Investing in crypto with common sense

Insights

Dec 28

‘The market of expectations is that of speculation. The real market is that of investment’
(From ‘The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns’. John C. Bogle, Gustavo Teruel Prieto.)

Hello world.

We are Edu, Luciano and Claudia and six months ago we decided to start our own company: CommonSense.

Why we started CommonSense?

When someone starts investing, it’s very common to give a lot of blind shots. Individual shares of companies that catch the eye or are trending topic in Twitter, are usually the most bought by the retail investors. Generally, in the beginning, the small investor takes more troubles than joys.

Investing in cryptocurrencies is something similar or even much more exagerated. Beyond Bitcoin and Ethereum, it is almost a lottery to guess which will be the next token that will make a x100 return. Those gems are usually exceptions in a highly volatile market where, for some to win a lot of money, others have to lose a lot too.

We believe that between lambos and DOGE lovers, it’s time for someone to bring some sanity and clarity to the crypto investment. Or as John C. Bogle highlight in his books on investment, it’s common sense.

But, what does investing with common sense means?

When investing, whether in stocks or tokens, the best way to do it is following an order, with objectives and diversifying risk. For example, it’s appropiate to allocate part of the budget to less volatile and less risky securities (but with lower profitability) and allocate another part of the budget (much smaller, it’s called ‘the play money’) to invest in a less conservative, much more risky way, but with potential for high returns.

In traditional financial markets, index funds are designed to invest in the stock market in the long term, thanks to their diversification (it is as if you bought all the shares of the index that they replicate). For example, SPY is an ETF that invests in securities of the S&P 500 stock index. This index includes the largest 500 US companies by market capitalization.

For conservative long-term investors, index funds are an easy, streamlined way to invest, make it easy to diversify, and cheap in commissions. And what about the spare ‘play money’? Enjoy the joy of gambling and the thrill of adrenaline, but don't do it with the money of the rent or with the savings to pay your kid’s university

On the other hand, we are of the opinion that investing takes time, the market does not always return results immediately. In the short term, volatility can generate uncertainty for and it is at this time when it’s worth to be be patient and look at the long term.

Based on these fundamentals, our experience as investors in the traditional financial market and our passion for decentralized finance, CommonSense arises. Our goal is to bring a new way of crypto investment adding a pinch of ‘common sense’ to a market devoured by speculation and difficult to access due to its technical complexity and confusing language for someone with little financial background.

So in July 2021, we launched our first investment product: a token indexed to the 10 largest cryptos in the market. In addition, to do it in a much more sustainable way and guarantee access to anyone (accredited investor or not, with €10 or €1 million), we decided to do it in a decentralized way in the Polygon network. This proof of concept or MVP (minimum valuable product) performed quite well and we got lots of individuals purchasing our first token.

Some months after, in May 2022, we raise our first funding round, due to the excitement of some business angels when they discovered our project. After closing the round, we decided to iterate our value proposition, since many of the users who approached us had changed their profile: they were now clients with some net worth, who wanted to diversify their portfolio and start to try allocating some of their wealth in crypto, but they didn't want to know anything about DeFi and didn't know how to use a wallet either.

This is why we decided to develop a new product concept: the CommonSense portfolios, a way to invest in digital and tokenized assets without complications. We choose the assets, we manage the risk and volatility through investment strategies that are included in the portfolios, and the user only has to sit back and wait.

Unlocking crypto investment complexity

After this change of course, we also reinforced our purpose: we would help traditional investors to navigate the complexity and uncertainty of crypto by developing tokenized portfolios that help them build their digital wealth.

That also lead us to write down our values and our added value, based on boldness, growth mindset, cutting-edge technology and true transparency.

After this two years of navigation, today we can say that we are on a journey to build the most successful wealth-tech firm in the blockchain by creating innovative tokenized investment portfolios.

To be continued… :)