| | | The next 100 million crypto investors. |
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| Health, Wealth, and Happiness |
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| “Few things in the world are more powerful than a positive push. A smile. A world of optimism and hope. A ‘you can do it’ when things are tough.” – Richard M. DeVos |
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In today's issue: Crypto investors can invest in more than just crypto.
Beyond bitcoin and tokens, there are several new investing ideas in the world of blockchain.
We've been exploring them over the past five years, but today is the first time we've put them all in a single list.
Consider this your master class for blockchain investors. Read on. |
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| | | Must Read Today's most important story for crypto investors. |
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Not Only Can We Avoid War, but We Can Have the Best Times Ever (Ray Dalio): After a doom and gloom post where he predicted the world could be on the brink of war, Bridgewater Capital founder Ray Dalio posted this follow-up on how we can avoid it.
Investor takeaway: Although the problems facing the world are real and enormous, the capacity for human invention and cooperation is just as big. Humans are good at solving problems. It's kind of our thing.
In this age of anxiety, spreading Ray's message of hope and positivity is countercultural. As long-term investors, it only makes sense to build a better future. We're literally betting on a better future. |
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| | | The List of Blockchain Investing Ideas by John Hargrave |
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Beyond buying bitcoin, how can you invest in the rise of blockchain technology? I was recently invited to lecture at Steve Gordon’s terrific blockchain class at Babson College. The course is so popular that this year, he started a second class at 8:00 am to meet the demand (you often can’t get college students out of bed at 8 am unless the bed is on fire). Since my talk was on crypto investing, Steve had put together a presentation on “How to Invest in the Blockchain Ecosystem,” which was a great overview of all the investing opportunities beyond crypto. We’ll call this the list of blockchain investing ideas.
Think of this as your master class for blockchain investors. |
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| Invest in quality crypto assets. This is the obvious investing opportunity. It's where we spend most of our time at Bitcoin Market Journal. We treat blockchains like businesses and cryptos like companies. We analyze their tokens like stocks through a framework we call crypto value investing. We see crypto projects like tech startups. Like all technology revolutions, most crypto “companies” won't make it, but a few will go on to disrupt the world of finance, banking, and other sectors and become the new global superpowers. Our goal is to invest in these early winners and hold them long term. Premium members can access our Future Winners portfolio of these early leaders, plus the complete list of our Investor Scorecards on today’s top tokens. |
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| Become a miner (or staker). Since blockchain is decentralized (run by the people), you can help run a blockchain network by either mining (in proof of work blockchains) or staking (in proof of stake). Mining usually requires expensive mining rigs and lots of electricity. This isn't great for the environment, but there are other forms of mining (i.e., running a Helium hotspot) that invoke lower costs, less carbon, and serve useful purposes. Staking simply involves owning crypto and “locking it up” to secure a network (i.e., staking ETH to secure the Ethereum network). It's environmentally friendly and you earn staking rewards (i.e., a portion of a network's fees) for your help. We update our Best Staking Rates page weekly. For the best historical rates, see our list of Best Proof of Stake Coins. If you’re just getting started, try our Beginner’s Guide to Staking. |
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| Invest in stablecoins. You can buy and hold stablecoins (cryptos that hold their value against another currency, usually the US dollar) and invest them to earn interest (often called "yield"). When interest rates are low, these are amazing opportunities given the demand for stablecoins is high. Traders use them to make money in crypto markets, which are still young and inefficient. In 2021, for example, you could earn a reliable 4-5% on high-quality stablecoins with little risk. As interest rates rise, however, stablecoins become a less attractive investment. When investors can earn 4% in U.S. Treasury bills, that drains money from the crypto ecosystem and opportunities lessen. See our list of Best Stablecoin Interest Rates along with our best opportunities for USDC and USDT. To get started, see our guide on How to Earn with Stablecoins. |
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| Invest in a crypto ETF. An exchange-traded fund holds crypto assets but can be bought and sold through a regular broker or online trading platform. Alas, in the U.S., you can currently only buy ETFs made up of “bitcoin futures” or the future price of bitcoin (not the price of bitcoin today). For this reason, it’s easier to just buy and hold bitcoin directly through a crypto exchange like Coinbase or Binance. However, if your circumstances only permit investing through traditional brokerages or you’re outside the U.S., consider a crypto ETF. See our guides to Best Bitcoin ETFs, Best Blockchain ETFs, and Best Crypto ETFs. |
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| Invest in "blockstocks." This is our name for publicly traded companies whose primary business is blockchain. Currently, their stock prices generally rise and fall with the crypto market, so it’s not a great way to diversify. However, our thesis is the long-term winners will be positioned to dominate the industry as they're bridges between the traditional and crypto worlds: fully regulated with the financial discipline of public companies. Coinbase (COIN), for example, is the gold standard of regulated U.S. crypto exchanges. See our guide to Best Blockstock Opportunities. If you’re just getting started, see our Intro to Blockchain Stocks. |
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| Invest in early-stage blockchain projects. Often called angel investing or seed round investing, you can invest in startup blockchain projects or join a group of angel investors that pool their money to invest in said startups. It’s risky because most startup projects don’t make it, but the potential reward is high as a few blockchain startups will go very big, indeed. Joining a quality group can help you make better decisions by listening to smart questions of others. Angel investing is best for those with large amounts of capital to invest, a passion for the industry, and a willingness to really work alongside early-stage founders where needed. I’m a member of Chain Reaction, a terrific angel investor group that I recommend highly for both investors and startups looking for funding. |
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Invest in companies building on blockchain. Separate from blockstocks, these are traditional companies investing in new blockchain or crypto projects to grow or evolve their core businesses. Practically every major bank and financial institution has some kind of blockchain or crypto team, but most of them are hiding away and waiting for regulatory clarity (I truly wonder what these teams do all day). One way of seeing who’s serious is to look at companies filing blockchain patents. When we last ran our Blockchain Patent Report, the leading companies were Bank of America, IBM, Mastercard, and Fidelity. Holding blockchain patents is not in itself a reason to invest, but if you like a company as an investment opportunity and it's serious about building blockchain businesses, it’s icing on the cake.
What's Not on the List
You’ll notice what’s not on this list: trading, speculating, technical analysis, meme tokens, social investing, or astrology. We find these things can make some people money some of the time, but they're rarely suitable for long-term wealth.
As crypto value investors, that’s what we’re after: putting our money into quality projects that help pave the way for the future of money. In that way, we achieve financial freedom... as does the rest of the world.
With grateful appreciation to Steve Gordon of Babson College, whose blockchain class inspired today’s column. |
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Health, wealth, and happiness,
John Hargrave Publisher Bitcoin Market Journal |
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Bitcoin Market Journal is a daily newsletter that makes you a better crypto investor. It's created by John Hargrave, Nick Marinoff, Steve Walters, Anatol Antonovici, Ben Burn, Preetam Kaushik, and Daniel Joel.
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