I often share information about the coins I hold and buy. While I sometimes categorise or group them, I rarely look at my portfolio as a whole and explain it in broad terms.
This post is to explain the broad rationale behind why I buy what I buy. It’s to give you an idea of why I am focusing my altcoin investments where I am, and perhaps an idea of how that is working for me so far.
Turn back the clock
Little story of my crypto history:
Like many crypto investors, I was doing very well in 2017. Not wanting him to miss out, I decided to introduce a very good friend of mine to Bitcoin. Of course, it didn’t take long before he wanted to start experimenting with other coins. Because I’m such a nice guy, I spent a weekend typing him a 27 page Altcoin Investing Guide. It was upon completion of that guide that I realised I should be sharing my crypto knowledge with more than just one friend – that guide is one of the major reasons why I became a crypto blogger.
Much of what I say in this post comes from that crypto guide. Obviously I’m not sharing the whole document here, just a specific part of it. I want you to understand that this is not something which comes off of my head today, this is part of a long-term plan which I use for myself and which I consider worthy of sharing with my closest friends.
Reset the clock to today – and the future
This is a broad post, an overview. It’s more about coin types, than specific coins. When I do mention coins by name, it is because they are suitable examples, it does not necessarily mean that they are the optimum coins to buy. (Except for NEO of course, always buy NEO! ? )
Before I bought too many altcoins, I used by enormous brain to look to the future. I brag a lot, I talk a big game, I make a lot of very bold statements. But if you believe nothing else about this eccentric crypto guy, then believe this: I am exceedingly good at predicting major future events accurately. It is based on these predictions that I made my initial altcoin investment decisions. Let me show you what those decisions led me to:
With the boom of altcoins, I could see that exchanges would be popular. People need somewhere to buy and sell their altcoins. Exchange coins were always going to be a good place to invest, so good that I made them number 1 in the investment guide which I gave my friend.
I’m glad that I did, because exchanges have done very well since then. Having said that, I believe that we have not even started to see the potential of these coins – with the possible exception of Binance Coin. I still see an amazing future for all good exchange coins.
Important: not all exchange coins are created equal! There are some good ones, but there are also many which just hopped about the bandwagon. I have sold a few which I did not like, such as COSS (which failed me miserably) and Aphelion (which is looking too shaky), others (like Huobi coin) have never looked appealing to me.
I still hold Binance Coin (BNB) and KuCoin Shares (KCS), coins I have held since just after they launched in 2017. Both are coins which I consider to be some of my most important coins to hold onto. I also took a relatively large position in Nash Exchange (NEX) which I believe is the future of DEXs. I hold a little NEXT exchange coin (NEXT) as a long shot and I even bought a tiny amount of the Switcheo token (SWTH) yesterday. I also bought exchange related coins with hybrid functions such as OmiseGo (OMG), Everex (EVX) and Kyber (KNT).
From personal observation: Binance has obviously done very well this year. But the recent Binance FUD (thanks to the US crypto regulations) caused some rather interesting happenings: my KuCoin Shares, Nash Exchange and even Next Exchange coins all climbed significantly in price. Read into that what you will.
I remain convinced that good exchanges are a fantastic investment. I think that a spilt between Centralised and Decentralised exchanges is a good idea, because I believe that the market will need both. As time goes by I believe that DEXs will come to dominate as only they are capable of ensuring that private transactions stay private. The surge in NEX price during the recent Binance threat proved that. On the other hand, institutional money may prefer Centralised Exchanges, so don’t rule those out.
I spoke about privacy coins in detail last week. Read this if you have not already done so: “The Future of Privacy Coins”. Privacy coins are vital to our continued battle for financial freedom – free from the fiat money regulations which enslave us and which governments will no doubt continue to try to apply to cryptocurrencies. Since many governments have already tried to regulate cryptocurrency investing to a large degree, privacy coins are the obvious way to avoid their tyranny.
I believe that demand for these coins is only just starting to grow – also something I observed during the recent Binance-USA FUD. For a privacy coin to gain value, it needs to be one of the big names. It’s not good enough that you just buy any privacy coin, you need something that will be accepted on enough exchanges to be useful globally. I hold ZCash (ZEC) and PIVX (PIVX). I also hold Dashcoin (DASH) which is semi-private. I like those three coins because they are all rather old and well established coins – meaning that they are relatively widely accepted and known. This gives them a good chance of riding the privacy coin success wave. I expect that such a wave will come once regulations begin to be enforced and crypto investors start to seek secure, private channels for transacting.
There are a few newer privacy coins which look good, but I am hesitant to touch an unproven coin which is not well known – it runs the very real risk of never gaining popularity. The biggest name in privacy coins must be Monero (XMR), I don’t hold it, but I would like to. I consider Monero to be the best of the privacy coins to invest in, with ZCash in second place. Don’t ask me about Verge unless you want me to laugh at you or give you sympathetic looks.
Probably my favourite variety of crypto – and for good reason. Like exchanges which benefit from the growth of altcoins, so platforms benefit from them too. A platform makes it much easier to launch a cryptocurrency, because it means that you don’t have to build a new blockchain from scratch. Why rewrite an entire operating system just to create one new application? For this reason, platforms should remain very popular for many years to come.
Since there are several competing platforms, it makes sense to hold a few of them, at least for now. Warning: I’ve told you this again and again, and now I’m telling you yet again – do not ignore the Chinese platforms! (Or any other Chinese cryptocurrencies for that matter.) China is going to have a major say in the future of crypto: just wait and see. I read an anti-EOS article about two weeks ago, you’ve probably read similar ones: “EOS is too centralised, blah blah blah”. That didn’t shock me, I’m used to that, it’s just the normal FUD you see daily in crypto. What did shock me was the writers conclusion at the end: “so go buy Cardano instead”. Really? You don’t like EOS so the obvious choice becomes the King of vapourware coins? There are so many better choices than Cardano – coins which don’t have glaring warning lights in the history of their development. But because Cardano is a Eurocentric coin, the author jumped straight to it as the logical alternative – the man is a moron. I’m not saying Cardano is bad, I’m saying that it got way behind and is no longer competitive. I’m saying that it does not nearly deserve its ridiculously high market cap when compared to better platform coins lower down.
Here are some platform projects which I consider to be good and undervalued: NEO, NEO, NEO, Waves, Icon, Lisk, NEM, Metaverse ETP, Iota, Stratis, Holochain, Ontology and NEO. I’ve probably missed a few. Ether is always a good investment, it’s just not as undervalued as those already mentioned. The same can be said of EOS and Tron. Note that Binance Coin is a platform coin as well as an exchange coin these days. Platforms are going to grow and grow as the market gets busier. Those with good back-end systems and good economic models stand to become very profitable. Again: don’t forget the Chinese platforms!
Did I mention NEO? (Which is Chinese…)
Finally we are starting to see mainstream creation of fiat-crypto bridges. Having said that, I am not really interested in any systems which are built by banks and existing centralised entities. In the same way that I won’t be touching Facebook’s soon-to-be-launched abomination coin, I would rather stick to proper crypto payment solutions for all my crypto to fiat needs. I believe that in time the proper crypto payment providers will crush centralised versions in popularity and usage. Remember: proper crypto makes you richer – fake crypto makes people like Zuckerberg and bankers richer – that’s how you tell the difference between the two. Centralised crypto projects may well enjoy initial success, but they will soon be dumped by their users, because big money doesn’t give a damn about those who use it.
Unfortunately, in order to buy things in a fiat-based world, a certain amount of crypto-fiat contamination is necessary (at least for now). The crypto coins I hold for that purpose are TenX (PAY), Metal (MTL), Request network (REQ) and UTrust (UTK). I believe that none of those have even started to bloom yet, but all are good projects with great potential. There are others like Pundi X (NPXS) or Crypto.com (MCO) which are equally good investments. As usual, watch out for the bad ones: I threw a lot of money away on rubbish like Electroneum (ETN) and Centra (CTR).
The reality of the world is that many people will be slow to adopt crypto. Something familiar to them (like a TenX credit card) will be needed to get the masses over from fiat to crypto. I can’t imagine people like my parents ever handling crypto without such projects as an interface and intermediary. For this reason I see a great future for payment coins, probably for the next 25 years or more.
Back when I typed my original Altcoin Guide, these didn’t really exist yet, but they do now! This is a good example of why a crypto investor must remain flexible and keep an ear to the ground: those who get into a new technology the earliest normally stand to benefit the most.
It’s a year old now, but my three-part series on cryptocurrencies and gaming is still well worth a read! The series will tell you everything you need to know – including coin recommendations. Go read it now, because it’s not like you’re going to find anything better to read – this is more Bit Brain wisdom we are talking about!
Here you are, I’m doing you a favour:
There is SERIOUS growth in this sector. Since I wrote that series, other big names are getting into gaming. Just look at the direction in which EOS and NEO are going…
Small Market Cap coins:
These coins are something which I actively invest in. They are not for everyone, I have had many of them go to zero! But if you’re not afraid of taking on more risk and you like the chance of much higher ROI, then this is the place to be. My favourite remains CargoX (CXO), for reasons too numerous to mention. Small market cap coins are the best way to grow your portfolio value relative to BTC – IF you know what you are doing.
I’ve said this before, but it bears repeating: I would rather buy a 1.5 year old low market cap coin – a coin which launched into a bear market and never got the chance to “Moon” – than participate in a brand new hyped ICO (or IEO) of an unproven coin.
I hope this has given you some insight into why I hold what I hold. I hope this helps you with your future decisions. Construct your portfolio carefully while prices are still relatively cheap; rebalance it if necessary. Whether a dip is coming or not, the market has started to move. Soon it will be too expensive to take large positions in crypto using fiat money. Get into good coins while you can afford to: coins which maximise your chances of good long-term growth.
Yours in crypto
“The secret to success: find out where people are going and get there first”
~ Mark Twain
“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful”
~ Bit Brain