Why Invest in Cryptocurrency
The Average Joes’ Venture Capital
It doesn’t matter your age, your risk tolerance, or whether you believe in the space or not. Why risk having zero exposure to the internet of tomorrow?
Here’s why I believe investing in this technology is not only a no-brainer, but a must-do.
#1 Average Joe Access to New Tech
It’s not every day that the average person can buy stock in the next Facebook, Uber or Google before they gain notoriety and go public. These investment opportunities are for the few. The venture capitalists. The private equity folks. The people with exclusive access or a network full of developers and engineers. Most people aren’t these people, and that’s fine, but it’s left the many — the “Average Joes” without the investment opportunities that change lives, families and communities. Well, the times have changed, and now life changing investment opportunities are abundant.
Now, the “Average Joe” can download an app on their smart phone and buy a cryptocurrency valued from $10k to $0.0001 (less than a penny per token). Yes, there’s risk involved but as is with any investment or when driving a car. The point is we have access to the next digital gold, the next communication network, the next social network, the next computing infrastructure, and the next MMOG (massive multiplayer online game aka Fortnite). The internet gave us access to information and now cryptocurrency is giving us access to value.
#2 Obviously the Future is Digital
“Cash is trash.” At least this is what legendary investor Ray Dalio likes to say because the asset doesn’t generate cash flow or increase in value like a stock or piece of real estate. But I’m saying it because cash isn’t digital and isn’t connected to the internet. Anyone that’s used Venmo or Apple Pay immediately feels the difference in utility and customer experience, however, these technologies are still running on legacy infrastructure where transactions are settled in a matter of days and middlemen collect their high fees. This is credit. It’s not pure digital with zero middlemen and same day settlement. This is where cryptocurrency comes into play, but with a twist.
You pay taxes, right? Do you know how your money is being spent? Do you know what public programs your taxes are funding? No, no you don’t. It’s a giant black whole and most likely being squandered away or put into a “general” bucket…we’ll save the politics for another post. Now, imagine that our taxes are programmable, and you can allocate 15% to education or more specifically to classroom materials, 5% to defense, 5% to infrastructure and 3% space exploration. This is possible with cryptocurrency and a pure digital financial infrastructure. Other possibilities include owning a piece of the Empire State Building, investing in a fraction of a Picasso masterpiece or being financially rewarded for eating healthy and working out every day. Try doing that with a dollar bill.
#3 We’re so Early and its Explosive
It’s estimated that ~1% of the global population owns any bitcoin or cryptocurrency. That’s ~78M people out of a global population of 7.8B. The point here is some people may think they’ve missed their opportunity to invest in Bitcoin when it was $1k or invest in Ethereum when it was $1. Yes, this would have been amazing, and we’d all be sipping margaritas on a beach somewhere, but this future isn’t out of the cards. There’s so much room to grow when comparing bitcoin and cryptocurrency market caps to other fiat currencies, gold, the stock market, real estate and derivatives. All it takes is for a couple prominent billionaires, blue-chip companies, institutional investors or central banks to start buying bitcoin and set off the next international “space race” for cryptocurrency.
· Ethereum Market Cap = $60B
· Bitcoin Market Cap = $340B
· Cryptocurrency Market Cap = $550B
· World’s Billionaires = $8T
· Gold Market Cap = $10T
· Stock Market = $90T
· M1 Narrow Money Supply (fiat, banknotes, checking deposits) = $35T
· M2 Broad Money Supply (above + savings + money markets) = $96T
· Global Debt = $253T
· Global Real Estate = $280T
· Global Wealth = $360T
· Derivatives = $1.0 Quadrillion
We’ve recently seen a massive shift in popular opinion amongst regulators, banks and corporates. Visa, Mastercard and PayPal are now issuing cryptocurrency payment cards and allowing users to buy cryptocurrencies on their platforms. Facebook’s Libra project is busy at work creating a crypto wallet, Calibra to support its stablecoin, Libra and the developing central bank digital currencies. And, quite possibly the biggest news coming from the US OCC (Office of Comptroller of the Currencies) allowing national banks and federal savings associations to provide custody solutions for digital assets and cryptocurrencies. It wasn’t too long ago when bank CEOs like Jamie Dimon said “Bitcoin is a terrible store of value…Bitcoin will not survive…Bitcoin is not going anywhere…Bitcoin is a fraud…” Now, Jamie Dimon and JPMorgan are offering financial services to crypto companies. This is what happens whenever there’s a new disruptive technology — first they ignore the technology, then they mock the technology, and then they adopt the technology. And, bitcoin’s “digital gold” isn’t the only use case for this new technology, which brings us to the explosive opportunities surrounding altcoins (alternative coins other than bitcoin).
With the invention of smart contract platforms like Ethereum and the Ethereum competitors like EOS and Cardano, there’s thousands of projects offering new use cases and investment opportunities. The decentralized exchange protocol Kyber Network is up 571% over the past year while hyped yield farming protocol, YFI is up nearly 3,000% since July. The cryptocurrency space is so young and it’s just getting started. This is similar to the internet bubble in 2000, but with a couple differences. The “Average Joe” has access to these projects at the idea phase and early adoption is not local, its inherently global and operating 24 / 7 / 365. These are free and open markets. There is tremendous risk, but with risk comes reward. Please do your own research. This is not investment advice. But, please don’t ignore this opportunity.
Volatility is a feature, not a bug.
#4 “Bitcoin is Schmuck Insurance.” — Chamath Palihapitiya, Social Capital CEO, Owner of Golden State Warriors
This should probably be reason #1. The reason why Bitcoin is “schmuck insurance” and why Chamath was an early adopter and owns millions in bitcoin is because the people’s trust and future has been taken for granted and abused by our politicians, central bankers and corporate elites. This is not supposed to be a political statement. There’s a lot at stake here and there’s only few people at the helm throttling the levers driving our economy and international relationships. These are impossible jobs for anyone. Global markets are too complex with too many moving pieces for any single person or group of people to make all the right decisions. So, what are we to do?
Bitcoin is the escape hatch. It solves the problem of relying on government and central banks for making all the right decisions when manipulating markets by simply opting out. Bitcoin is a decentralized immutable ledger running on open sourced transparent code operating a new type of monetary policy. There are many benefits to bitcoin such as having an artificial fixed supply and acting as deflationary currency vs. inflationary currency (we’ll get into the nuances on another post), but the most important benefit is that nobody can manipulate how it works — every ten minutes a block of transaction data is added to the chain and 6.25 bitcoin is added into circulation…it’s that simple. How many trillions of dollars is every central bank printing into existence right now? I don’t think anyone knows the answer here, but it’s a lot and most likely more damaging than we can imagine.
In closing, we can only control what we can control and now we have the ability to be our own bank and digitally store wealth that no one can manipulate, censor and ultimately control. Do your future self a favor and grab some coin.
***This is not financial advice. Investing in bitcoin and cryptocurrency is extremely risky. Please do your own research. The ideas and news presented in this newsletter are my personal opinions and meant for informational and entertainment purposes only.