Old Economy vs New Economy: Investment Basics for Beginners

4/14/20252 min read

Are you thinking about starting to invest but feel overwhelmed by all the options and financial jargon? In this beginner-friendly guide, we'll break down the fundamentals of investing and explain the key differences between the Old Economy and the New Economy approaches.

Whether you're in Brazil, the US, Europe, or anywhere else in the world, this article will help you understand how investments work globally.

What is an investment?

An investment is simply putting your money to work with the goal of earning more in the future. This return can come from interest, profits, or asset appreciation.

But before choosing specific financial products, it’s essential to understand the two basic investment paths in the traditional financial system (aka the Old Economy):

  1. Becoming a shareholder (equity investor)

  2. Becoming a lender (creditor)

Old Economy: Shareholder or Creditor

1. Becoming a shareholder

When you buy shares or equity in a company, you become a part-owner of that business. As a shareholder, your profit can come from:

  • Dividends – a portion of the company's profits shared with you

  • Capital appreciation – the increase in value of your shares over time

Example: Buying stock in companies like Apple, Tesla, or Amazon makes you a part-owner of those companies.

Other (less accessible) ways of becoming a shareholder include:

  • Venture Capital – investing in startups

  • Private Equity – investing in established companies that aren’t publicly listed

2. Becoming a creditor

When you buy bonds, CDs (certificates of deposit), or government securities, you're lending your money to a company or government in exchange for:

  • The original amount returned (principal)

  • Interest payments

These are known as fixed income investments, and they come with credit risk – the risk that the borrower may not repay you.

Examples of creditor investments:

  • Government bonds (like U.S. Treasuries or UK Gilts)

  • Corporate bonds

  • Bank CDs

New Economy: Decentralized Investment

In the New Economy, a third form of investment has emerged – where you’re neither a shareholder nor a creditor. Instead, you participate in decentralized networks, often powered by blockchain technology.

Some popular examples include:

  • Cryptocurrencies (Bitcoin, Ethereum)

  • Tokenized assets

  • DAOs (Decentralized Autonomous Organizations)

These types of assets are based on distributed systems, and their value often depends on community adoption, technology, and trustless protocols.

Summary: The 3 Types of Investments

Type of InvestmentExampleYou are...Equity (Old Economy)Stocks, shares, equity fundsA shareholderDebt (Old Economy)Bonds, CDs, Treasury securitiesA creditorDecentralized (New Economy)Crypto, DAOs, Web3 platformsA network participant

How to Get Started

If you're new to investing, start by understanding traditional (Old Economy) investments. Learn the basics of:

  • Stocks (equity)

  • Bonds and fixed income (debt)

Once you're comfortable, explore New Economy options with caution. Blockchain-based assets carry unique risks and require research and education.

In future articles, we'll dive deeper into topics like interest rates, opportunity cost, investment risk, and how to build your first investment portfolio.

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