The Importance of Business Models in Crypto Investing

Source: Daoshuo Blockchain

In an article a few days ago, I quoted a technology blogger's comment on crypto ecosystem investors, which roughly means: He believes that most players in the crypto ecosystem do not even have some common sense, and are purely gamblers.

The common sense emphasized by this blogger refers to some basic elements that must be considered in commercial investment, such as the project must have a business model, in other words, it must be able to provide value, make money continuously, and generate profits.

Applying this cognition to the crypto ecosystem, that is, other projects other than those that are considered to be similar to Bitcoin should consider their business models.

When I first heard this sentence, I was a little resistant.

Because in the past few years, at least I myself have not seen much of the "business model" of the projects I participated in. I mainly look at the so-called "grand narrative".

I still made money using this method in the past few years, why?

Looking back now, I think it's mostly luck.

Duan Yongping once commented on a case.

In that case, a player was very successful in all kinds of fancy ways, and he was full of all kinds of fancy terms. Duan Yongping said that this player must have made a lot of money using this method before.

After reading this comment, I felt a chill on my back.

To continue to participate in the investment market, it is impossible to rely on fancy things and full of terms for a long time. We still have to return to the common sense of investment and the origin of investment.

Duan Yongping once made a very intuitive statement about Buffett's investment and venture capital in my opinion:

Buffett has a very large amount of funds, so his targets are all large companies. For small companies, even if he finds them, he often cannot buy them because these companies cannot accommodate the amount of funds he wants to hold.

For investors with small funds, they can look for small companies with more opportunities in the market, and their returns will be much better than those of large companies. This is venture capital.

Although these two investment methods are different, the companies they are looking for are essentially the same. They all want to find a company that can continuously generate value, with a good business model, a good corporate culture and a good price.

Coincidentally, I watched an interview with Zhu Xiaohu these two days. When he talked about the criteria for selecting companies in the venture capital process, he also emphasized that the companies he invested in must be commercialized and whether the commercialization can be sustained.

These are the essence of business.

In his interview, he talked about a very hot "little dragon" at the moment, and believed that this "little dragon" is likely to be listed on the Science and Technology Innovation Board in the current environment, and it will perform very well.

But he still prefers companies with good fundamentals.

In the crypto ecosystem, there are countless "little dragons" like this. They have a grand narrative, which caters to the hot spots that people are chasing now and is in line with the trend that people are talking about. We know that once it is listed, there will be a wave of craze in its coin price. We know that whoever can grab the chips first can make money from this wave of craze.

Based on this idea, guessing market sentiment, looking at on-chain data, exploring insider information, and going long and short naturally became a series of operations that followed.

However, their business models and whether they can be sustained are basically not discussed, let alone explored in depth.

Grand narratives can be imagined and great stories can be told, but narratives and stories ultimately depend on whether they can be transformed into viable business models. Otherwise, the model of storytelling alone is doomed to be unsustainable and destined to be a mess after the excitement.