The 10 Commandments of Blockchain Investing

by Gordon James

When I wrote my book on blockchain investing in September 2018, I published a smart and simple Blockchain Believers portfolio:

  • Start by investing the amount of your choice (I used $10,000).
  • Invest the same amount each month (I used $100).
  • Invest it mostly in stocks and bonds, with a little bit in bitcoins.

Here’s how. Put it down and forget it.

The aim was to make it very easy for ordinary investors to build up long-term assets: Blockchain for all.

I haven’t found any financial advisors interested in the Blockchain Believers portfolio.

I have not been able to get bankers excited about the blockchain wallet.

I failed to get the financial media interested in the blockchain portfolio of the faithful.

Zero percent. Not even Ha. I felt like a wild, gray-haired prophet, shouting in the marketplace while people went about their business:

Slowly but surely, this strategy is making money – a lot of money – for investors who believe in it. People of faith did better than non-believers, while old school financial advisors looked on in disbelief.

Today’s new financial advisors are creators of content on Reddit and YouTube, blowing up shares of memes and bypassing the NMT. The guys at r/WallStreetBets sound like they know what they’re talking about, until you realize they’re encouraging you to buy Gamestop stock for $200 each.

There are fools on both sides: either a foolish conservative or a foolish risk taker.

Those of you who have faithfully followed the portfolio of blockchain believers have chosen the middle ground. You have been rewarded with slow and steady growth and enjoy the benefits of bitcoin while saving a lot of money, heartache and stress.

Let’s take a look at how this simple strategy worked for believers after the first quarter of 2021 – compared to non-believers who invested only in stocks and bonds.

The figures speak for themselves. So why aren’t more bankers jumping on the bitcoin bandwagon?

Your banker secretly believes in Bitcoin

My wife and I went to our old bank last week. – LAST WEEK! – and a young banker tried to sell us his wealth management services, again.

When are you going to own crypto assets, I asked casually. (That’s a banking term – when are you going to hold my Bitcoin?).

Yes, we don’t yet, said the young banker. He lowered his voice. Some of us think crypto is the future, but it takes time in a bank like ours.

Well, you’ve had your time, I replied. Bitcoin was invented in 2008.

He chuckled nervously. It’s complicated, he replied. There are laws and regulations…

Please don’t say uncertainty about regulation, I interrupted. It gives me hives.

So, you got bitcoins, huh? He asked.

This is the same bank we sent a wire transfer to in 2013 in Belarus to buy our bitcoin, I said.

Don’t start with him, my wife is a beginner.

I wrote a book about it and moved on.

That’s cool, the banker replied. I’d love to read it.

I brought a copy for the bank when the book was published, I replied.

You don’t say.

The story in the first chapter.

Ha.

I think I wrote it down.

You don’t say.

A code to open a Coinbase account and redeem $25 in free cryptocurrencies has been bookmarked.

That’s cool.

So you could say I paid the bank to read the book.

Has anyone read the book? he asked, uncomfortable and nervous.

I think you answered that question.

I understand the difficulty of accepting bitcoins at a large commercial bank. But, come on, guys. At least they should have a plan by now. You wait and see. This is not a game plan. You don’t see Tom Brady, 4. Quarterback, back by 6, on the 20-yard line, talking: Let’s wait and see how it goes.

The wallet of blockchain enthusiasts is the game plan. Banks can still help their customers with stocks/bonds and then send the customers to Coinbase to invest in bitcoin. (If they’re really smart, the banks invest sideways in Coinbase shares).

Remember: We don’t make money with the Believers Blockchain wallet. It’s not a product. It’s a simple, common-sense strategy that anyone, even banks, can employ.

Reddit experts are idiots

On the other end of the spectrum, we have idiots on Reddit interested in Gamestop, Dogecoin, and NFT stocks, among many other dubious investments. (I love Reddit, but not for financial advice).

Pictured above: Financial advice from Reddit.

Unlike the highly regulated and professionally licensed world of wealthy executives, anyone with a keyboard and opposable thumbs can post to sites like Reddit, YouTube or SeekingAlpha. And most importantly, you don’t even know who they are. They don’t have to reveal their real names!

That said, if you spend all your money on their ridiculous fan theories, you only have yourself to blame. It also means you never know if they are working for you or secretly for a hedge fund or crypto startup. Sketch of McSketchville.

I do this sort of thing professionally, and even I only understand a handful of the stocks and blocks out there. Some of these new DeFi projects seem like easy money, until an anomaly report explains why something went wrong.

  • The explosion of financial information on the Internet,
  • Not to mention the lack of transparency about who is behind the information,
  • Combined with the ease of creating new blockchain projects,

created the perfect storm for investors to lose a lot of money.

And it’s not just the horns: I spent half a week looking for a new DeFi project in the startup phase, only to discover that the pseudonyms of the founders reveal a clever contractual bug. (Translation: you could lose all your money and have no idea who is behind the project).

That’s a tricky question, which is why the Believers Blockchain wallet remains the gold standard. Here’s how to combine the worlds of traditional and digital investing – the stock market and the block market – with a simple, proven strategy.

Health and well-being portfolio: Adverse reaction within one year

Sometimes we talk about specific investment ideas, for those who have a little more time or interest. For example, we launched our Health and Wealth portfolio a year ago at the start of the Covid-19 lock-up.

Again, it was a simple strategy: invest in four well-run companies that would do well in the event of a pandemic: Amazon, Netflix, Zoom and The Clorox Company.

A year later, you see how these four actions work:

It seems like common sense now, but in retrospect, it still is. Back then, markets were collapsing, people were hoarding toilet paper, and Zoom was the sound of the machine. No one thought to invest.

But to beat the market, you have to go against the market: zig when everyone is shy.

These companies have made a difference: They fed us, provided contact, entertained us and kept us clean. In terms of value investing, these companies benefited enormously from the Coronation Crisis.

Those of you who have invested in these stocks are putting your money into companies that work.

To summarize our work so far:

Investors who followed the Blockchain Believers portfolio have enjoyed handsome returns of up to 78% since 2018, compared to those who stayed with stocks and bonds, which gained only a third (27%).

Investors who got into the Health and Wealth portfolio a year ago achieved an even better return of 89%, almost doubling their money in just one year. They put their money into businesses that work.

The 10 commandments of blockchain investing

I’m not a financial advisor, so I can’t tell you what to do. I can only tell you what I do, in the form of these ten guidelines for investing in blockchain:

  1. Keep working during the day
  2. Invest money automatically every month
  3. Focus on simple strategies
  4. Set it and forget it.
  5. Look for opportunities in times of crisis
  6. Say no to most investments, and yes to a few big ones.
  7. Talk to smart people to improve your ideas (preferably in person).
  8. Be confident, but humble (have the power of conviction, but be prepared to be wrong).
  9. Learn to read and grow
  10. Give back what you’ve learned.

It is a golden mean: not too conservative, not too crazy. It’s a path we can all follow.

John Hargrave is the author of Blockchain for Everyone: How I learned the secrets of a new generation of millionaires, which tells the aforementioned story.

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