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Another Way to Invest in the Digital Asset World

By Demitri Kalogeropoulos and Asit Sharma – Jan 4, 2022 at 11:58AM

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You don't have to focus on individual cryptocurrencies to gain exposure to this space.

Options are expanding for investors who are excited about the cryptocurrency trend but don't want to invest in individual names like Bitcoin (BTC).

In this video from "The Virtual Opportunities Show," recorded on Dec. 21, 2021, Fool contributors Asit Sharma and Demitri Kalogeropoulos highlight another investing choice, which focuses on blockchain infrastructure projects. 

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Asit Sharma: This was on The title is "Polkadot Parachains Go Live, Capping Yearslong Tech Build for Ambitious Blockchain Project." Now, I think this is part of what Demitri was talking about. You're either spending a lot of time in this space to understand all the terminology, the various investment opportunities, or you're taking it a bit more slow to learn about this space. That's the title in itself, which I probably would have a little understood even a few months ago, let alone a year or two ago but I'll explain it.

Essentially, Polkadot is a technology that underlies different blockchains, it connects them together. It has a technology called a parachain, which is essentially you build a network that runs alongside a main network so that it can have differentiation from the characteristics of the primary blockchain, but still be compatible, still be harmonious. This solves in some ways the problem of one blockchain technology versus another. Is Ethereum's technology superior to Solana's technology?

These are big-picture battles, but there is a lot of space in the digital asset realm for blockchain technologies to have different versions of themselves running alongside. They've basically been working on five of these parachains, these parallel networks. They are named Acala, Moonbeam, Parallel Finance, Astar, spelled A-S-T-A-R, and Clover.

I think that's a difficult one, that last name, Demitri, because there is a really great small coffee company that Starbucks purchased, which had designed a super advanced coffee machine with lots of variable controls. I think they bought that to take out their competitor, but that's called a Clover. You can still order Clovers at various bigger Starbucks around the world and also to finance companies, so I'm not sure why they took such a common name that already has different trademarks and usages associated with it.

Nonetheless, these are really interesting names and the parachains are really centered around DeFi, so decentralized finance investments and loans according to this article. I wanted to talk about this just to say that this gives you an example of the innovation that's going on in the space, and that it doesn't have to be a winner-take-all environment. You don't have to try to solve this huge question. Will Bitcoin ultimately be the leading digital asset, or will Ethereum be the leading digital asset, or will Cardano or Solana become the mainstream assets that everyone wants to invest in? I think that there's room to diversify as time goes on into a number of different blockchain technologies, different digital assets that will stick around. I think that some of these technologies are really building ecosystems that are investable.

They're drawing capital as you were talking about, Demitri, they're drawing enthusiastic first adopters, they're drawing engineers, and as they build, they're also little bit cognizant of the various types of regulation that are coming down the pike at some point. Some of the newer technologies are really trying to design themselves so when that big hammer falls, they'll still go on. I guess my message is very similar to yours in this first article that I wanted to share.

There is a lot to learn, you can take it slow. My little add to yours is it's not winner-take-all. If there is one part of the digital asset world that really piques your interest as an investor, if you're interested, say in decentralized finance, then maybe something like a Polkadot is for you and there are other companies that are blazing trails in decentralized finance.

Asit Sharma has no position in any of the stocks mentioned. Demitri Kalogeropoulos owns Starbucks. The Motley Fool owns and recommends Bitcoin, Ethereum, and Starbucks. The Motley Fool recommends the following options: short January 2022 $115 calls on Starbucks. The Motley Fool has a disclosure policy.

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