Prudently Invest in the Combination of Blockchain and Finance

Many unnecessary transaction costs and losses can be reduced if blockchain, the new technology, is combined with finance, which makes the combination of blockchain and finance possible. Nowadays, many internationally renowned financial institutions have begun to increase investment in and cooperation with the blockchain sector. At the same time, there have also been some investment patterns in this area. Faced with such a heated topic, we should be not a blind follower but a rational and cautious thinker.

The Application of Blockchain and Finance

The application of the technology of blockchain to the financial sector is still in its infancy. The following points are summarized.

1. Equity Financing Services

Blockchain is a digital currency infrastructure and underlying technology. Some digital currencies that have appeared are based on blockchain technology. For example, the current hot Ether is a digital currency based on the Ethereum, the computing platform. There are many crowd-funding projects on that platform which link the Ether to people’s real assets, so they are able to use certain funds to purchase a certain amount of Ether, and then invest in those projects to obtain equity, which is an application of equity financing.

However, there are obvious problems in financing by using digital currency. The cost of buying digital currency for each financier is not the same, and there are no banks, stock exchanges, law firms, and supervisors in the financing process. Therefore, the legitimacy of the transaction cannot be guaranteed. Until now, there have been a lot of project scams that have caused many people going down the drain. This is the reason why I titled the article as Prudently Invest in the Combination of Blockchain and Finance. As we all know, you can never be too careful to invest in digital currency.

2. Securities Trading and Settlement

The whole process can be open and transparent, and the transaction can be sped up by the application of blockchain technology to the securities trading and settlement. Because this technology can record every transaction and the information of both parties in real time, the possibility of inside operations can also be reduced. This is also an advantage of the combination of blockchain and finance, which is favored by market.

3. Cross-border Payment and Settlement

In the financial system, there must be a role as a control center, which many times, is the bank of each country. The bank will track, confirm and record every transaction among individuals, companies and even countries, ensuring that fraudulent activity does not exist. However, this issue is still difficult to avoid. On the one hand, after all, banks cannot guarantee the complete authenticity of customer information. On the other hand, traditional financial transactions are often traded through third-party trading institutions, which not only increases transaction costs but also limits the size of transactions. Once the applied technology of blockchain and finance is available, it can decentralize, ensure transparency, and also save costs, which may be a perfect solution for difficulties in financial sector. At the same time, the security of each transaction can be well guaranteed due to the characteristics of the distributed ledger of blockchain.

All in all, the widely approved combination of blockchain and finance still can do more good than harm.

The Investment Risks of Blockchain and Finance

It’s no wonder that the relevant blockchain investments are constantly emerging as the combination of blockchain and finance are advantageous and the market is so optimistic about it. However, the problem today is that the combination of blockchain technology and the financial sector is still in its infancy, and there is no mature application at present.; in other words, technically speaking products won’t emerge fast, let alone the mature business model. Current blockchain investment is risky, so we should take a cautious attitude and consider it carefully. Here are some negative examples and sincere suggestions through which you can get some inspirations.

1. Think before Investing in the Project

For investment in blockchain project, we cannot blindly believe in its bright future. It is necessary to deduct from the logic level to determine what extent this project can essentially achieve and what effect it will achieve in the future. Currently, the application of blockchain is still in its infancy. As for the implementation of the project, it will take a certain period of time. Therefore, before investing in, it is necessary to think about how to take the most profitable trail.

2. Over-optimistic Vision for User Base

In market today, as the blockchain application with the largest user base is just on the scale of tens of thousands of users, many people may believe that if the blockchain application is promoted and a huge number of users are introduced into it, then this investment is definitely a stable gain.

For this beautiful vision, I would like to point out that the blockchain is a product that is re-creating a completely new underlying structure, and so far there has been no successful cases that introduce a large number of original users into a new application.

3. Blindly Believe in the Innovative Model

New technology as blockchain is, it cannot be interpreted simply from the perspective of innovative model by investors. Because blockchain is essentially a structural upgrade to finance and to the Internet, investors who blindly believe in the innovative model and become followers will ultimately lament their losses.

4. Investment is Definitely Rewarding

No one can ensure certain success in blockchain investment or anything else. With the eternal development of times, nobody knows whether the start-up combination of blockchain and finance can succeed. Although it has a promising future, there is nothing wrong to invest in with discretion.

Declaration: This article is only shown for reference and should not be regarded as advice for consumption and investment.

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