Answering the Rest of Your Most Common Crypto QuestionsBy Eric Wade  In yesterday's essay, I addressed some common questions to help you better understand the cryptocurrency space...
The sector is red-hot. But you need to know the basics before jumping in. Today, I'll continue the discussion and answer some more key questions that investors have about cryptos... How do you separate cryptos poised for success from ones that are junk? What qualities set good cryptos apart from others? It doesn't matter what sort of investing you're doing – from stocks to venture capital opportunities to real estate to cryptos... Putting time and effort into your research is always the best way to outperform the market. Your data and ability to identify trends must be better than the market's. That's why my team and I travel the world to attend crypto conferences in good times... and why we've participated in virtual conferences during the COVID-19 pandemic. We make it a point to talk directly to founders... and try out every new product we can get our hands on. The qualities of a great crypto project aren't much different than what I looked for in stocks when I worked as a financial adviser at one of Wall Street's biggest firms... First, you need a stellar founding team. You also need a product that can truly go global. And you need great economic incentives (what we call "tokenomics"). Cryptos have some unique factors that we should consider, too... Decentralization, for example, is key. Remember, decentralization means no central party – like a bank or government – is in charge. We want to see a crypto with hundreds or thousands of computers running its software in a lot of different countries. We also want to see a thriving community of users, contributors, and advocates for the project. When all of these things align for a small, unknown crypto... you could potentially see life-changing gains just by making a small investment. Does it make sense for an ordinary person like me to invest in cryptos? Why isn't it just for tech junkies or people looking to get rich quick? Absolutely, it makes sense for you to invest in cryptos for two main reasons... First, beyond the scarcity and low inflation we've talked about, bitcoin has created an industry of digital goods and services that can't be copied or faked. Decades ago, before the Internet took off, people had to train their minds to accept that digital goods could be copied a million times... and that every copy was as good as the original. Now, in the coming years, that's all going to change... thanks to cryptos. The blockchain allows us to create unique assets... one-of-a-kind digital objects that can't be faked or duplicated. That's obviously important for online currencies, but it also means we'll soon be buying and selling one-of-a-kind digital objects in video games, online art... potentially even anonymized data from things like our smart watches and web browsers. Investing early in cryptos gives you the best opportunities to capture the biggest gains as more and more industries learn how to take advantage of them and the blockchain. But that isn't the only reason it makes sense for you to invest in cryptos... You see, you should also consider owning some cryptos purely for their speculative value. Bitcoin was the best-performing asset in the world over the previous decade. It wasn't even close... Oil was down. Gold gained 23%. The S&P 500 Index climbed 190%. Even the best stock picker in the world couldn't beat bitcoin... The top American stock from January 1, 2010, through December 31, 2019, was Netflix (NFLX). If you had bought $100 worth of Netflix stock at the start of the decade, it would have been worth a whopping $4,277 at the end of 2019. But if you had bought $100 worth of bitcoin instead at the beginning of 2010, it would have been worth $9 million at the end of the decade! And yet, bitcoin's market cap is still only about $600 billion today. Many individual U.S.-listed stocks are worth more than that. In our view, crypto's impact on the world will be as profound as the Internet's. But while the Internet digitized information, crypto is digitizing value... Today, you don't actually own the digital dollars you can view in your bank account. They're just entries in the bank's database. If you face certain criminal charges, for instance, the bank can seize those funds before you go to trial. But when you hold bitcoin in a crypto wallet that you control, you actually own it... No one can take it from you without your "private key" (a string of characters and numbers that's essentially your password). That will impact all the world's currencies, stocks, and bonds. It will also create new forms of value that we can't even conceive of in our minds yet. We believe everyone should have at least a small position of their overall portfolios in cryptos. If bitcoin achieves its vision in the coming years, the industry's market cap will one day be in the tens of trillions... And each bitcoin could be worth more than $1 million.
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How do I buy cryptos? Is it complicated? Will I need to take any convoluted steps? Can I do it through my regular broker? Buying mainstream cryptos – like bitcoin and ethereum – is easier today than ever before... First, you need to create an account with a crypto "gateway" – a place that sells crypto in exchange for fiat currencies – and pay for your purchase with a debit card or bank transfer. The account-creation process is about the same as setting up an online bank account... In some cases, you may need to provide a utility bill or a picture of your ID. Once you own the bitcoin or ethereum, you can simply store it on the gateway (or exchange). However, we strongly recommend you transfer it to a crypto wallet that only you can access. By doing that, it ensures that you – and only you – can access your funds. It's worth noting that different wallets exist for different cryptos. That's where it can get a little confusing, but Blockchain.com offers an easy-to-use solution for most major cryptos. Acquiring smaller, more speculative cryptos may require setting up accounts on two different exchanges and transferring crypto between them. That's because many of these smaller tokens trade on small exchanges that may not offer the ability to buy crypto with fiat currencies like U.S. dollars. So you'll need to buy bitcoin or ethereum elsewhere, then transfer it to the specific crypto exchange where you can trade it for your desired token. My team always determines preferred exchanges and crypto storage methods for every crypto recommendation we make. It's a critical part of our research. A lot of folks like to start with a tiny amount of money invested in cryptos... just $50 or $100, for example, so they can get comfortable with the process. That's good advice... Investing in cryptos – like any speculative investment – involves a small learning curve. That's why a lot of people avoid the space entirely... But by deliberately sitting on the sidelines, they'll miss one of the greatest investment opportunities in generations. How do I limit my risk? That's simple... You should treat your bitcoin stake like any other investment. As I just noted in the response to the last question, you should keep your bitcoin investments small and reasonable. Don't invest more than you can afford to lose. Take the time to educate yourself on safely storing your bitcoin. Always research smaller cryptos before entering a position, too. You want to be sure that it's safe to own. Because crypto is such a new and rapidly changing field, it has attracted plenty of charlatans. My team and I to steer you away from scams... as well as educate and inform you on the most promising investment opportunities in the space. As we mentioned, a lot of people start with as little as $50 to $100 in cryptos just so they can learn how everything works (as far as the process of the exchange, wallet, etc.)... That's perfectly fine! Only buy amounts you can manage and only invest in cryptos you believe in. That's an excellent way to limit risk. I hope you've learned a lot about cryptos in today's essay... Bitcoin is a truly global currency. Banks or governments don't need to approve its use. As a result, short of cutting people off from the Internet, folks can't be stopped from using it. And even better, we're only in the early innings of the crypto boom... Fortunately, you haven't missed the boat at all (yet)... Bitcoin was the first step in the crypto revolution. But an opportunity we have in front of us today is the next step. It's much bigger than bitcoin or ethereum... and it's something I've been predicting for years. And I'm not the only one who thinks so. Bank of America (BAC) calls the opportunity "more disruptive than bitcoin," and Forbes says it's "reinventing global finance faster than the Fed can print money." During a free event on July 21, at 8 p.m. Eastern time, I'll share all the details, including a free pick for everyone who tunes in. You don't want to miss it... Register to attend right here. Regards, Eric Wade
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