NFTs and DeFi are 2 very large segments in the crypto space. It’s important to think of the future because whether we like it or not change happens. It’s good to be learning and keeping up to date so we don’t become extinct like a dinosaur right?
NFTs and DeFI are both equally very powerful in crypto and I only see growth for both long-term, but anything can happen.
Keep reading and I’ll share the future outlook of DeFi and NFTs, plus the challenges with both of them. I’ll also share which I’m more bullish on in the long run.
The Future Outlook of DeFi in Crypto?
The most fascinating thing about crypto is the perspective of Warren Buffett and Charlie Munger.
Both of them are insanely smart people and I’ve learned a lot from them. I also used to think the same way and I thought cryptocurrency was very stupid.
The more I blogged (and learned) about crypto the more the pieces of the puzzle came together. Light bulbs started to go off and I could how it could be beneficial to people.
The benefit it gives to society is where the value is!
The reason I’m so bullish on DeFi, (decentralized finance) is due to it giving competition to banks. Why did El Salvador adopt Bitcoin as currency?
One reason was reduced fees on transferring money from other countries to El Salvador. Oh, and it’s faster and can be done 24 hours a day 7 days a week. Another reason El Salvador adopted the currency was that 70% of the population is unbanked.
Crypto is one way someone can store value using their phone. They don’t have to put cash under the mattress or in a bank.
When it comes to banks there are 3 types…
- Regular Banks
- Fintech and I wrote about this HERE
- DEFI
A BIG reason DeFi is so powerful is due to overhead. In business, overhead is expenses, and the fewer expenses you have the better.
Regular banks have buildings to pay for, electricity, employees, and more. It’s harder for them to compete due to their bills.
Fintech is better and the company Paypal is a great example of this.
DeFi has even less overhead and can provide MUCH more competitive services. The challenge is it’s a new technology and people are hesitant to jump on board.
Most things in banking can be done on the blockchain!
Maybe I’m wrong, but DeFi has a competitive advantage, but the problem is it’s too new. Some people don’t trust it and it may take some time for it to take off.
The Future Outlook of NFTs?
NFTs or (non-fungible tokens) are all the rage in crypto. From Crypto Kitties, Bored Apes, and even video game pieces.
NFTs have a VERY bright future.
In case you don’t know NFTs are rare stuff that is owned on a blockchain. Bitcoin is fungible since every Bitcoin is similar to another one. With a Bored Ape, there can be only 1 of them.
The reason I’m very bullish on NFTs is due to the value they can bring to society. An NFT is just digital ownership of an item.
Due to gas prices, Covid19 the world has expanded more online. We have all seen this with Zoom meetings, right?
The ONLY way to own something in this online world is with NFTs. Plus it can document (in a way everyone can trust) the history of an item.
People want to wear clothes and drive cars to express themselves and communicate. It’s going to be the same online and why some kids spend money on Fortnight skins.
It really is a generational thing and kids that spend more time online will want to invest in digital assets rather than an antique rug that an older generation such as Warren Buffett might want to hold on to.
NFTs are much bigger than a picture of an ape because behind them is a smart contract that could represent anything.
- It could represent a deed to a home.
- It could represent a ticket to a show.
- It could be medical records.
- Academic credentials.
- Intellectual property.
- Voting.
- VIP access to an event.
- An item in a video game.
Anything that represents ownership of an item (we humans like to own stuff) can be represented with an NFT.
Also, a ticket to an event can also be used as an art piece that could be sold in the future. Maybe at the event, something crazy happened and now that ticket is worth a lot of money.
Another really cool thing about NFTs is the documented history of an item. This is why an artist can get royalties from an item. It’s difficult to do this without the blockchain technology.
The challenge with NFTs just like DeFi is it’s too new now. Many people are not able to wrap their minds around where the value of a picture on the internet is (I can understand this).
Some people look at an NFT and think it’s stupid. The reason Warren Buffet and Charlie Munger think crypto is stupid is because they don’t fully understand it.
You might feel the same (I know I did), but once you “really” look into it, you might see the value of what it can bring to society.
Another point is many people already see the value and why the price of various crypto projects including Bitcoin has risen so much.
Something is only worth what someone is willing to spend for it!
Which is a Better Investment DeFi or NFTs?
Both of these ideas I’m very bullish on (in the long run) the challenge is they could take years. Remember it took Amazon 9 years to finally make a profit.
NFTs are probably going to be a riskier bet. It’s very similar to the internet in 1999 when many internet companies went to the moon then in 2000 everything crashed.
There is “a lot” of hype around digital art, and it could be a bubble. NFTs can become less risky by betting on artists that have a proven record. Plus there are many scams on marketplaces that I wrote about HERE.
It’s the same with DeFI projects. I’ve looked at many of these projects and this one HERE I feel is the least risky because it’s based on Bitcoin and I know the team behind it.
Still, anything with crypto is very risky and that is also where the excitement comes from.
Bitcoin is boring and very stable, while Ethereum does “everything” and is riskier. When it comes to money it’s better to have something very boring and stable right?
Conclusion
It’s an exciting time for crypto and there will be MANY more cycles of booms and busts to come. The million-dollar question is can you weather the storm and commit to the long term? If you’re educated and know what you’re investing in then you can.
If you are investing because you have FOMO (fear of missing out) then you might not be able to weather the storm.
Looking for ways to earn money is a very positive thing! The easiest money you could earn might just be to take home bills you’re already spending money on and reducing them. This right HERE has some ideas I bet you never thought about.
All it takes is one good idea, right?
Hope this post on NFTs and DeFi was helpful, bye for now.