Booming cypto
4th January 2021 |
Last time I wrote to you in Sam Volkering’s Crypto Network it was 14 December.
Back then feels like a lifetime ago now. Since, I’ve had a couple weeks off which has been incredibly enjoyable. Hopefully you’ve also taken the end of the year to recharge, refresh and be ready to hit the crypto ground running this year.
I’ve also seen that over the few weeks since my last crypto message to you, that my inbox has started to fill with questions about crypto and what’s happening right now…
I’ll get to all those over the course of this week, and if you’ve got any other crypto questions, make sure to send them in through the frontiertechinvestor@southbankresearch.com inbox.
Now, as I say, it’s been a few weeks since my last update.
Fair to say, what a wild few weeks!
On 14 December, bitcoin (BTC) was trading at just over $19,000, Ethereum (ETH) was trading at about $580 and we were talking about the resurgence of this space after the long “crypto winter” from 2018 through to early 2020.
I also made note in my final message for the year that over the break the two crypto for you to really focus on were bitcoin and Ethereum.
To me, these are two of core crypto that are important to the overall and widespread growth of the space. They’re not the be-all-and-end-all but they’re still both very important.
This year we’ll be looking further at other crypto that I also believe are important to the development of what’s shaping up as the “decentralised world”.
That core idea of these crypto networks allowing the decentralisation of industry is something that very central to what’s happening now. Importantly it comes in a variety of different shapes and forms, bitcoin is one, Ethereum is another, and there are others that we’ll explore more over this year.
However, as noted above, where the fiat-converted prices of BTC and ETH were trading on 14 December is a world away from the last couple of weeks’ action.
As recently as the early hours of this morning ETH has punched up to $1,140. Yesterday, BTC had traded in excess of $34,500.
I’m pretty sure I’ve written to you already about this – crypto is volatile, when you’re relating it to fiat-converted prices.
Personally I have no doubt that a lot of this “price action” is related to the constant interference in the money supply in the traditional system by central banks.
That alone is forcing the hand of people, institutions, corporations and investment funds to look to other assets to protect value. Historically (pre-2009) that would have been to something like gold as “hard” money.
Now, we have an alternative that’s also “hard” money, in the shape of bitcoin. This is why in the second half of 2020 and what I see continuing into this year and beyond, is great institutional interest in bitcoin.
However, I also see that as being the entry portal into the wider world of crypto. That’s the portal you’ve already stepped into and are also starting to explore, and that we will explore more this year.
You see, to many bitcoin is the first point of entry into crypto. For me it’s the best way to really get your head around the concepts of decentralisation, how a network can evolve, how the network effect can deliver value to crypto and also how to think about new ways of understanding money, investments, finance and an economy.
This is the story that we’re seeing play out once again. I highlighted it in my book and have been trying to explain it to as many people as I can over the last decade. Sure, maybe it takes bitcoin’s fiat-relative price to skyrocket for people to see it, but we’re in the midst of some pretty wild economic times so if that’s what it takes to get people’s attention so be it.
Hopefully you’ve already gone about getting yourself some crypto already and you’re starting to see just how exciting this world can be.
What I do want to caution you about though is it can fast become obsessive and dangerous if you get too wrapped up in the excitement.
I’m here to taper your expectations as much as I’m here to open your eyes as to what’s going on.
It’s very easy to catch a bout of FOMO (fear of missing out) and start ramping in everything you’ve got and more into crypto.
But while we’ve seen some great, wild value increases in the last few weeks, we also got a swift reminder today that volatility is rife, when you’re looking at everything in fiat money. That’s a dangerous game to play, and one that you’ve really got to have your wits about you.
For example, while bitcoin traded at over $34,500 on Sunday, this morning sometime after 10am, it had taken a sharp little dive down to around $28,200. That’s a swift 18% drop off in a matter of hours.
That can cause some panic, and it often bleeds out into other crypto, we also saw ETH dip back below $1,000. The important thing here is to always have the bigger picture in mind.
I’m not here to ramp up crypto or to teach you how to trade, there are plenty of other ways to do that, with different approaches and different methods for the more complex and advanced crypto investor.
Here the goal is to educate you to the bigger picture, the revolution in play and to help you build a foundation of crypto that opens you to a potential lifelong opportunity. That means that here my predominate message will be to “hodl” to hold on to your crypto as we experience a shift from centralised, authoritarian traditional finance and economics to the decentralised, distributed, accessible and free (in the sense of freedom) crypto economy.
That’s why the message of “stacking sats” is so important, and also “stacking ETHs” – in fact, my view is that much like stocks, you should eventually have a core portfolio of crypto that you stick it for the long term.
Then around that you can begin to experiment and “play and punt” a little more with more risky, complex strategies and opportunities.
What I would encourage you to do again at this point, is to remind yourself of the basics – review and revisit the Ultimate Starters Guide to Crypto report that we have accessible for you.
I’m also preparing a couple more reports that I plan to have available to you soon, including one of the most important, how to avoid crypto scams, and then one that steps you through some of the lingo, the important links and resources that you can use to further you knowledge when I’m not writing to you as well.
Our “Crypto to Know” List
At the end of last year, I had made note that bitcoin and Ethereum were the two most important crypto at the time to get to know and understand in your crypto journey.
These formed the basis of our “Crypto to Know” List.
Well I’m going to add another today. This is a crypto that I think you should again start to introduce yourself to, and in our next update I’ll explain a bit more about it, its value proposition and how it’s working towards a unified and functional world of crypto.
The crypto project is called Tezos and its crypto token is known as XTZ, sometimes referred to as “Tezzies”. A good way to think of Tezos is a bit like Ethereum. It’s a separate blockchain that utilises a few nifty technology tricks, one being “Delegate Proof-of-Stake” (DPoS) which is a different way of confirming blocks in the blockchain to Ethereum and bitcoin.
Tezos has been a very stable blockchain since its mainnet launch in 2018. It’s also gone through several upgrades and development milestones with no forks (which is a feature of its design and construction). It’s done all this while also enabling smart contracts, and more recently developments around shielding transactions and more privacy focused technologies.
One of the best resources you can start with when it comes to Tezos is the Tezos foundation website, and its “Get Started” information which you can find here.
I suggest starting there, reading up, understanding, and we’ll dig into this more over the coming weeks along with bitcoin, Ethereum, and what’s now a nice little growing list of crypto to know.
Crypto to Know List
- Bitcoin
- Ethereum
- Tezos
Regards,
Sam Volkering
Editor, Sam Volkering’s Crypto Network
