Disclaimer: I am not a financial professional or guru. Do not take anything I say as financial advice, because it is not financial advice. You should always do your own due diligence before making any sort of financial transaction. I also am providing referral links in this post which, if used, will reward me.
2021 has been a COMPLETELY wild year for investors and people involved in their own personal finances. Meme stonks like $AMC and $GME are completely surging on almost no underlying fundamental change. SPACs like $CCIV and $QS went up 6x before the target company had ever earned revenue.
And then comes Elon.
Elon decides that a memecoin (sometimes referred to as an “altcoin” or a “shitcoin”) should be the next surging sensation. And so it was.
For someone like me who interned at traditional investment firms like Merrill Lynch and the Financial Planning Association, 2021 has stood in direct opposition of everything I had learned about investing. Seemingly, if you invested in complete jokes at the right time, you became a millionaire.
Now, I don’t have FOMO. Let me point that out right now. Let me also say that I have been involved and invested in some (tiny) capacity with Cryptocurrencies since 2017. I remember Mt. Gox. I lived through crypto winter. I’ve mined pretty much every algorithm that there is.
Just for a long time, I never really found projects that I cared about. But 2021 piqued my interest again, and I learned more about ongoing projects, as well as explored different cryptocurrency exchanges and offerings. Here are my thoughts:
I don’t get it. Bitcoin was originally created to do nothing more than to be a currency. It was designed to replace fiat currencies like the US Dollar or the Euro. It didn’t. Instead of becoming a currency, it became an investment product. It’s scarcity – only 21M BTC can ever be mined – have led to it’s soaring price. But… it doesn’t do anything. At all. I once heard someone compare BTC to Gold, indicating that it was a store of value. The thing is, gold gets its value from being pretty and shiny. I can melt gold and turn it into jewelry. I cannot do that with BTC. So I don’t get the hype around BTC, even if it is the OG.
The first real competitor to Bitcoin was Ethereum, and it’s entire purpose was to NOT be a cryptocurrency. Instead, Ethereum’s purpose is to be able to build not only applications and digital services that can be distributed around the world, but also to build OTHER blockchains on top of it. ETH was originally a proof-of-work blockchain, meaning that expensive, loud, environmentally damaging miners had to be used to find blocks and create ETH. However, ETH is now migrating to Ethereum 2.0 (ETH2), which is based on Proof-of-Stake. Proof of Stake is the future. ETH2 will provide MUCH faster transactions on the Etherum blockchain, with MUCH less overhead and network fees/gas fees. ETH2 is very promising. I hold ETH2 in Coinbase, which yields a 6% return when staked.
Weirdly, this cryptocurrency is shaping up to be one of my favorite plays there are. Why? Because 1 USDC will always equal 1 US Dollar. Never more, never less. USD Coin (USDC) was created by Coinbase to be a stable store of value. People can quickly swap out volatile cryptocurrencies for USDC, but further, a new financial environment was created around it. You see, bank-like businesses can have depositors who deposit their USDC and earn interest on their deposit. They can then loan out USDC, or OTHER cryptocurrencies, and use the depositors’ crypto as collateral. The result is VERY high yields on an asset that is not volatile. I currently have USDC with BlockFi, earning 8.6% interest after a 10% introductory promotional rate.
If you Google “ETH killer,” this is the one that will have the most results. Cardano is a VERY well organized group of developers, foundation operators, businesspeople, etc. They learned lessons from the first blockchains, and sought to make one better. This Proof-of-Stake project really has what it takes because it is fast, inexpensive to use, decentralized, and are soon to release updates (that the community votes on) that include Smart Contracts. The addition of Smart Contracts will no doubt put Cardano in direct competition with ETH, though you could argue it already is in direct competition when you see where it ranks overall by market cap. I purchased Cardano from Coinbase, then moved it to the Yoroi wallet to stake the currency and earn about 5% APY. BlockFi and Celsius have both indicated that they are looking to add Cardano ASAP.
5. Polygon (MATIC)
Polygon (previously Matic, ticket: MATIC) is one of the first blockchains built on top of the Etherum blockchain with the sole purpose of helping the Etherum blockchain. You see, Etherum is kind of like an 18-wheeler semi truck. It does a lot. It is extraordinarily powerful. It is also extraordinarily heavy and unwieldy. In tech terms, it just doesn’t scale well because it’s so big. Polygon is a “layer 2” blockchain, meaning it exists as a second layer on top of the primary (Etherum) layer, and SIGNIFICANTLY increases ETH transaction times while reducing the network costs to a fraction of what they were. I hold MATIC in Celsius Network earning 10.5%.
My last project that I want to address is Algorand. I am very excited about this project, which I’ll admit, I wasn’t at first. But I explored their subreddit and started reading about the use cases and companies that are actually building applications on top of Algorand. From an investing standpoint, ALGO is another Proof-of-Stake blockchain that stakes the moment you buy it (at least on Coinbase). You earn, at the time of this writing, about 6% APY which is awesome. But the most awesome part is it pays out daily. Every day, on Coinbase, you see ALGO sent to your wallet. I hold ALGO in Coinbase.
Notable mentions or Omissions: You will notice I didn’t mention Dogecoin, Safemoon, Poocoin, Shiba Inu, Elongate, Bonfire – the ones that are making headlines for insane returns. That’s because I don’t think they DO anything. They’re just like the meme stonks. They represent more risk to me than reward. For me to be interested, you have to have a REAL project with real use cases. Use cases like:
Helium Network – This one interests me. The idea here is this – IoT devices like sensors and other mobile IoT devices often rely on expensive cellular signals from ISPs. The Helium network looks to offer an alternative called a LoRaWAN (Long Range WAN). Someone like myself can deploy a “miner” aka a “hotspot” that projects the Helium Network’s signal for miles away, and effectively extends my ISP connection to the IoT devices over miles. Hotspots currently sell for ~$500 (check Helium.com for a list of supported hotspots), and in my area are earning about $35-50/day worth of HNT.
Basic Attention Token – I love this one, even though it doesn’t have a big impact. The idea with BAT is that you can reward yourself AND content creators for just browsing the web and consuming their content. When you use the Brave Web Browser on Desktop or Android, you can opt in for Brave Rewards. If you so choose, they will send you an OS push notification for an ad (no more than 5 times per hour, which you also configure your frequency). When you click on an ad, you are rewarded with a small amount of Basic Attention Token. You can keep it. You can send it to Coinbase (links above). You can store it in Celsius and earn interest on it (links also above). OR, you can leave it right where it is. Then, when you browse websites that content creators like myself have enrolled in, your attention to their content will serve as a tip. A tiny portion of your earned BAT is then rewarded to the content creators. This could be content on my blog, YouTube, Twitter, GitHub, or more.