Crypto Crash: nothing to be afraid of

The Crypto Crash Might Just Be a Temporary Blip

Revolutionary technologies follow a pattern

Zoe Landi Fontana, The Weekly Journal @Landi_Zoe

The last few weeks have wreaked havoc on crypto investors and enthusiasts, alike. Some are beginning to doubt the viability of crypto-based finance, and some are saying things along the lines of “I told you so”.

Nevertheless, eventually, the recent so-called Crypto Crash may not be as serious as it seems today. THE WEEKLY JOURNAL spoke with James Haft, Chairman of DLTx, a Norway-based technology company with a hub in Puerto Rico, for his expert take on the crisis.

Don’t Be Afraid: Part 1

“In my mind, you will never remember the last three weeks. Ten to twenty years from now, you won’t even think that they’re remarkable, the changes that happened over the last three weeks,” Haft reassured while citing Amazon as the perfect example.

Amazon came onto the scene in the late 1990s and ‘was the hottest thing since sliced bread’. When people began to speculate and criticize the business design, however, the stock dropped critically low. Do we remember that period? Maybe, but on an absolute basis, those dips aren’t even visible. Since 1999, Amazon’s stock has gone up exponentially.

The Power Of A Down Cycle

The future of the crypto industry and markets isn’t in danger. “Many of the great tech businesses - and historically great quantum shift technologies that came into the world and changed society and the economy - were born and developed during down cycles,” explained Haft.

During down cycles, people focus much harder and are forced to make difficult decisions. It’s an opportunity to spend less time speculating and more time working and evaluating shifting priorities while maintaining faith in long-term growth. The work done during a down cycle determines how successful the proceeding upcycle will be.

Besides leaning down and being less wasteful, downcycles lead to consolidating more attractive assets. Amateur investors tend to sell off their most liquid and in-profit assets. The better assets get sold at a cheaper price to people that are longterm investors. Thus, this period, a nightmare to some, can be a dream for long-term investors who plan for the future by acquiring quality assets at reasonable prices.

How To Avoid Being Devastated by Future Crashes

“Crypto is no different than real estate, the stock market, or foreign currency. There’s nothing special about crypto,” Haft stated, “Everyone says the same thing - you have to have a well-diversified portfolio, risk-adjusted. That will out-perform a single-adjusted portfolio almost every time. The effects of a single market - like crypto - won’t end up hurting you.”

So, instead of holding only one type of coin, invest in an index of crypto. Even better, have an index of cryptocurrencies as part of a portfolio of other investments - real estate, stocks, etc. According to Haft, the idea of singling out crypto alone as being ‘so volatile’ is baseless. “Any singleexposure portfolio that takes a hit is brutal,” he said.

Haft has the following words of advice for anyone concerned with the current crisis: “I would give the same advice to someone in any market - crypto is just like everything else. Instead of focusing on crypto, you need to understand that growth stage, emerging market, blue ocean growth opportunity, and the boom and bust cycles led by fear and greed. It doesn’t matter what the subject is, it’s all driven by people.”

Haft’s company DLTx is in the crypto business, but their operations aren’t being hit heavily by the Crypto Crash. “We’re in the business of providing infrastructure that is used by the companies in the new decentralized economy that uses peerto-peer encrypted transactions, which includes cryptocurrencies,” said Haft.

DLTx mines and produces Filecoin and Bitcoin as a public company. They produce those tokens in a way where the financing for those coins comes from the currency itself, making the price of the coin irrelevant to them. It’s like a foreign currency transaction in which they borrow, produce, and pay in the same currency.

Haft recounted how he learned the importance of this method while working abroad in Brazil. “It’s important to have your revenues and costs be in the same currency. [It] makes it, so you are not affected. In the same way with the crypto crash happening right now, if you are buying or mining the tokens that you need to use, then when the price of [the coin] to dollars goes down, you don’t lose,” he described.

Don’t Be Afraid: Part 2

Puerto Rico isn’t heavily invested in crypto yet, so the current waves most likely won’t be significant on a macro basis to the island. “The only way that this would affect is if this lasted in the long term and slowed down global capital formation around crypto. It could slow down the growth of new crypto businesses in Puerto Rico, thus slowing down job opportunities formed by new capital investment,” Haft pointed out.

James Haft is the co-founder of CryptoCurious, a program founded to educate Puerto Ricans about blockchain and crypto. Classes are taught in Spanish, in cooperation with the Puerto Rico Blockchain Trade Association. He is also the founder of the global community event CryptoMondays, which is active in over 60 cities in 25 countries with 40K followers and has a robust chapter on the island.

Crypto is no different than real estate, the stock market, or foreign currency. There’s nothing special about crypto,” Haft stated, “Everyone says the same thing - you have to have a well-diversified portfolio, risk-adjusted. That will out-perform a single-adjusted portfolio almost every time. The effects of a single market - like crypto - won’t end up hurting you.