By Hassan Mehmood (Saudi Arabia)
Despite a recent downturn, the crypto sector has created enormous riches. In reality, the total value of all crypto assets is above $2 trillion, up approximately 100% in the last year and nearly 800% in the last two years so now is the best time to sell bitcoin in Istanbul. Following that extraordinary success, risk-averse investors may consider allocating a portion of their portfolios to this rising asset class.
Of fact, there are thousands of different cryptocurrencies with dozens of them appearing to be viable investments. Unfortunately, there is no secret formula that can help you distinguish between excellent and terrible ideas. Instead, the best course of action is to seek crypto assets with a competitive edge. Terra (CRYPTO: LUNA), for example, has grown in prominence in the decentralized finance (DeFi) industry, whereas Bitcoin (CRYPTO: BTC) is the oldest and most valued cryptocurrency. And both appear to be wise additions to a well-diversified portfolio.
Bitcoin
Bitcoin’s initial public offering in 2009 sparked interest in the crypto economy to easily sell bitcoin in Turkey. And over 13 years later, it is still by far the most valued cryptocurrency. With a current market capitalization of $800 billion, Bitcoin’s worth accounts for more than 40% of the cryptocurrency industry. And it is this popularity that is at the heart of the investing argument.
The Bitcoin protocol restricts the total quantity to 21 million tokens. Bitcoin’s scarcity, like that of other finite goods such as gold or platinum, makes it valuable. When demand exceeds supply, the price of an item rises, according to basic economic principles. And there are excellent reasons to expect Bitcoin demand will continue to climb.
Institutional investors, a group with over $100 trillion in assets under control – are becoming more interested in Bitcoin. In fact, according to a recent Fidelity research, 52 percent of institutional investors now own digital assets, with 71 percent planning to purchase in the future. Unsurprisingly, Bitcoin is the most popular digital asset among those large money managers, a pattern that could translate into demand as more institutional investors diversify into cryptocurrency.
Finally, Cathie Wood, a powerful fund manager, is thinking along the same lines. She anticipates that institutions would eventually devote 5% of their money to cryptocurrencies, propelling Bitcoin to $500,000 by 2026.
Terraforma
The Terra blockchain intends to improve the efficiency of financial services. The network offers a number of stablecoins, which are cryptocurrencies that track the values of fiat currencies, such as the TerraUSD token, which is tied to the US dollar. The Terra stablecoins are all powered by the LUNA token, which is another cryptocurrency on Terra.
LUNA is intended to absorb volatility, allowing stablecoin values to remain stable. For example, when the value of TerraUSD rises over $1, the system incentivizes token holders to convert LUNA to TerraUSD, increasing its supply and causing its price to decline. In reverse, the mechanism operates the same way.
The Terra blockchain is built on the Cosmos framework, which means it is protected by the tendermint consensus algorithm, a high-speed proof of stake protocol. Terra may theoretically expand to 10,000 transactions per second (TPS), and those transactions are completed in less than two seconds. In comparison, Ethereum, the most popular dApp and DeFi ecosystem, processes just 14 TPS and transactions take six minutes to complete.
Not unexpectedly, Terra’s DeFi ecosystem is rapidly expanding. In reality, with $19 billion invested in platform items, it is the second largest DeFi network behind Ethereum. And there is reason to expect it will grow much more popular in the future. For example, the Chai mobile app, which has 2.5 million users in South Korea, employs Terra stablecoins to facilitate cross-border e-commerce purchases. Furthermore, because it is backed by blockchain technology, traditional financial institutions are not required, allowing transactions to settle faster and with less fees.
Anchor, a DeFi device based on the Terra blockchain, offers the same advantages to sell BTC in Istanbul. Whereas Chai seeks to replace existing payment options, Anchor seeks to alter how individuals save money. Anchor pays interest to investors who lend stablecoins on the platform, and the interest rates paid are far greater than those given by banks. In fact, investors may make 19.5 percent yearly by lending TerraUSD on Anchor right now.
So, why should you invest in LUNA? The Chai payments app, the Anchor DeFi protocol, and many other blockchain-based dApps and DeFi products generate demand for Terra stablecoins. As such items grow more popular and demand for stable coins increases, so will demand for the LUNA token, driving up its price.
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