Cryptocurrencies are in the process of going “mainstream”…
Wall Street is starting to fully embrace bitcoin – and Crypto Capital editor Eric Wade believes this is only the beginning. A flood of investors will soon pour trillions of dollars into the crypto market – which will likely send prices soaring much higher in the years ahead.
While bitcoin is a popular place to start, it certainly isn’t your only choice. And as with any asset, it’s critical that you know all your options before investing in the crypto space…
Today, Eric explains the three cryptocurrency subcategories… details the differences between them… and explains the benefits of investing in each…
Eric Wade: When It Comes to Cryptos, Bitcoin Is Just Scratching the Surface
Bitcoin is the largest and most widely known cryptocurrency…
It’s the original “proof of concept” cryptocurrency. It was the first one, released in 2009 by an individual (or group) known as Satoshi Nakamoto.
Bitcoin proved that it’s possible to build, deploy, and support a fully decentralized and secure digital asset that doesn’t rely on any centralized issuing authority. It showed that a scarce digital asset (one that can’t be copied) can be stored and transferred over the Internet.
If the Internet in the 1990s was about the transfer of information, blockchain and cryptos are about the secure transfer of value. The implications are mind-boggling.
Today, bitcoin accounts for around 58% of the total crypto market value. But it is just one of more than 6,500 cryptos currently trading in the market. And more are being added every day.
The birth of bitcoin has paved the way for hundreds of these cryptos to flourish. However, as with all early-stage industries, most early cryptos will fade away into obscurity.
In my Crypto Capital advisory, I’m focused on bringing my subscribers the ones that won’t… and finding the ones that will double, rise 10-fold, or even climb 100-fold. But before you consider investing in any cryptos, you must know all the basics about this ecosystem…
Just like there are different types of stocks, there are many different types of cryptos. So when I refer to the entire crypto market, I’m talking about crypto assets.
I break these down into three subcategories:
- Crypto protocols
- Crypto enterprises
Let’s start at the top…
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Bitcoin was specifically designed to be a secure, fully transparent platform for storing and moving digital value. That’s it.
Since it will eventually have no inflation, bitcoin is like “digital gold.” But cryptocurrencies have very different characteristics and purposes…
Some are more like businesses, some are like gambling services. Some provide the investor or token holder with some form of “utility” (like decentralized digital storage or identity verification).
At the moment, all crypto assets tend to get lumped into the “cryptocurrency” bucket. But that’s wildly misleading…
The majority of “cryptocurrencies” aren’t currencies at all. The Japanese yen, U.S. dollar, British pound, euro – these are currencies. They are mediums of exchange. Bitcoin is a digital currency, and there are a handful of other competing digital currencies.
However, the entire crypto market involves much more than these digital currencies…
When you go to a website, the website address doesn’t start with “www.” It starts with “http” or “https.”
Hypertext Transfer Protocol (“HTTP”) is the foundation for data communication on the web. It’s a protocol that defines how messages are formatted and transmitted, and the actions web servers and Internet browsers should take.
Simple Mail Transfer Protocol (“SMTP”) is the foundation upon which billions of e-mails are sent daily around the world.
A handful of other protocols exist, but these are the backbone the Internet was built on. They are the fundamental infrastructure, the roads, the water pipes, and the electricity pylons of our global digital economy.
They’re worth trillions of dollars, but you can’t invest in HTTP or SMTP. When it comes to the existing Internet ecosystem, all the investible “value” has been captured by the likes of Amazon (AMZN), Google parent Alphabet (GOOGL), Facebook (FB), and other Internet-based businesses.
But there’s a new Internet backbone being created right now, and it’s being built on blockchains. These crypto protocols are what the next blockchain version of Amazon will be built on. And you can invest in these protocols…
Joel Monégro from technology investment company Union Square Ventures coined the term “fat protocols” to describe the backbone of a new blockchain-based Internet. You can buy into these fat protocols using their tokens… And the ones that succeed will be worth tens or hundreds of billions of dollars.
Blockchain technology and crypto protocols have led to new businesses being built and distributed to investors as crypto assets. These kinds of crypto enterprise tokens provide investors exposure to that particular business.
That exposure could be in the form of utility…
For example, holders of a decentralized version of digital storage company Dropbox (DBX) might have a certain amount of storage depending on how many tokens they hold. And if they don’t use all their allocated storage, maybe they could rent it to someone else for some bitcoin.
Or the exposure provided by the token could be more like an interest in the business.
(Note: The regulatory and legal framework behind how these kinds of tokens are distributed and structured is extremely important and will vary on a case-by-case basis. You do not want to buy anything that could potentially be labeled a security by regulators.)
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I’ll use a hypothetical example here… We’ll call it “Bettingcoin.”
Let’s say the team behind Bettingcoin decided to build a global casino platform on blockchain.
They decide to create 1 million Bettingcoins and sell 900,000 of them (90%) to the public in return for some bitcoin to build, launch, and market the platform.
These Bettingcoins give the holders an economic interest in the Bettingcoin operation and – more often than not – the ability to participate in the governance, or decision-making process, of the operation.
The fictional Bettingcoin platform takes a small commission on all the bets on its platform (known as a “rake”). And then, every month, it distributes a portion of that out (like a dividend) to the Bettingcoin token holders.
Bettingcoin isn’t a digital currency – it’s a way to participate in the venture.
So why do this on the blockchain?
By building the application on one of the crypto protocols, Bettingcoin can…
- Prove that its games are fair. If you play online blackjack with a regular online casino, you have no way of knowing if it’s fair or not. Bettingcoin’s games are open-source, so anyone can audit the code to see the cards are being dealt fairly.
- Provide complete transparency. All token holders can see how much rake is being generated since the blockchain captures everything. You don’t need an auditor for the business because everything is on the blockchain.
- Become fully decentralized. Once the company is up and running, a portion of the monthly rake can be allocated to token holders who “bid” to help improve the platform. For example, a young programmer enters into a contract to build another casino game for the platform in return for some Bettingcoin. This way, there’s no corporate structure. It’s just a decentralized application that exists on the Internet, run by its own community and outside of any jurisdiction.
In short, the term “cryptocurrency” can be confusing. Most cryptos are not currencies. The term could mean crypto assets, cryptocurrencies, crypto protocols, or crypto enterprises.
And the crypto revolution is just getting started…
In the end, entire industries will be upended – and the investment opportunities will be as large as those during the dawn of the Internet era.
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Eric Wade’s Beyond Bitcoin – Crypto Capital Portfolio Coins?
Eric believes the gains in cryptocurrencies could be bigger than any other asset class on Earth – and the story in this market goes well beyond bitcoin…
In fact, Eric believes he has found fantastic opportunities to profit in six much smaller – and much cheaper – cryptos. You probably haven’t heard of them yet… But Eric said these six cryptos could offer as much as 10 times upside potential this year.
And on Wednesday, March 31, at 9:30 a.m. Eastern time, he’s hosting a special broadcast to share the details of these under-the-radar ideas… Plus, he’ll reveal what he believes could be next for the crypto market in 2021. This event is completely FREE to attend – but you must reserve your spot in advance right here.