk in this sense about IPO (Initial Public Offering), STO (Security Token Offering) and IEO (Initial Exchange Offering). Each of these investment and financing modalities have their differences and particular characteristics, but in addition to this they all have as a common factor the fact that they belong to the field of cryptocurrencies.

It is not the purpose of this brief post to talk about the differences that exist between these and all other forms of financing or crowdfunding that exist in the cryptographic environment. The idea is to highlight the fact that they exist, and that they are viable alternatives to consider in the field of cryptocurrency investments. Now, anyone who plans to use these forms of financing must be very aware of the advantages and disadvantages of each of these modalities to be able to choose the one that best suits them in every way.

Investments in both directions

With everything I've explained, we see how investments in the field of cryptocurrencies through financing models work in two ways. That is, they function as an investment both for those who provide financing for a project or idea, and for those who receive it.

Because whoever lends or supplies cryptographic funds is expecting to obtain a return for it. But also, whoever is receiving the cryptographic funds, it is because it wants to invest them in something that it senses will generate enough profit for both itself and those who are financing to.


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Many large cryptocurrencies on the market were launched through these financing methods. Not to go too far, we could mention that Ethereum started as an ICO, obtaining the initial funds that allowed it to become what it is today. But we could talk about many other examples. Since basically, every major cryptocurrency on the market began its journey using some of these form of financing.

But crypto financing reaches beyond the crypto sphere

Because we have to understand that financing is also for ideas and projects that do not necessarily have to do directly with cryptography. That is, there are various online platforms that are based on blockchain technology that provide financing for ventures of the most varied types. So we are not talking here only about financing for the emergence of cryptocurrencies without further ado, but also for innovative ideas and projects for various goods and services.

Now, I'm not going to advertise any of these sites specifically because that's not the point of this post either. I simply mention them as a guide. But you should know that the great advantage of this type of sites is that you technically present your idea or project in the form of a post. So that later, all the people who read it and feel interest in it, can contribute a share of the financing that they decide.

These sites usually rely on blockchain technology to regulate processes, so the requests, granting, management and payments of financing occur in a manner regulated by the internal system of said platforms. So nothing is left to chance.


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The care that must be taken into account

Care must be taken both when requesting and becoming project financiers, this is something that we must take into account. Deciding which project to support is important, so we must study very well the potential of startups in this regard.

It is not about simply investing like crazy in everything that appears before us, but rather we must carefully analyze the risks and possible benefits of each specific idea. Because just as scams and briefcase companies exist in the real world, they exist in the cryptocurrency space as well.

We must also be careful when we receive financing to invest in our projects. Because in the end we will have to respond with our money to pay for the financing we are receiving, and both our money and our reputation would be at stake in this regard.

Decentralized finance role

As I explained previously. Thanks to cryptocurrencies now more people are having the opportunity to invest and many more people are doing so every day in some sense. Because access to financing for any good idea we have is so easy and so great that it is simply a growing sector.


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We are talking about people who invest in things as diverse as environmental conservation, the global diffusion of the Internet, or the purchase of real estate, to name just a few sectors.

This is how we finally get to the topic of DeFi (or decentralized finance). In fact, throughout the entire post we have been talking about this. Because the blockchain-based platforms that I've mentioned before (where it is possible to obtain financing for any project), basically belong to this modality.


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Since decentralized finance is all forms of financing that are based on the blockchain, eliminating intermediaries in the process. The commissions and fees for each financing process and the management of each of them are regulated by smart contracts, not by people, and everything is recorded in the blockchain. So the processes are automatic, and error-free in all of this. Both at the level of who invests in a project, and at the level of who receives the financing.

Decentralized Finance has brought us freedom and unlimited access to a world of possibilities

As we have seen throughout the post, decentralized finance has meant a before and after in project financing schemes worldwide. So now nothing stops anyone who has a good idea from carrying it out.

This means limitless freedom, and a level of access to a world of possibilities never seen before. With this, financial success is basically within the reach of anyone who sets their mind to it. Of course, as I already mentioned at some point, we must examine and study very well both those things for which we provide financing, as well as the financing modalities to which we access.


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