Cryptocurrency investors have had a difficult few months. Volatility in the stock market has been exacerbated by concerns about rising prices and international strife. In reality, the crypto market has subsequently plummeted more than 40 percent, losing almost $1 trillion in value.
If this isn't your first rodeo with digital assets, you already know that this sort of stuff happens on a regular basis. Between May 2021 and July 2021, the cryptocurrency market lost half of its value. In spite of this, the market has always rebounded and gone on to new highs after crashing. As a result, it's a fantastic moment to start investing. And Terra (CRYPTO:LUNA) and Solana (CRYPTO:SOL) appear to be solid investments.
For decentralized apps (dApps) and decentralized financing (DeFi), Solana is a programmable blockchain. Anatoly Yakovenko, a former Qualcomm software developer, launched the project, and it shows in the architecture of Solana. To obtain consensus on Solana, the platform uses a combination of proof of history and proof of stake (PoS).
Each validator on the network must come to an agreement with every other validator before a transaction can be confirmed in PoS protocols. Solana timestamps incoming transactions to produce a verified sequence of events to speed up that time-consuming operation. Nodes will be able to validate transactions without waiting for consensus from other nodes. Because of this, Solana can theoretically process 50,000 transactions per second (TPS) and finalize transactions in 13 seconds, which means transactions are integrated into the blockchain quickly.
So, why would you want to put money into Solana? It is now possible to borrow, lend, and earn interest without the assistance of a traditional financial institution thanks to DeFi applications. DeFi can reduce the cost, improve the efficiency, and broaden the reach of financial services by cutting out the middlemen. Moreover, Solana is well-suited to accomplishing that goal because of its scalability.
The Solana DeFi ecosystem has received $6.7 billion in investment since its launch in 2015. The price of the SOL coin, the blockchain's native cryptocurrency, is expected to climb if its popularity continues to rise. Because of this, this coin appears to be an excellent investment.
Terra is a programmable blockchain designed to improve the efficiency of financial transactions and payments. To connect hundreds of blockchains, it uses the Cosmos Hub, an open source technology. This is critical since the PoS consensus mechanism Tendermint is used by Cosmos and, by extension, Terra, and it can handle 10,000 TPS and complete those transactions in under six seconds.
There are two cryptocurrencies at the heart of Terra, unlike most other blockchains. For starters, there's Terra, a stablecoin that monitors the value of conventional currencies, such the US dollar. The second is Luna, a stablecoin alternative aimed to reduce price fluctuations. While TerraUSD's price may rise above $1 in response to increased demand, the network will encourage investors to convert Luna into TerraUSD in order to lower TerraUSD's price. Instead, the system functions the same.
In other words, as the use of Terra stablecoins grows, so does the demand for Luna, making the altcoin more valuable theoretically. The Terra blockchain has a wide variety of dApps and DeFi products designed to increase the demand for Terra stablecoins. PaywithTerra is an excellent illustration of this. Customers can use Terra stablecoins to pay at checkout, and because the platform is founded on blockchain technology, businesses pay only $0.05 per transaction. When you deposit TerraUSD into your Anchor account, you'll receive 19.5 percent annual percentage yield, which is far higher than what you'd get from a regular savings account.
Is this what you're looking for? At $25 billion invested, Terra is the second most popular DeFi ecosystem in the blockchain business. Amount invested at the beginning of December was $12 billion, which is more than double. The demand for Terra stablecoins will increase in the future as products like PaywithTerra and Anchor become more prominent. A rising demand for Terra stablecoins should also raise the price of its stablecoin sister coin, Luna, as Luna is built to withstand market volatility. That's why this cryptocurrency has the potential to make you a lot of money in the long run.
In addition, it's safe to say that Bitcoin is now a reliable medium of exchange. Investors can no longer ignore cryptocurrencies. And Bitcoin, with its decade-plus history, is solidifying itself as a good location to keep your money.
A large number of institutional investors, such as Ark Invest, believe Bitcoin will continue to rise in value over the next few years. And companies like Block, MicroStrategy, and Tesla have even changed some of their cash balances to the virtual currency on their balance sheet. Traditional financial institutions may now easily access the rising asset class of cryptocurrencies thanks to the creation of secure and seamless linkages between the two.
Afterwards, it has the potential to be of actual use. Even though El Salvador has made Bitcoin legal tender, other countries could follow suit. due to slow processing times and excessive costs, the $500 billion global remittance sector is ripe for upheaval . Bitcoin may be the answer.
Future returns may not be as impressive as they were in the past, but I believe Bitcoin will continue to outperform the market for many years to come.
Bitcoin as an inflation-protection tool
Since the Great Recession, the ultra-loose monetary policy has encouraged consumers to spend, which is a vital component of modern capitalism. Moreover, this is what Charlie Munger ( Warren Buffett's longtime right-hand man) was referencing.
Bitcoin, on the other hand, has a finite supply. Computer programming that cannot be altered with ensures that there will never be more than 21 million coins. This contrasts sharply with the use of fiat currency.
It is becoming increasingly difficult to argue that Bitcoin is a good hedge against rising costs because of the current surge in inflation. Investors would anticipate safe-haven assets, like gold, to benefit from increased geopolitical risk. As a result of this, the price of gold has risen by around 8% this year. A 19 percent drop in 2022 on the other hand for Bitcoin as of March 8th. But it's important to take a step back and look at the big picture.