Crypto Investing: It’s Time for Smart-er Contracts that Encourage Innovation

Cryptocurrency investing is a risky business, but a lucrative one at that: like the stock market,  it creates winners and losers. Look at 2019: the global market for crypto was more than $3 Billion in June and it dropped to $2.6 B just this week. To say nothing for the big swing in December when the market plunged to $100 Billion. This risk/reward paradigm is more pronounced when you look at the trends of previous ICOs, of IEOs in the marketplace. Many people want to invest in the next Ethereum but the risk of losing your ENTIRE investment is great.  

For those who prefer sweaty palms and wild market rides, the cryptocurrency market offers both.  Big upside. Tremendous downside. Which is why so much of the general public is hesitant to enter the digital currency market, causing them to miss out on the larger returns that early adopters can realize.  

The industry must do better

In today’s evolving digital environment, the current cryptocurrency business model is being challenged by new and innovative ways to mitigate the downside of investing. The industry knew there had to be a better way than the failed ICOs of 2017-2018. 

How downside protection works

One model that seems to be the most viable and is attracting attention from investors all over the world is the Smart Contract. Smart Contracts lock investments until the price is to the liking of the investor. This model provides downside protection because the investment risk is mitigated until in the investor’s eyes, the token price is at the level it needs to be.  A Smart Contract is transacted one-to-one and is recorded on a blockchain and the investor is the only one to hold the key to unlock these funds. This type of contract is fixed and immutable.  

Smart Contracts are currently being used in other industries to offer buyback protection at the time the transaction is conducted.  For example, if Dean buys a car from Perry, Dean can set a due date to cancel the transaction and return a portion of the money back to Perry. If Perry, in turn, is satisfied with the car, he can remove the buyback protection at any time before the due date.  

Downside protection in action

This same trust-building Smart Contract can provide cryptocurrency investors with similar downside protection.  In building Jointer, our team recognized that the typical investor will be more apt to invest early and enjoy early adopter bonuses if downside protection is offered. We also saw that using the model that provides the product and protection, as it was in the auto industry, would lead to major issues as investors have an incentive to lower the price of the token.

So rather than provide the protection and the tokens, Jointer created a Smart Contract that locks 90% of the investor’s investment as well as their accompanying JNTR tokens. After one year, 90% of the investment is automatically returned to the investor and the tokens to the company.  If at any time before the due date the investor is satisfied with Jointer’s performance and the token’s market value, the investor can cancel the downside protection insurance and the tokens are released.  

This accomplishes two objectives:  it provides an investor with the opportunity to participate in the crypto market with confidence as the Smart Contract guarantees that 90% of the funds invested can be returned.  It also opens the door for more people to benefit from the tremendous upside that digital currencies can afford without taking on tremendous risk. Downside protection is key to increasing innovation and the longevity of good crypto projects. Do your own research and find companies that offer downside protection, it shows they are not greedy and poised to create new opportunities from which everyone can benefit. 

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Original Article by Jude Regev:

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