How to supercharge your wealth
Thursday, 12 October 2017
By Bernd Struben
- Cash is for suckers
- Gaining mainstream traction
- An important reminder on risk
- The C.O.I.N system
The focus in Port Phillip Insider this week has been squarely on the rapidly growing world of cryptocurrencies.
A flood of initial coin offerings (ICOs) helped see the nascent market exceed US$160 billion in August this year. And it shows no signs of slowing its explosive growth anytime soon.
(As a reminder, ICOs are not unlike an initial public offering [IPO]. In an IPO, a company raises funds by listing on a stock exchange. ICOs also see companies — mostly start-ups — looking to raise capital from potential investors.)
Now, much of the current value in the crypto market stems from the biggest players — bitcoin and ethereum. These are core coins; ones that will likely continue to dominate in terms of scale.
But with over 1,000 digital coins in virtual circulation today, there’s far more to cryptos than that.
For example, have you heard of KyberNetwork, NEO or OmiseGO?
Don’t worry if you haven’t. I’d never heard the names before crypto expert Sam Volkering brought them to my attention.
Sam tells me they sell for just a few cents per coin. Not unlike bitcoin a few years ago…before it surged 50,000%.
Then there’s Monero. You may not be familiar with Monero either. Yet today it’s the eighth largest crypto in the world. This time last year, it was worth only US$1.99. Then, over the next 12 months, it shot up 5,650%.
Now, please note that these are just examples. None of the cryptos listed above are recommendations. But Monero is indicative of the types of gains that can be made in this highly-risky, though highly-lucrative market.
And the 5,650% gain is calculated in fiat money…US dollars. Investors who bought in and cashed out in dollars did undeniably well. But they missed out on the chance to supercharge their returns.
What do I mean? We’ll get back to that right after a look at the markets.
Overnight, the Dow Jones Industrial Average closed up 42.21 points, or 0.18%.
The S&P 500 gained 4.60 points, or 0.18%.
In Europe, the Euro Stoxx 50 index finished up 8.60 points, or 0.24%. Meanwhile, the FTSE 100 dropped 0.06%, and Germany’s DAX index gained 21.43 points, or 0.17%.
In Asian markets, Japan’s Nikkei 225 index is up 101.82 points, or 0.49%. And China’s CSI 300 is up 0.14%.
In Australia, the S&P/ASX 200 is up 14.56 points, or 0.25%.
On the commodities markets, West Texas Intermediate crude oil is US$51.07 per barrel. Brent crude is US$56.65 per barrel.
Gold is trading for US$1,293.84 (AU$1,657.07) per troy ounce. Silver is US$17.22 (AU$22.05) per troy ounce.
One bitcoin is worth US$4,827.21.
The Aussie dollar is worth 78.08 US cents.
Cash is for suckers
If you’re a regular reader, you’ll know that I’m a big fan of cash.
Cash is a reliable store of wealth…especially in today’s low-inflation environment. It offers anonymity from the prying eyes of government and corporations. And no one knows how much you have…or don’t have.
This is why I’ve taken the time to write a number of pieces warning you about governments’ — both Australia and globally — backdoor plans to abolish cash.
So why, you ask, would I write something sacrilegious like ‘cash is for suckers’?
Because, when it comes to ICOs, resorting to cash can see you lose out on what Sam Volkering calls ‘supercharged returns’.
Here’s what Sam wrote to me last night:
‘When I’m looking at ICOs, the idea is to supercharge a person’s wealth through their crypto holdings. The aim is not to use fiat money to invest in these and then exchange back out into fiat money afterwards. It’s to get your “core cryptos” — bitcoin and ethereum — and then use those to participate in these ICOs.
‘The reason for keeping this wealth creation within the crypto world is to build a huge base of your core cryptos. For example, taking just one ether* and contributing to an ICO and then having a chance to see that multiply out to 10 ether in the space of a few days or weeks. And then taking that 10 ether and rolling it into another ICO for another potential 10-fold gain. One ether to 100 ether in the space of a couple months.’
(*An ether is the ethereum token.)
How can this ‘supercharge’ your returns?
Well, $1 back on 2 January is worth roughly $0.99 today.
On the other hand, one ether on 2 January was worth US$8.17. Today that same ether fetches US$306.40. That represents a gain of 3,850% on your core ether holding alone.
Now imagine if an ICO investment you made in January saw your ether holdings go up 10 times. Are you beginning to get the ‘supercharged’ idea? Nice, isn’t it?
Of course, there are no guarantees any ICO will go up in value. And no guarantees, for that matter, that ether might not lose value.
But taking 2017 as a litmus test for what the coming year may bring, getting into the right ICOs — and then supercharging your returns — could deliver truly life-changing wealth.
Gaining mainstream traction
As I noted in yesterday’s Port Phillip Insider, for ICOs to take the next big step, investors need greater confidence in the system. At the moment, 99% of investors are on the sidelines. Only one in every 28,000 people hold bitcoin.
But as more institutions and nations move to regulate and accept cryptocurrencies and initial coin offerings, more people are likely to invest in them.
Last month, Christine Lagarde, head of the International Monetary Fund (IMF), sounded off on the cryptocurrency issue:
‘Many of these are technological challenges that could be addressed over time.
‘Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays.
‘So I think it may not be wise to dismiss virtual currencies.’
That may not sound like the strongest endorsement for virtual currencies. But when the head of the IMF even leaves the door open to cryptos, you know this is a market to watch.
And Lithuania has just joined the growing list of nations offering guidance on ICOs.
‘Lithuania’s central bank has become the latest financial institution of its kind of release new guidance for those seeking to organize an initial coin offering (ICO) in the country…
‘On the question of ICOs, or the sales of cryptographic tokens commonly used to bootstrap a new blockchain network, the central bank outlined a number of national laws that could apply – depending on the characteristics of the project and the function of the token itself.
‘Marius Jurgilas, one of the central bank’s board members, said in a statement:
‘“Notwithstanding the fact that such activities are not regulated, in their essence, they are the raising of funds from investors, often unprofessional, to finance some activity. Since the risk of losing investors’ funds and other risks are particularly high, our position is that such offering, in certain cases, should be subject to investment related legislative requirements and restrictions.”’
Meanwhile, in the private markets, blockchain start-up company Balanc3 is working to increase the level of transparency in ICOs.
Also from CoinDesk:
‘Last week, in the first live demo of its [Balanc3’s] new accounting platform, the company gave more than 200 people from the “Big Four” accounting firms, other blockchain startups and regulatory agencies a glimpse into a new way to value ethereum-based token sales.
‘In an exclusive interview, Balanc3’s Griffin Anderson told CoinDesk:
‘“It really allows the industry to begin to hold accountable these token sales that have essentially almost gone public, and the markets will be able to use this information to more accurately price what these token sales are worth.”’
More governments are moving to regulate ICOs. And more companies are working to increase transparency levels.
The combination should see ever more investors feeling comfortable about putting money into what is already the fastest growing market in the world. And if more investors pile in, that growth should continue apace.
An important reminder on risk
When you’re talking about potential gains in the thousands of percent in a matter of months, it’s easy to lose sight of the risks. And that is that many ICOs don’t make any gains at all. Some see their investors lose everything.
The following story, published on Bloomberg this morning, is a great example of just how cautious you need to be:
‘From the outset, investors have been warned that it’s buyer beware in the world of initial coin offerings. On Wednesday, someone got a $70,000 lesson on the subject.
‘That’s how much someone lost on their failed attempt to purchase ICO tokens for AirSwap, a decentralized cryptocurrency exchange that started its public crowdsale on Tuesday. The reason the deal didn’t go through is unknown. One of many possibilities: a trade can blow up if the user doesn’t have enough ether to fund the computers that process the deals.
‘The person, only known at this point by their ethereum blockchain address 0xf51ec864d5fb2f184198e369fe063fc77045a3ad, was trying to buy about $508,000 worth of AirSwap tokens — or 1,700 ether — according to the transaction history on Etherscan. They ended up losing 236.9516 ether, worth a little more than $70,000.’
$70,000…gone. Buyer beware indeed!
ICOs are not for the uninitiated. First, you need to ensure you know how to properly make the deal. Unlike poor 0xf51ec864d5fb2f184198e369fe063fc77045a3ad.
Second, you want to put the odds in your favour by knowing as much about the company running the ICO, and the people behind it, as humanly possible. Avoiding the trash IPOs is just as important — or even more so — than getting into the next ethereum on the ground floor.
And that’s precisely why Sam Volkering developed his C.O.I.N system…
The C.O.I.N system
Here’s what Sam has to say about his system for pretesting ICOs before ever considering investing in them:
‘After eight years immersed in this wild new market, I’ve developed a tried-and-tested, four step system that homes in on the ICOs and new-to-market cryptos with the best chance of success.
‘Without this system, you’re shooting in the dark with a blindfold on. Seriously, you start buying these tiny crypto plays willy-nilly without following this system and you’ll lose your shirt. Simple as that.
‘Now, this “crypto screen” system I’ve developed has already helped some readers score quick crypto gains like 382% and 393%. And I’ve seen it deliver a 10-times return in just six days.
‘In other words — it works.
‘I call this system C.O.I.N. There are four steps or criteria every crypto opportunity I come across must tick.’
This Saturday, at 2:00pm AEDT, Sam kicks off his free Crypto Masterclass. He’ll cover a range of critical issues you need to be aware of when it comes to ICOs. Or what he calls the ‘razor’s edge of the crypto market’.
And he’ll walk you through his C.O.I.N method step by step.