Getting Started in Cryptocurrencies – The Appeal of Alpha Cryptos and ICOs
Lambos to da moon! Well, for anyone who was betting big on cryptocurrencies this time last year, what once might have seemed like a far-fetched pipe dream became a very tangible reality… in an exceptionally short period of time.
Readers who have followed this blog for any length of time know that I have carved out quite the reputation for myself as being a reckless “gambler” in the early FI community, notorious for a short attention span and willingness to jump ship, switching between different topics/asset classes on a whim…
It ain’t easy (nor popular) being an agnostic investor… let me tell you.
Just one short year ago, I was incredibly bullish on precious metals and clean energy mining stocks… and well, I actually still very much am today, but most recently, my own personal portfolio set some new milestones, and long story short, let’s just say that I exceeded my original goals/aspirations by leaps and bounds…
Mining stocks treated me very well, and like I mentioned last time around in the year end newsletter to subscribers, I will be looking to exit stage left beginning this year…
Although the decision to taper back and eventually sell off my mining stocks portfolio was ALWAYS part of the plan (long-term I really only believe in buying and HODLing Class A/Tier 1 real estate), I will say that there is absolutely no correlation between my decision to exit miners and to start speculating more heavily into cryptocurrencies…
So, why the decision to get into cryptos now?
Although there are multiple reasons, here are the most obvious to me:
The gains that can be made through participating in Initial Coin Offerings (ICOs) can be life-changing and you don’t need to risk much seed capital to experience epic wins.Here are two most recent home run examples:
Icon (ICX) up 78.29x since its ICO in September 2017.
Populous (PPT) up 143.74x since its ICO in June 2017.
As shown above, let’s say a speculator took a shotgun approach and loaded up on a bunch of ICOs, 15 in total… Well, shit, if you were lucky enough to get a seat at the ICX/PPT table, you’re pretty much won and done!!
Early FI for perpetuity!
For all you care, your remaining 14 ICO positions could have all self-destructed, and you’d still be walking out of the casino with a big grin on your face… and possibly taking off into the cool night in a new lambo!
Anyway, you get what I’m trying to say here…
For the longest time, I was a speculator into alpha mining stocks, which I used to try and generate outsized returns; my hope was the alpha specs would help provide a little spice to turbocharge the overall mining stocks portfolio (which was primarily made up of more fundamentally sound beta stocks)…
Sometimes I swung and missed badly (e.g. Novo Resources; NVO.V/NSRPF) and on occasion I hit bigly (e.g Garibaldi Resources; GGI.V/GGIFF)…
Speculation has never been easy and it never will be easy! But as everyone in the mining space knows, early stage exploration is EXTREMELY RISKY and most drill plays end up going bust sooner or later down the road…
I mean, even some of the most prospective plays out there run into HUGE bumps in the road…
Just check out what happened to Aurion Resources (AU.V) recently after their initial drill results failed to live up to the market’s insane blue sky expectations…
Yeah, so I really don’t want to hear the argument that crypto ICOs are somehow a lot more risky and speculative than early stage exploration mining…
In my own eyes, whether we are talking about alpha mining stocks (early stage exploration) or alpha cryptos (ICOs), THEY ARE BOTH INSANELY OFF THE CHARTS RISKY! This is pretty much straight gambling, so only play with capital that you’re willing to lose completely…
And never forget to “sell half on a double”, de-risk, and pull back out your initial capital ASAP!
With all that said, here’s an ICO, SelfKey (KEY) that some friends of mine took part in just last week…
From SelfKey.
From the above chart, you can see that SelfKey raised $5.940 million at $0.015/token during the ICO… The maximum purchase was capped at $3,000 (since it basically sold out in the first 7 minutes)…
1.5 cents…
What’s your downside risks?
Remember, I am a big fan of asymmetric bets and I like to always look at speculations from a Risk vs. Reward perspective…
In the case of SelfKey, with so many interested parties trying to storm into the ICO, I just knew that there was going to be some good upside with this one…
Did I try to get into the SelfKey ICO for myself?
Of course I did…
But since I was a total newb at this ICO game (I still am), I whiffed and made some newb mistakes…
Here’s what I did wrong…
The SelfKey ICO turned into a total gas war… Since we’re talking about the Ethereum (ETH) platform and ERC20 tokens, it’s all about the Gas Price (GWEI)…
I put down 90 GWEI thinking I had a good shot at getting a ticket to the dance…
Hah!
Although I sent in my transaction order at pretty much EXACTLY 4:00 PM PST (when the ICO went live), I still failed…
Here’s what somebody else did (and what a successful transaction looks like)… 
This particular individual went in with 112 GWEI…
Shoot, I didn’t even know going over 99 GWEI was possible!?!
But I do now…
No, not every ICO turns into a “gas war”, but sometimes they are, and well, you’ve just got to be ready to jump the queue if you really wanna win…
In the case of SelfKey, it was totally worth the extra “toll fee”, of let’s say no more than an extra $100 USD in transaction expenses (which is a very extreme worst case scenario)…
To win an ICO, having to fork over an additional $100 USD in fees is “chump change” as you’ll see below…
Shortly after the SelfKey ICO ended (like the next minute, it felt like), the company announced that tokens would be free-trading on KuCoin this past Monday…
From KuCoin.
And the next thing you know…
The above screen capture was an intraday order book for SelfKey on KuCoin…
Yup, that’s right, on the first day of free trading, SelfKey hit a high of $0.08/token…
$0.015/token to $0.08/token…
5.33x
In a span of over a weekend…
If you were able to catch a trade around these levels, we’re talking about multiplying an initial investment from:
$3,000 -> $16,000
Although I am not monitoring SelfKey at all (since I didn’t get into the ICO), I heard from my buddy that it actually reached a price level even above $0.08/token…
From a Telegram private group chat room…
Enjoy the win, bros!
Anyway, the exact “top” doesn’t matter…
I think we can all agree that 5x returns (shoot even 2x) is well worth the: time, effort, struggle, learning curve, etc. to try and figure out…
No, absolutely, I am not suggesting that Happy Days will persist indefinitely, but for the time being, the ICO game is definitely working, so if you’re able to participate, why the hell not?
Each ICO will vary, but by and large, each offering requires a Know Your Customer (KYC) background check… What this means is that for each ICO you apply for, before you can get approved to participate in the token sale, you must pass screening, which usually consists of:
Passport photo CLEARLY legible.Selfie of you holding the passport photo (with text still CLEARLY legible).Some offerings (although rare) are asking for proof of residency (e.g. utility bill).Etc.Although it varies for each ICO, by and large, right now, citizens from the following countries are typically banned from participating:
United States.China.Singapore.Etc.If you have a passport/ID from one of the above countries, tough cookies, you’re NOT going to pass KYC…
But not all is lost… When there is a will, there is a way…
Please note, owning cryptocurrencies is NOTHING like owning stocks in a brokerage account… Crypto wallets can be created on a whim and owned by anyone anonymously… In other words, once you’ve got tokens in your private wallet, nobody is going to check to make sure your name matches up with a certain account number, or anything like what is done using conventional platforms…
Cryptos are the Wild Wild West…
There are no rules, essentially!
No, I’m not going to advise anyone on what to do, or not do… We are all adults here, so play within your own comfort level, do your own research, and ALWAYS assess your own risk tolerance… All I’m saying is, just like with early FI, sometimes if you want to get things done, you’re going to have to think outside the box a little bit… I will never ever suggest anyone do anything shady or illegal, but what I’m alluding to is more along the lines of individuals getting together to form solid partnership deals. You know, connecting with people who can and do qualify for participation into ICOs… Hopefully, there’s a win-win opportunity for all parties involved…
Anyway, cryptos are SCORCHING HOT right now, and it’s only a matter of time before the masses move into the sector aggressively (and in droves)…
As readers all know, I try and be as open-minded as possible… Initially, I made dumb assumptions about the crypto space, didn’t know what I was talking about, and wrote this asset class off entirely as being “overhyped and in a serious bubble.”
I was dead wrong… Ok, so what?
I missed out… on some MASSIVE gains…
I’m willing to admit that.
I’m wrong all the time!
I ate some humble pie with cryptos…
Now I’m moving on…
Sure, I still think the overall crypto sector is “overhyped and in a serious bubble”, but just like mining stocks, real estate, traditional stocks, etc., sometimes there are “diamonds in the rough”, and you’ve just got to know where to go look…
With cryptos, I’m not experiencing serious Fear of Missing Out (FOMO) and chasing after coins that have already skyrocketed in value and are rising due to nothing more than pure hype and insanity…
No, I’m going “bargain hunting” in the ICO space, no different than what accredited investors do with mining stocks via private placements… As someone who has participated in a traditional private placement before in the past, let me just say this:
ICOs are way, way, way, way simpler and easier to participate in than private placements… Private placements are a total pain in the ass, and I’m still working on converting some paper share certificates into digital form so that I can freely trade them online… Further, the fees that you’re paying for private placements can be asinine in comparison to cryptos… It’s a total joke how much the middlemen are making every step of the way in the traditional/conventional markets…
It’s no contest, and knowing what I know now, I would never waste my time/energy chasing after private placements (unless it’s just an absolutely killer deal that I can’t say no to)… No, for the Average Joe (like me) with no deep “insider connections” in the business, I’d rather just stick to ICOs than private placements…
Bottom line — ICOs are probably gonna get you way more upside than private placements and the barrier to entry is almost nil (ANYONE who can pass KYC is able to participate, you don’t have to be an accredited investor!).
So there you have it…
I hope this post helps clarify and explain why my own focus has shifted away from alpha mining stocks (early stage exploration) and into alpha cryptos (ICOs), instead…
With alpha cryptos, the upside potential is currently far too MASSIVE to ignore and dismiss…
ICOs are all the rage right now, so I’m going to do my best to get in early to some of the more promising projects out there, and hopefully eke out some decent gains along the way… But just like everything else, again, it all comes down to Risk vs. Reward… If you don’t feel like the upside justifies all the risk you are taking with you own capital, pass and move onto the next thing…
Nobody knows how long this crypto ICO game will stay lucrative… So, I think the key is to stay fluid, adaptable, and most importantly of all, open-minded…
I still don’t know jack shit about cryptos, but hey, I’m willing to embarrass myself trying to learn along the way so that one day, hopefully, I’ll make some decent progress and gains in the space.
Lambos to da moon!
Fight On!