View profile

Steve Harmon - Decrypting Crypto Currencies, Get Ripple

If you haven't heard by now, Bitcoin is up more than 1,000% this year to $10,590.  You're asking, wha

Steve Harmon

November 29 · Issue #12 · View online
Beyond the hype, inside the world of venture capital, tech, stocks and trends, from Silicon Valley to Shanghai, from veteran investor and entrepreneur Steve Harmon - followed by many leaders in finance and tech, see more:

If you haven’t heard by now, Bitcoin is up more than 1,000% this year to $10,590.  You’re asking, what is Bitcoin? Basically it’s a digital currency, kind of like an alternative to the dollar or euro. 
It was 6 cents in 2010.  Yeah.  
If you would have bought $1,000 worth of BTC back then it would be valued at $175 MILLION today.  That’s million. 
And a few weeks ago I had a chat with one of Bitcoin’s biggest investors, Tim Draper. Tim got there early and bought 30,000 Bitcoins in 2014 for $20 million. Now valued more than $300 million.
But fret not, Bitcoin is not the only digital currency in town. A few more have started to pop. Read on to which I think could be one of the next few outsized returns. Because that’s what we’re looking for, right? the 100x, 1000x?

Digital Currencies For Everyone
Digital currencies have been described as kind of like “loyalty points” for various online platforms. But that isn’t quite accurate as some of them are also a payment system (like dollars). 
Bitcoin is a cryptocurrency and worldwide payment system; it is the first decentralized digital currency, as the system works without a central repository or single administrator. It’s basically a peer to peer payment system. Bitcoin (BTC) has over half the market share of all digital currencies today. But that doesn’t mean much over all. Read on.
Bitcoin was not the first. In fact, some of you may recall CyberCash and Digicash in the mid 1990s, two companies that tried (and failed) to bring digital currencies into vogue. Those weren’t the first either. If you want to get off into the weeds there’s more than 1,300 digital currencies out there. But, like stocks, 90% have a more difficult time getting seen. Or invested in. Let alone traded.
Which Could Be The Next Home Run?
But enough about history and what was. And I’m not going to dwell on Bitcoin as an opportunity, although I think it has more legs. The run from 6 cents to more than $10,000 has happened for Bitcoin. 
I want to talk about the NEXT potential big winners in crypto. The kind of 100x (or 1000x) return that could happen. Bitcoin has had a huge run. Is it likely to have another 100x run? Who knows. A handful of others have a better chance, in my view, to do just that.
That brings me to my thesis. I believe the top 5 or 6 could do very well in the next year and beyond. How?
1) Crypto currencies in my view are in a “currency speculation” phase. Similar to any countries currency, like the dollar, yen, euro. Only much riskier and more potential return for that risk.
2) Institutional investors, you know, the hedge funds and big banks that run high net worth client account, are getting into Bitcoin. Hence the above $10,000 price per coin. But, even though an individual investor can buy a fraction of BTC the question is, can it have another 10x, 100x, 1000x run from here? Big investors may be comfortable with BTC but I believe small investors may want to get something “more affordable” that could have potentially a huge run ahead, similar to BTC has already had.
3) So, which of the next largest crypto currencies could have a big run? I believe the top 5 could all run. However, looking at this from a number of coins and upside basis, I think individual investors could be attracted to a crypto currency called Ripple (XRP), which is basically about 28 cents or so a coin and which I own. 
Why XRP? To me a number of factors: a) company pedigree looks strong, known venture capital backers; b) the company is used by many large banks to settle digital currency transactions; c) other investors are seeing the value in using XRP as a currency. I think this trend could continue.
The Top 4 Crypto Currencies
The Top 4 Crypto Currencies
People who invest in crypto currencies may argue that any one of several may perform better than XRP and I have said that many will do as well or maybe better. You can buy a fraction of a Bitcoin or any other. But the psychology of buying something for 28 cents a token cannot be denied. Especially if it rises to $2.50, $25 or $250 or higher. Quantity matters in return on investment. You can argue nuance or peer to peer but investors want return.
The Future Is In Applications
I’ve been in the digital world since 1994. The Web without video. Without images. Without sound. Without broadband. Without ads (yes, those nasty things). Now the Web is on and in computers, phones, cars and fridges. These are applications of the potential it held that I forecast way back then. 
I called Amazon the “Walmart of the Web” in 1997 when it sold only books. What existed were the ingredients for the application of the idea, the development of it, the logistics of delivery, the ease of use, which grew into the Amazon today. Ditto for many other companies I discussed back then. Ripple today will be different tomorrow. It’s well funded, has a smart team, and I think could adapt in ways not yet seen to be a key player in digital currencies. Just as Amazon adapted in ecommerce.
In 1996 I added up the market value of the top 50 Internet companies and they were valued LESS than Microsoft and Intel.
Here we are again and I’ve seen this movie before. New platform, new ideas, but a LACK of applications… so far. 
The current rage over crypto currencies is still the pre-game workout to me. The real value in my view will come in APPLICATIONS. Just as Apple is valued from the application of the iPhone, not the hardware itself. Take away the app store and the iPhone is an expensive paper weight.
So, if you think crypto currencies are in a “bubble” that may be true. But in 2001 most “smart” investors said the Internet stock market was dead. Not me. Then came Facebook. Twitter. Snapchat. WhatsApp. Alibaba. Tencent. Mobile accelerated these companies.
I believe the same thing could happen for crypto currencies (some of them  anyway). As applications develop that are built using these digital coins, value, payment, settling, transfers, etc. are built. New things. 
The entire application layer for crypto hasn’t been built yet. As it is built I could imagine values for the top currencies to be even greater than yet imagined. I don’t want to talk about a new venture here yet. I did mention last newsletter I was considering it. It could basically implode Google (and Facebook’s) business model in one move. More on that later, talking to investors now. Just an FYI that appleseed is doing 100% crypto and blockchain investments now. Contact me to join as an investor (accredited only).
In the meantime, XRP may be a way to dip your toe into crypto currencies.  Check this on how to do it
Until next time,
Did you enjoy this issue?
If you don't want these updates anymore, please unsubscribe here.
If you were forwarded this newsletter and you like it, you can subscribe here.
Powered by Revue
somewhere on the Internet since 1994