Editor’s Note: We’re excited to announce that Ian King has joined Banyan Hill as our cryptocurrency expert. Ian is an experienced trader who started a firm to educate and advise cryptocurrency speculators, and he’ll be launching a cryptocurrency trading service in the near future. To read his interview with Jeff L. Yastine, click here.
Cryptocurrencies are at the top of many investors’ interest. I know I’m interested in them.
However, there are a lot of fakes out there, touting their expertise on the subject. I keep seeing this advertisement pitching a former self-help guru as a cryptocurrency genius. I’m skeptical, to say the least.
That’s why today’s essay will be a little different. You see, we found a genuine cryptocurrency expert (although he wouldn’t like me to call him that).
Ian King is our newest editor at Banyan Hill. He took some time out this week to talk to me about some basic questions I had about cryptocurrencies.
I hope you enjoy this as much as I did!
Crypto Markets and the Cryptocurrency Revolution
Matt: Thanks for talking to me today, Ian. Let’s start with your background. How did you gain your knowledge in cryptocurrencies?
Ian: As a professional trader for two decades, I’ve learned that markets are humbling devices for anyone who is too confident in what they know. In that respect, my approach is a little different than that of a typical adviser.
I am neurotically curious and not afraid to try something new, especially when it comes to identifying and partaking in a new endeavor. My investment areas have ranged from running an options hedge fund in New York City to running an oil services business along the Marcellus shale in Western Pennsylvania to co-founding a health education nonprofit in Pakistan and India.
When it comes to crypto … most crypto investors arrived by way of a libertarian, anti-Fed, anti-fiat route. I’m a little different.
I’ve been thinking about digital money since the end of the financial crisis, when the Fed lowered interest rates to zero.
In 2012, I met with a startup in Silicon Valley that was piloting an e-currency to allow central banks to print and distribute a digital form of money.
To be clear, this was not a cryptocurrency because the value was backed by whatever central bank was issuing it.
But the experience sparked my thinking about how digital money can be used to facilitate economic transactions between people who have no history of trusting one another, without the need for a middleman or a bank to oversee the transaction.
There was a need for digital currency here. And the timing was perfect…
Matt: Why is cryptocurrency a thing? What makes it better than the U.S. dollar or the euro or any other existing currency?
Ian: Cryptocurrencies are a fundamental change in the way people can exchange something of value.
Every transaction is built on trust. Economies thrive in societies where people trust one another.
In a typical economic transaction, I give you something of value (for instance, $10), and you deliver me a good or service in return. (Let’s say it’s a ride somewhere in an Uber.)
Historically, in order for this transaction to happen, there has to be a middleman to oversee the transaction and punish bad actors.
But “smart” digital money that can be programmed is going to change all of that…
For the first time, an internet user can transfer a unique piece of digital property to another internet user in a way that is safe and secure. Everyone knows this transfer occurred, and nobody can oppose it.
This digital property can be exchanged through a decentralized network of trust that gets rid of the need for a bank or middleman to oversee its validity.
No middleman, no fees to pay the middleman! It’s all verifiable without it. This is a huge breakthrough.
When you see just how big it is (something I’ll continue to write about in Sovereign Investor Daily), you will understand why smart investors are quickly getting into the crypto markets and snapping up new crypto assets.
Matt: Why should our readers consider trading cryptocurrency?
Ian: There are a number of reasons why investors need to focus on the crypto markets.
As I stated above, crypto is a fundamental change in the way we can transfer value without a middleman.
In a way, it’s the biggest development since the internet, which democratized information. This new platform will inspire cooperation.
For starters, crypto markets are volatile, and traders thrive on volatility! In the crypto markets, 10%, 20% and 50% moves are a daily occurrence.
That’s a stark contrast to the stock market’s record-low volatility, where the S&P 500 recently broke a record for number of days without a 3% pullback from all-time highs.
Crypto investors are entering a market before the institutions can participate, as most funds have yet to figure out security and custodial issues. This would imply that the herd is still on the way. Is there a better reason than this?
And finally, crypto markets give investors access to early-stage investments with public market liquidity. Everyone can now be a venture capitalist. Not only are crypto investors able to purchase early-stage companies, but they can also exit without the need for an IPO (initial public offering).
Matt: What’s your outlook for crypto in 2018? Are there new versions coming out that you like? Do you see bitcoin surging to new highs?
Ian: There are plenty of reasons to support higher prices in bitcoin. This is arguably the most-hated, underinvested bubble in human history.
Everyone is talking about bitcoin. Only a few people own it, and even fewer people understand it.
Currently, there are only about 1 million wallets that own more than $10,000 worth of bitcoin. And this is globally.
And don’t forget about the wave of financial products that have already launched or are in the works, including futures, options and ETFs (exchange-traded funds).
Or as famed hedge fund manager and crypto investor Mike Novogratz recently quipped: “The herd is coming.”
However, if you’re only focusing on bitcoin, you are missing the growing ecosphere of crypto companies that are creating generational wealth for investors.
I have written about the similarities between bitcoin in 2017 and AOL. In the mid-‘90s, AOL onboarded everyone onto the internet with their post-office-delivered floppy disks and iconic “you’ve got mail” catchphrase.
Like bitcoin, AOL’s 70,626% rise drove an enormous amount of capital and entrepreneurs to the internet sector, and what followed were revolutionary companies that created enormous wealth for investors and became part of our daily lives.
There is an entire ecosystem of crypto investments rising behind bitcoin containing the Amazon, the Google and the Facebook of this new technology.
Sure, there will be flops like Pets.com. However, my job will be to steer readers toward the crypto investments that offer the best risk/reward.
Matt: Well, I know I’m interested in this subject. I’m really looking forward to the new cryptocurrency service you have coming out soon. Thanks for taking the time to talk to us.
Editor, Real Wealth Strategist