It's 2021, so I am late to the crypto party.
My first crypto I didn't even buy, I got it free. A few months ago, this awesome game I've been playing on the blockchain, Splinterlands (SPS 2.33%), started awarding its players crypto. This is in addition to the non-fungible token (NFT) assets I've been winning since 2019. It's a free game, but if you want to start owning the monster cards and win some crypto, you have to pay $10.
I've got a lot of "sweat equity" in this game, maybe 1,000 hours, so I've won a lot of cards. My assets are now worth about $20,000. About six months ago, my cards were worth $2,000. If you want to learn about crypto and NFTs, that's my No. 1 suggestion: Start playing this unique game on the blockchain.
My biggest crypto investment is still my bank stock, Silvergate Capital (NYSE: SI). Silvergate is the bank for all the crypto exchanges like Coinbase (COIN 19.40%), as well as all the institutions that are interested in owning this new asset class. Silvergate is a small bank with roughly a $5 billion market cap. I bought my first shares in 2020 at around $16. It now trades for $197 a share.
After my two crypto investments skyrocketed in 18 months, it occurred to me that maybe I ought to buy some coins. So last week I opened up an account at Coinbase and made my first purchases.
I bought a basket of altcoins
I could have just bought some Bitcoin (CRYPTO: BTC). That's the first crypto, the most famous crypto, and it's still the most valuable crypto. Its market cap is over $1 trillion. That's the safest coin (I think), but I still don't own it. I'm looking for next-gen crypto, and coins that might make some big moves.
Because I'm learning as I go, I decided on the basket approach. What I'm hoping is that one of my investments will spike higher. So by spreading out my bets, hopefully I increase the odds that one of my coins will skyrocket over the next year or two.
The first coin I bought was Solana (SOL 12.31%). This is a tiny position, under 1% of my assets. In fact, if you add up all my crypto buys together, it's still under 1% of my assets. I made tiny purchases because I still don't understand this asset class very well, and I'm learning as I go. One Solana coin costs about $194 right now. I tried to buy exactly one coin and found out that's impossible. It's all fractional shares. So now I own 2.6 Solana coins.
On Coinbase I had about 120 coin options I could buy. And the vast majority of these coins, I had no idea what they did. So I visited hundreds of websites. Many of these coins I knocked out right away. I didn't buy Uniswap because I hate pink unicorns. I didn't buy Pirate Chain, because I don't trust pirates, and it's not on Coinbase. (I guess they don't trust pirates, either).
I bought Crypto.com (CRYPTO: CRO) because I thought their Matt Damon ad was pretty cool. Which is a horrible reason to buy a coin. So I sold out of that one. And then the darn thing went up 40% in a couple of days. I bought Ankr (CRYPTO: ANKR), Internet Computer, (CRYPTO: ICP), Filecoin (CRYPTO: FIL), and Numeraire (CRYPTO: NMR).
I had to pay a commission with every purchase. At the end of this process, I said, "Man, Coinbase made a lot of money off me." And the next day I bought shares of Coinbase.
Why I'm making small investments in crypto
A lot of people are buying crypto because they want to make money fast. And I like fast money, don't get me wrong. But that's not the main reason I'm buying crypto. Almost all of these coins represent a new wave of computer engineering. These companies are working on blockchain technology. And I'm convinced that the blockchain is going to revolutionize the internet.
Blockchain promises to be faster, cheaper, and safer than existing internet protocols. For instance, Bitcoin has never been hacked. And it is completely transparent. Every transaction that happens is right there on the blockchain. And Solana's technology is superfast. Visa processes about 1,200 transactions a second. Solana's network is now processing 50,000 transactions a second.
It's highly risky investing in crypto, of course. The vast majority of these coins are issued by private companies. We don't have access to their financials. We don't know how much (or how little) cash these companies have. For a lot of them, I'm guessing the crypto is financing the business. I expect a large wave of companies (and coins) to disappear over the next few years.
On the other hand, I'm fairly certain that the blockchain is going to seriously disrupt some of my favorite stocks one day. So I'm making tiny purchases now, to invest in the future. But also to (hopefully) protect my existing finances if and when blockchain technology radically shifts the internet, and the world. I don't know when this is going to happen. But it might be sooner than we think.