First one piece of good news: You can buy fractions up to the eighth decimal place of bitcoin. That means you don’t need to plunk down the nearly $17,000 you often see quoted as the price for a full bitcoin — which is probably for the best, as we noted above. As of Thursday afternoon, that one ten-thousandth — four decimal places or 0.0001 — of a bitcoin is worth about $1.65.
Yet there's reason to doubt that cryptocurrency frenzy will return. JPMorgan Chase, Bank of America (BAC) and Citigroup (C) — Ma Bell in Warner's analogy — banned credit-card purchases of cryptocurrencies. Meanwhile, the SEC and foreign governments have cracked down on initial coin offerings. And lately, Alphabet (GOOGL)-unit Google, Facebook (FB) and Twitter (TWTR) have banned cryptocurrency ads.
Coinbase is a global digital asset exchange company (GDAX), providing a marketplace for digital currencies, and then sending information about the transactions that happen in its marketplace to the appropriate blockchain network, so that those transactions can be recorded in the blockchain. Coinbase serves as a digital wallet, too, where you can store the digital currencies you purchase on the platform. The currencies available on Coinbase? Bitcoin, Bitcoin Cash, Litecoin and Ether.
You’ll find that different exchanges cater to different markets. Today, most countries have at least one cryptocurrency exchange specializing in their own currency. There are exchanges that can accept New Zealand Dollars in exchange for bitcoin, for example. Other exchanges are known for certain pairs. Bithumb, for example, has particularly strong liquidity in the ETH/KRW (South Korean Won) pair at the moment (and it’s easily the most popular cryptocurrency exchange in Korea).
This isn’t necessarily wrong, or inaccurate. This is the reason I first started paying attention to bitcoin. Countless people *have* made shocking amounts of money investing in cryptocurrency. I’ve personally made over $400,000 in less than two years. In fact, bitcoin has already proven to be the best investment in all of recorded history by a shocking margin for those who got in at its most early stages.
It is an exciting time to get involved in cryptocurrency investing. It is a new asset class that is currently delivering better returns than the traditional markets (as of writing these lines). However, it is also important to have a strategy. Not having an investment plan for cryptocurrency investing, or any other market for that matter, can result in heavy loss of your funds. A long-term investment approach is just one strategy that you can choose to adopt. You can even vary the long-term investment approach to suit your own style. The most important thing is to have a plan for each scenario that might happen.
The most common mistake people seem to make is investing solely based on the price alone and its short term historical trajectory, and nothing else. The second mistake is investing in assets that they don’t actually understand or believe in long term, are not planning to hold for at least 5 years, and will be tempted to sell if the price begins to fall in the short term. The third mistake is believing that they’ve already missed the boat on the most established and successful cryptocurrencies, like bitcoin and ethereum, and that consequently they should invest in much less established, much more speculative ‘altcoins’ to achieve truly outsized gains, for no truly good reason besides the fact that the price/market cap for the altcoin is a lot lower than bitcoin’s, and seems like it has more room to grow. The fourth mistake is day trading, and trying to capitalize on short term market movements. I’ll address each of these in turn, and why I believe them to be mistakes.
“There will be a ramp-up time,” said Ari Paul, chief investment officer of Blocktower Capital Advisors LP. “There just isn’t a rush. The professional traders will mostly be looking to do arbitrage, between the futures and bitcoin itself. I don’t expect massive money flows right away but then I expect gradual buying from people who want passive exposure” without buying bitcoin directly.
Moreover, in the event of a hard fork, whereby two blockchains are created, and consequently, two sets of coins that you technically should own, only some exchanges will actually give you access to both sets of coins. Most notably, Coinbase has explicitly stated that they will only give you access to the dominant blockchain that emerges from a hard fork, no matter how much value the market assigns the non-dominant chain. They may or may not give you access to the other coins in the future, but there is no guarantee either way. In any event, with any exchange you are fundamentally agreeing to trust them to give you access to both sets of your coins, even if they say they will. If you own your coins yourself in your own wallet, however, you need to trust no one. You will automatically own both sets of coins by default in the event of any fork.
Speaking to that last point now (the ’second’ mistake I mentioned at the beginning of this part) I’m of the personal opinion that it is incredibly important to not only invest solely in things that I truly believe have the real potential to succeed in a big way long term, but to actually commit and hold to that investment, once I make it, no matter what happens with the price short term. If some fundamental fact underlying my investment changes, I can certainly re-evaluate it, but if the price drops 90% or even 95% in the short term for no particular reason except a collapse of a local maximum in price speculation (e.g., a bubble popping), I must never be tempted to sell and try to ‘time’ the market in any way. Instead, I have to hold that investment with firm conviction in what I believe the eventual price based on fundamentals is worth, regardless of how the market values it in the present moment.
Coinbase is a global digital asset exchange company (GDAX), providing a marketplace for digital currencies, and then sending information about the transactions that happen in its marketplace to the appropriate blockchain network, so that those transactions can be recorded in the blockchain. Coinbase serves as a digital wallet, too, where you can store the digital currencies you purchase on the platform. The currencies available on Coinbase? Bitcoin, Bitcoin Cash, Litecoin and Ether.
It’s also extremely convenient and valuable for a merchant to use, and we had great success implementing it for a trial run at my company Sprayableback in the day. In the past, we’ve suffered from rampant fraud after our site was targeted on a carding forum (a place where people buy and sell and use stolen credit cards). When we were paid in bitcoin, however, these concerns were completely eliminated, as fraud is an impossibility on the bitcoin network with enough confirmations.

When examining strategies, it is of course a good idea to find the strategy that fits the best with current market conditions, but the real long-term value is found when remaining analytical and critical of every asset and every trading strategy. Even the best and most complex strategies being employed by the best crypto traders on the planet are not perfect, so recognizing the faults of every trading strategy is just as important as examining the potential upsides. The cryptocurrency market is not perfect, and assuming that there is a perfect strategy to match the imperfect market is not a recipe for success.
WAX (World Asset Exchange) is an emerging project with a bright future. Developed by the founders of OPSkins, the leading marketplace for virtual video game assets. The WAX team has built the first decentralized exchange for gamers to trade digital-assets for nominal fees on a trusted platform. There’s a massive market for this platform considering there are over 400 million gamers who purchase more than $50B in digital goods every year. WAX is one of the few emerging projects with a built-in use case and existing user base which already has experience using cryptocurrencies to purchase digital assets. 
The most common place where people buy and trade cryptocurrency is on the exchanges. Exchanges are places where you may buy and sell your crypto, using fiat. There are multiple measures to judge the reliability and quality of an exchange, such as liquidity, spread, fees, purchase and withdrawal limits, trading volume, security, insurance, user-friendliness. Out of all these, I find Coinbase as the best exchange hands down. It has a beginner-friendly user interface, and an unbeatable 100% crypto insurance.
The futures offered by Cboe Global Markets Inc., and similar contracts that start trading in a week at at another Chicago-based exchange, CME Group Inc., may open the door to greater inflows of institutional money, while also making it easier to bet on bitcoin’s decline. Either way, it’s likely trading will start slowly, said Mike Novogratz, chief executive officer of Galaxy Investment Partners, which is raising a crypto hedge fund targeted at $500 million.
But not everyone is convinced it’s a good idea. On Dec. 6, the Futures Industry Association -- a group of major banks, brokers and traders -- said the contracts were rushed without enough consideration of the risks. Last month, Thomas Peterffy, the billionaire chairman of Interactive Brokers Group Inc., wrote an open letter to CFTC Chairman J. Christopher Giancarlo, arguing that bitcoin’s large price swings mean its futures contracts shouldn’t be allowed on platforms that clear other derivatives.
However, as I’ve mentioned before, this is far more difficult, if not impossible, to do with cryptocurrency, more than even normal investment vehicles like stocks. I’ve seen people who think that bitcoin has hit a peak and must necessarily stop going up sell, intending to wait until bitcoin falls again to buy in again and make maybe a 20% extra profit, miss out entirely because bitcoin kept going up and never came back down. There are numerous stories of those who bought into bitcoin at $1 or less, but sold well before it ever reached even $10, much less $2500.
Avoid borrowing money. One of the drawbacks when credit cards were the most popular way to pay for Bitcoin was the concept of borrowing money on such an unpredictable investment. When you borrow money that requires you to pay interest (credit cards and personal loans, for example), you risk having to pay extra for an investment that doesn’t give you a return, which exponentially increases your risk.
Ripple (XRP) is a more recently popular cryptocurrency, although some argue that it can't really be called a cryptocurrency at all. It does, however, have a market cap of $19.2 billion as of this writing, 3rd largest amongst cryptocurrencies. Ripple is meant to act as something of a payment processing system that could allow for instant international money transfers. It has partnered with several notable companies, including American Express.

Even though other transaction coins will definitely grow in value in the next few years, I think that Bitcoin will remain the dominant currency in this segment. While others may be faster, less centralized, or more private, Bitcoin’s incredible first mover advantage and allowance for upgrades makes me continue to place my faith in the reigning monarch of cryptocurrencies.
This is especially true given the number of new cryptocurrencies that have entered the market. There is no industry that is targeted by only one cryptocurrency, and even if you manage to find such an industry, new players will likely surface. IOTA was the crypto that didn’t use blockchain; now there’s Nano, Circle, and Hashgraph. Ripple was the crypto for banks; now there’s Stellar slowly eating away at Ripple’s first mover advantage.
There have been a lot of new digital asset fund launches in 2017, but still only a couple of funds with more than $10m under management and even fewer with more than $100m under management. Flows into actively managed digital asset funds were strongest in the UHNW, family office and VC channel in 2017. We believe 2018 will mark the beginning of Wall Street and institutional capital entering the digital asset market. You’ll see endowments and global macro managers enter the market in a big way. You’ll see some sovereign wealth funds look to get exposure. That said, it is important to level-set. This is a still a tiny market. It’s a $300 billion market today, so it still has a ways to go before hitting mainstream.
The most common place where people buy and trade cryptocurrency is on the exchanges. Exchanges are places where you may buy and sell your crypto, using fiat. There are multiple measures to judge the reliability and quality of an exchange, such as liquidity, spread, fees, purchase and withdrawal limits, trading volume, security, insurance, user-friendliness. Out of all these, I find Coinbase as the best exchange hands down. It has a beginner-friendly user interface, and an unbeatable 100% crypto insurance.
But here, more than anywhere else, is where you need to proceed with caution. Bitcoin is already incredibly risky, imagine what risks smaller and lesser-known crypto brings. Rounding out a portfolio with other cryptocurrencies may be able to help you evaluate the state and perhaps the future of that market, but many of them can quickly prove to be a flash in the pan. The sudden rise of initial coin offerings -- a method of crowdfunding new cryptocurrencies in a way that avoids venture capital entirely -- has many people excited for the future, but also has many wondering if it's going to create an even more dangerous bitcoin bubble.
"We see continued growth both in terms of the average daily volume and open interest," said Tim McCourt, group global head of equity products and alternative investments at the CME Group, a Chicago-based derivatives exchange. "The volume has steadily increased compared to when it was first launched in December. This is not a one-sided product because we have both supply and demand."
While Ethereum focuses on dapps and Ripple on ultra-fast finances, Monero focuses on – privacy! This technology actually uses cryptography to protect all incoming and outgoing addresses, as well as the transmitted amounts. Monero is an all-in-one solution for all privacy enthusiasts, and as such, it holds tremendous potential for great success in the crypto world. Monero is my favourite coin.
Grayscale Investment Trust is the sponsor of the Bitcoin Investment Trust, and it charges shareholders an annual expense ratio in order to manage the fund. The current charge is 2% of assets, and because the trust's bitcoin holdings don't generate regular income for trust shareholders, Grayscale has the ability to liquidate bitcoin in order to pay itself its fee. That's the reason why over time, each share of the trust will be equivalent to a decreasing amount of bitcoin, as fees eat into the trust's principal assets.
This part will be wildly subjective. Crypto has the potential to realize many ‘rags to riches’ stories, but its volatility makes it unpredictable. As a precaution, the money you put in crypto should be money that you are fine with losing. I cannot emphasize the importance of this as we often underestimate how the volatility affects our emotional capacities. The upside is huge, but it comes with lots of risks and, if I may put it, emotional torment.
Retailer Acceptance – A cryptocurrency isn’t much of use if you can’t purchase anything with it, so before you invest in it, it’s very important to know who and where it was accepted. Some coins are simply built for other purposes and they aren’t designed to be exchanged for goods. Some of the popular cryptocurrencies are widely accepted just like Bitcoin, while some cryptocurrencies can only be exchanged for other cryptocurrencies.
Transaction volume: in order to determine whether a cryptocurrency is actually being used, you can take a look at its transaction volume. In the case of Ethereum, its transaction volume per day is about 500,000 ETH. Historically, this is a number that is increasing and as long as this upward trend continues this reaffirms the long-term viability of holding Ethereum in our portfolio.
This leads to what’s known as a bank run, where the bank fails because it is unable to fulfill all the withdrawals customers demand. This can escalate quickly into a systemic bank panic, where multiple banks begin to suffer the same fate. Each successive failure compounds the collective panic, and quite quickly, the whole system can begin to collapse like a house of cards.

Once the ICO tokens are released on an exchange, prices would tend to shoot up in value – often in multiples – as there will be a huge demand stemming from those that were not able to invest during the ICO stage. A trait of popular ICOs is that they would have a whitelisting period, where you must register yourself prior to the ICO period to book a slot for the actual ICO date.


You should look for projects that have good long-term fundamentals. Assessing a project based on its vision, the problems it is trying to solve and the quality of its developing team is vital in understanding whether the project has great prospects. Good projects will tend to achieve their objectives and deliverables, which will, in turn, be reflected in an appreciation of their token’s price over the long-term. (See more: Coins, Tokens & Altcoins: What’s the Difference?)
Bitcoin (50%) – When speaking about cryptocurrencies, it means speaking of Bitcoin. Bitcoin is the base asset for the other alternative coins, and is the primary decentralized crypto currency. Bitcoin was created by Satoshi Nakamoto back in 2009. Bitcoin is designed to function just like physical currency, which transfers value, and as time goes on more places accept Bitcoin as a legitimate way of payment.
What makes Leo Tolstoy’s magnum opus unusual is that he disputed the invasion of Russia being caused by Napoleon, or that the series of conflicts during this period were called the Napoleonic Wars. He argues that doing so makes it easy to disregard the untold millions of people who also participated in the conflict as little more than pawns on a chessboard.
Basecoin is a stable coin (not volatile cryptocurrency) whose money supply algorithmically contracts and expands based on market demand and a decentralized Consumer Price Index.  What this means in english is that this token is effectively managed by a robot central bank free from the political interference that real central banks face.  We still have not come across a stable coin that can act as an everyday usable cryptocurrency, but doesn’t wind up in fiascos involving the legality of the token (see Tether articles).  If the project works as intentioned, it could change modern currency markets.  One could reasonably pay wages in basecoin, or use basecoin to more effectively trade digital assets, but the best use case of the basecoin would be for the digital currency to alleviate the inflation madness occurring in countries like Venezuela or Zimbabwe.  
Utility value: when determining if a cryptocurrency will be here in a few years from now, we have to ask ourselves, is the cryptocurrency useful? Does it have a users’ market? This question is important because it is the most useful cryptocurrencies that are likely to be widely adopted. Take Ethereum for example, its utility value derives from its function of allowing developers to build Decentralized Applications (DApps) on top of its blockchain. We can conclude that, as long as Ethereum is the go-to-place for DApp development, it is likely to maintain, and possibly increase, its utility value. Therefore, Ethereum would be a viable cryptocurrency to include in our portfolio.
Bitcoin futures have fairly extreme pros and cons to them. Contracts are leveraged in that you're paying a fraction of bitcoin's actual price when you buy futures, giving you a chance to profit off them. However, the contract has an expiration date in the near future. If the price is down when it expires, you can't simply hold and wait to see if it bounces back; you just lose.
You’d be in good company in that case, anyway. Jack Bogle’s bitcoin investment advice is pretty simple, and blunt: You should avoid Bitcoin speculation “like the plague.” And this is coming from the guy who founded Vanguard, so he knows a thing or two about investments. The other risk to keep in mind if you plan to invest in bitcoin, aside from the overall volatility of the cryptocurrency, is of a cyber attack. Hackers descended on digital currency exchange Bitfinex on Tuesday, less than a week after cybercrooks made off with $70 million in a separate heist.
Ripple – Ripple is more in the nature of a payment protocol created and developed by a company named Ripple, which is based on the concept of Real time Gross Settlement. It was initially released in the year 2012. Also known as the corporate cousin of bitcoin, ripple is another cryptocurrency which saw sudden uptick in August. It shot from levels of 16 cents to 30 cents within a span of 24 hours on August 23. Since then, it has retreated back to levels of 20 cents.

When those mortgages were defaulted on, the artificially inflated values of the homes began to collapse, and banks were left holding assets worth far less than the amount they had lent out. As a consequence, they now had nowhere near the amount of money that customers had given them, and began experiencing liquidity crises that led to their ultimate bankruptcy and demise.


Had I actually done my research and believed that it was a fair bet to make that one day bitcoins would be worth far more than even the height of the local maximum bubble at the time, it absolutely could have been the right decision to buy in then, even if it crashed later temporarily to $200. What wasn’t right was buying in simply because the price was going up and I had a fear of missing out.
The financial crisis of 2008 highlighted yet another risk of the modern banking system. When a bank goes out and spends the 90% of net deposits it holds in investments, it can often make very bad bets, and lose all that money. In the case of the 2008 crisis, banks in particular bet on high risk subprime mortgages. These were mortgages taken out by borrowers very likely to become delinquent, to purchase houses that were sharply inflated in value by the rampant ease of acquiring a mortgage.

A very cautious investor can buy on an exchange and then store the bitcoin code off the site or even on a piece of paper — that's what the Winklevoss twins and bitcoin early adopters have done, going so far as to cut up their code into pieces and store it in a vault using a system that only they understand to put the actual bitcoin code back together.
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