And A Few to Avoid like Madoff!
Ask Natalie for June 20
There’s a saying that during a gold rush, you want to be the one selling pickaxes. This year, everyone is hot on cryptocurrency and blockchain, though few understand what these platforms are really doing. So, here’s a breakdown on the opportunities and the pitfalls, and ways that anyone can profit. Understand that there are more than a few risks associated with investing in the next hot thing, and, therefore, you should be using fun money, not your retirement.
Five Ways to Play Cryptocurrency and Blockchain.
- Cryptocurrency as Currency.
- Trading Cryptocurrency.
- Selling the Pickaxes.
- Blockchain Technology.
- Disruptive Innovations.
And here is more information on each point.
Cryptocurrency as Currency.
In December of 2017, Bitcoin was trading at $20,000/coin. By June 15, 2018, it was down to just $6,514. Similar losses were seen in Bitcoin Cash, Ethereum, and Litecoin. You can’t have a currency that is worth $20,000 one day and $6,500 the next. Avoid using cryptocurrency to buy or sell things.
On June 21, 2017, Ethereum experienced a flash crash, dropping from $318/coin to 10 cents in a matter of minutes. If you receive an email about how one person or company is making trading cryptocurrency easy and cheap, it is more likely a scam than a true opportunity. I get emails almost daily asking me to double-check on this or that amazing, once-in-a-lifetime, act now ruse. Not even one has turned out to be legitimate. Buyer beware!
Selling the PickAxes.
Nvidia has exploded in share price, under the halo of crypto. Nvidia has 34% profit margins and year-over-year sales growth of 65.6%! However, the share price reflects this popularity and is trading at an all-time high. Coinbase has solid leadership and boards if you are looking for a reputable company for your crypto wallet and for your trading. Coinbase is not yet publicly traded but could be soon. Marathon Patent Group (NASDAQ: MARA), a potential Coinbase competitor, has $91.7 million in accumulated deficits, interim C-level management, only $5 million (or less) cash on hand and might not make it through the next quarter without restructuring. This means that even investing now, at an all-time low, might result in losing everything. Marathon will have to raise a substantial amount of capital to continue operating.
Newsletters list dozens of cryptocurrency plays. However, the majority of those companies listed in the articles are cash-negative micro caps that are trading off the boards, where pump and dump schemes abound.
A lot of bulletin boards and stock newsletters are using the word blockchain as bait to lure you into a subscription. The truth is that the biggest developers of blockchain are IBM and the banking industry, alongside a few entrepreneurial startups that are not yet publicly traded. This space is worth monitoring. There is no clear winner here yet.
There are typically two cycles of disruptive innovations. The bubble phase with a lot of pretenders, and then, after a big crash, an extended period of growth where the best companies are able to produce a great product at a more reasonable price. Even if you are able to find a company to capitalize on in crypto or blockchain, be careful that you are not caught up in the first bubble/crash that occurs before the profitable cycle. Read Peter Schumpeter’s Capitalism, Socialism, and Democracy for more information on disruptive innovations theory.
So far, Nvidia and Coinbase are the best bets in cryptocurrency. However, Nvidia’s price is very high, and Coinbase is not yet publicly traded. Steer clear of get-rich-quick schemes as these are marketing ruses to allow insiders to pocket profits at your expense.
Other Cryptocurrency Blogs to Read
Chain Split Disruption
The Bitcoin Cash Hard Fork
The Ethereum Flash Crash
If you wish to read more of Natalie Pace’s report on cryptocurrency, click here.
Do you have a budgeting, investing or economic question for Natalie Pace? Simply email info@NataliePace.com or call 310-430-2397.
Natalie Wynne Pace is the author of the Amazon bestsellers The Gratitude Game, The ABCs of Money and Put Your Money Where Your Heart Is (aka You Vs. Wall Street). She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for more than three years (in its vertical). Natalie Pace’s great, great grandfathers James Pace and Lorenzo Wright were some of the original pioneers of Graham County. Call 310-430-2397 to learn more about Natalie Pace’s books, private, prosperity coaching, and 3-day Financial Empowerment Retreats.