BeinCrypto spoke to Danny Chong, co-founder of Tranchess. He discusses the changing landscape of crypto investment and how many directions the future of the space can take.
Since the release of the Satoshi whitepaper, most people have entered cryptocurrencies through bitcoin. Whether it’s because of a strong belief in the decentralized ethos or as a hedge against the current system, interest and investment has grown year on year.
However, with new arenas being opened up, such as non-fungible tokens (NFTs) and Decentralized Finance (DeFi), bitcoin as the first entrance and overarching investment is becoming less common.
Other cryptocurrencies are proving to be onboarding mechanisms and part of much wider spread portfolios. For Danny Chong, this is all about understanding individual investor interests and risk levels.
Ethereum offers a more attainable goal
Chong explains that it’s not clear whether bitcoin still retains the same power as it previously did. However, it is still a catchall term for those outside the community.
“A lot of people, if you’re not into crypto they associate bitcoin with crypto. The thing is, now we have more people coming into crypto and more people being educated on what crypto is and the kind of projects or coins out there. I don’t think necessarily people will be diving straight into bitcoin,” he says.
For Chong, those he interacts with possibly see owning one whole bitcoin as too unattainable. Now that the price has passed $60,000, it appears a costly asset.
While investors don’t have to buy a whole bitcoin, it does appear more manageable to achieve the goal of owning one ETH while it still sits around $4,000.
“So people kind of have that mindset that they definitely have to have at least one coin and if that one coin is maybe a few grand instead of like 50 grand, then it’s probably something that there’s a lot of value in. So there is kind of a benchmark in that sense. I don’t know whether it’s necessarily true, but at least that’s how a lot of my friends who are first getting into crypto look at it and I think that’s actually not a bad way to consider how much more upside they can go.”
ETH overtaking BTC, if it fixes it’s problems
In addition to being a more attainable goal, for now, Chong sees the possibility of ETH overtaking BTC. However, he says this does depend on whether it can fix its issues.
“In the future, I definitely think it can. It’s just that there are a few nudging issues that I think we need to solve for now. That includes the massive expensive gas fees, overcrowding if you’re on-chain and when layer 2 can actually be launched.”
He says the projects will determine how quickly this becomes a reality when it comes to these fixes.
“I guess that’s all up to the various layer two projects coming out and trying to make it a reality. As a user of the chains, we are hoping that this comes faster than not. Obviously, we have a keen interest to try and work on layer two,” he says.
In addition, the current environment is bringing up debates on which is the best solution to move Ethereum forward. He references how some online personalities declare die-hard support either for new chains or layer two solutions. Thus, making it a battle between the two.
“I’m more of a neutral stance. I do believe that what’s good may take some time to become better and but in the world of crypto and DeFi especially, people can always make what’s good become the best in a very short time if they really want to. That’s kind of exciting for crypto. This kind of very keen competition that’s coming along. I think users and protocols are finding it hard to make a choice of where to go next.”
Weighing up ease with variety
For Chong, it’s not just bitcoin and ethereum that offer up investment opportunities. However, it is understandable that these are the go-tos.
“I think these coins being the more familiar ones and given that they have also etched a way into the future, means that people have easier access to them. It means that people coming to buy them will definitely have a lot more ease of doing so compared to maybe your other tokens or coins. Those that you may have to set up an exchange account before you can actually go into.”
“So if we look at that, then yes, there’s already a kind of like a natural advantage by being able to go into these coins. A lot of so-called financial platforms like Saxo Bank and so on will also have funds already tracking at least Bitcoin and Ethereum. So it’s also natural access for people who already have access to these platforms.” he says.
Considering different ways to look at coins
However, this doesn’t mean Chong thinks other tokens and coins should be disregarded for the top two only.
“Other cryptos are not as easy, but I think they should definitely be the focus of people trying to come into the crypto space or trying to find coins to invest in the crypto space. Why? First and foremost, we can see a lot of interest within the financial space or even by a large number of funds into companies or exchanges such as FTX or Binance. There has been recent news of the many rounds of investments that are happening with these top two exchanges. So naturally, Binance coin BNB and also FTX would definitely be a focus. I mean, people are buying up so-called shares in these companies,” he says.
“I see also a lot of DeFi chains, that are fast up and coming. Those are offering bigger block sizes, faster transactions per second, and so on so forth. I think it’s definitely worth looking them because there are a lot of protocols that are going to be developed and this is going to be a new space for sure.”
Fundementals and horizons
Chong understands that it’s hard to fully grasp each coin’s purpose without a fundamental understanding of cryptocurrencies.
“There are also other coins that are within the spectrum of Top 20 and Top 15. It’s always good to have a look. I guess for a newcomer in the crypto space, if you need to understand things from traditional world space, then maybe you should just kind of understand where traditional finance is going to be investing in. That will propel it to the next stage. Maybe if you look at the angle, it is easier to make a decision,” he says.
“Without fundamentals or with coins that skyrocket, they may not always be the best option, even though they may have a good size market cap. So I think in that sense you have to look carefully into what coin you’re buying into.”
However, overall, in addition to understanding the coins themselves, it’s also about understanding your personal goal and strategy.
“The truth is, it depends on what your horizon is and also what is your point of coming to this token. I mean, for some of them, it’s just a game of it. It’s something that you make a game out of or you needed it to buy stuff. So I think that’s perfectly fine. It really depends on what kind of angle you’re coming from getting yourself into the coin.”
“It really depends how you want to look at it”
For Chong, the question of why people should invest in cryptocurrencies is not an easy one to answer. He explains that, in addition to a hedge against inflation, the reasons are broad.
As a result, this sets up a situation where there is no “correct answer.”
“So let’s look at it from just your average Joe on the street. Why would they want to look at chasing crypto? If you believe in the portfolio kind of a setup. I mean, the traditional way of looking at it will be you split it into different assets, and maybe part of it will be your equity, part of it will be your bond portfolios, and some will be foreign exchange commodities,” he says.
Crypto asset considerations: newbie vs. experienced investors
“Some people believe that a small part of percentage can be put into high alpha, high beta asset class. At this stage, people not familiar with crypto can consider it as part of that few percent.”
“So, if I believe that this is going to be the future game-changer, but I am not sure. If I don’t go in now, I might be worried I missed the boat. I definitely will consider going into buying like the futures and so on. Then my portfolio already has a representation of crypto. Then if the rise takes place in the future, you benefit from it. If it doesn’t, there’s no need to cry a bucket because it’s just a few percent, and you have the rest of your so-called stable portfolio or traditional portfolio to hang your future wealth management on,” he explains.
For those who are more astute investors, Chong sees a different path. He even references some investors he knows who are so committed to crypto they see stablecoins like USDC as part of their bond portfolio. This is because of its stability and year-on-year returns.
“I have no comment on that. I think it really depends on who you’re speaking to and also what the person’s background is. Some will say that this is true. Some will basically tell you’re just thinking about more risks. So it really depends on how you want to look at it. Currently, there’s no right or wrong.”
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