If you are somebody who possesses strong convictions of a technological future and enough emotional resilience to cope with the barrage of FUD that accompanies this space, there is tremendous opportunity smiling at you.
P.s. None of this is financial advice.
What sets apart the conscious being that is man from all other forms of life on earth is our ability to not only plan for the future but to proactively participate in the construction of it.
While it may be impossible to predict how society will continue to evolve with perfect accuracy, we can however have a strong sense for the direction of its evolution.
Short of a solar EMP that permanently disrupts the radio frequency waves on Earth and renders computers useless, it is safe to say that moving forward, every faculty of human life will converge toward technology.
The lowest-hanging fruit en route to this convergence also happens to be an area of extreme interest to every sane person on the planet; finance.
Regardless of how many boom and bust cycles have swept through the industry, there is (should be) no doubt about the fact that cryptocurrency is the technological realization of finance.
As the world strengthens its acknowledgment of this maturing economic sector's permanence, a radical shift in behavior is taking place.
Organizations and individuals from every class are rushing to get exposure.
This then leads us to the next question, how can somebody get involved in crypto?
Buy the Digital Assets
This is the most straightforward method to get involved.
While it may seem simple and obvious on the surface, buying crypto is a form of art. Excessive fees, regulatory ambivalence, and sharp short-term movements can confuse and even dissuade participation.
With the abundance of onboarding applications available today, understanding when and how to enter still eludes the vast majority of people.
Highly desirable for those looking to own the underlying assets and arguably the form of exposure with the highest risk due to price volatility, direct ownership is not the most optimal choice for everyone. It demands extreme organizational dedication around the security and storage of it; a level of organization that the vast majority of users do not have or simply do not want to be tasked with.
There are two ways to get into mining:
A. set up your own equipment
Not for the lazy and not for the technically challenged.
So many people are deluded by the demands of mining. It is commonly thought that mining is a “set it and forget it” approach. That couldn’t be further from the truth.
The complex process of setting up your own mining rig requires a strong basic understanding of hardware and networking. Then after it is set up you must constantly monitor the equipment to make sure that everything is running properly. You must be able to keep up with the developers of your network to always patch any incoming software updates.
You must work out a strong financial model that accounts for the amortization of equipment, constant energy costs, fluctuations in network emissions, adjustments of hash rate, and of course, the cryptocurrencies price. Then you must work out a secure storage plan and ultimately an exit strategy. Moreover, the landscape of machinery is always advancing, as new devices with greater performance become available, your equipment loses its prominence and your operation becomes less profitable.
B. cloud mining contract (not advised)
Due to the high-touch daily monitoring and complex technical process of mining, there are online services that provide consumers with contracts to rent out servers and electrical consumption remotely, in return for the cryptocurrency that is extracted from the efforts of their machines.
While there is merit to all attempts at getting into crypto, this one I personally am not a fan of. These contracts are designed to derisk and make money for their operators.
Misunderstood by crypto-natives and decentralization maxis, owning stocks of companies that have Crypto on their balance sheets or are somehow involved in the industry translates to a form of exposure vicariously.
In some jurisdictions around the world, there is no simple way for large institutions or wealthy individuals to get involved in the digital asset industry without being scrutinized by their nosey governments. Some organizations even have legally binding operational agreements that downright forbid them from allocating capital outside of their confined sectors.
This grade of exposure is unique in the vector of value it captures. Owning Bitcoin directly is a radically different risk/reward profile than owning shares of a company involved in BTC markets.
Whether public or private, there are 4 general classes of stocks to explore:
A. Mining companies
Mining is one of the most prominent business models of public companies involved in crypto. Riot, Marathon, Cipher, Canaan, among others are such companies. Prices/valuations of these companies tread tightly with the greater crypto market price cycles, but do have a small degree of difference in their volatility (it is smaller).
B. Equipment Manufacturers
Companies producing ancillary products that support the crypto industry. I'm not just talking about BitFury or Bitmain that produce ASIC miners, I'm talking about everything from NVIDIA to AMD for graphics cards and ECX for cooling equipment. Whenever close attention is paid, there is tremendous opportunity to be found.
C. Holding companies
The traditional definition of a holding company is one that holds a vested interest in a group of other companies. Here I am referring to any business that is willing to hold crypto on its balance sheet instead of just dollars or other legacy financial instruments. The best example of this is Michael Saylor and Microstrategy. While Microstrategy is an Enterprise Business Intelligence company, the fact that it holds so much BTC in its treasury gives the stock price a very unique trading pattern versus other similar companies.
Were talking about centralized exchanges of course. Exchange businesses earn money regardless of the general market cycle. Their models allow them to benefit from activity/velocity on their platforms rather than price. Coinbase, Gemini, OKX, Binance, and countless others. The vast majority of exchanges are not publicly traded, therefore these opportunities are typically available only to private groups of insiders/investors.
* Hedge funds and VC firms also qualify for this category. However, they are money managers that have radically different risk tolerance and time horizons.
This is the silent kingpin of all methods.
Highly favored due to the absence of sensitivity to price. Earning crypto is a subtle adaptation of DCA. Of course, if you earned $1,000 in BTC and a week later it falls down to $900, it doesn’t feel too great. However, if you earn $1,000 BTC again while at the lower price, you will accumulate more BTC. Once the price rebounds, you would have in effect earned more than just $2,000; you earned $1,000 + ($1,000 + ~11%).
This is such an undervalued vehicle for accruing crypto. Surely the raw size of cashback is never going to be huge. But, odds are that you need to eat. If you are spending money anyway, you might as well be earning some cashback rewards for doing so. There are plenty of platforms that now provide users cashback every time they make a purchase, the two that I personally use are Fold App and Lolli. (Happy stacking!)
B. Incentives for the use of platforms
Almost every new product that arrives on the market needs to have some kind of user acquisition game plan in place. Majority of the time, these plans are to provide some kind of incentive, in the form of cryptocurrency, for people to use/test their platforms. These can range from something as simple as signing up for an account and simply interacting with a GUI to something more complex as proving liquidity on a DEX.
C. Hackathons & Bug Bounties
This one is for the developers among us. Protocols and software applications are constantly providing incentives for finding vulnerabilities in their codebases. Both early-stage and mature companies will have some form of bug bounty available all year round. Occasionally, coding festivals called “hackathons” (a mixture of the words Hacking and marathons) are hosted, where teams from around the world come to compete against one another in utilizing their development skills for creative problem-solving.
D. Writing contests
There has been a consistent rise in platforms that provide rewards for creating content. Hackernoon and Publish0x are constantly partnering with sponsors to host creation contests. If you are talented at or just love to write, this might be an option for you!
Get an Industry Job
As unsexy as it might present itself, this is one of the most effective ways to get exposure. Aside from the personal reputation and skillsets that you will develop along the way, you will build a network of like-minded individuals that will provide you with a wealth of insights and knowledge that would otherwise be impossible to gain. Cheeky? Maybe. True? Absolutely.
There are two calibers of companies to consider, startups and established giants. Startups are tricky to work with as they might offer to provide their own token as payment. High risk as you would then be dependent on their success before you have any chance of securing your value. More established companies might offer to provide payments in stablecoins. The choice is yours.
There is no right or wrong way to find yourself getting into crypto. As is the case with anything else in life, trial and error, is the only guaranteed path to improvement.
There are certainly other creative ways to find exposure, such as marrying a hodler or divorcing one. Scamming perhaps? But let's assume that everybody who is here, has a moral compass and leave these manipulative tactics of social engineering and dramatic politics off the table.
Thank you for reading.
I hope you found some insight throughout this passage that will provide you with a greater understanding of how broad the actual landscape of opportunities really is.
Live long and prosper 🥂