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I have some money....why should i put it into crypto?

I got another great question from a grad school classmate with deep investment management experience... it went something like this...

the question

"I have always had a fundamental question about crypto: why crypto?

What's the investment thesis? What would the investment tear sheet look like?"

...actually let me make the question more basic...

I have money... why should i put it into crypto? ...

as opposed to 3M or Tesla or Microsoft, or Google or any typical investment opportunities?

the response

First, crypto is more than "bitcoin" or "ether" or [insert your favorite crypto]. There are literally thousands of "projects" and "companies" built around these projects in crypto, so we should think of crypto not as "one thing" but as a whole bunch of "projects" or "companies."

These projects are often very focused and specific. For example:

  • NEXO is a crypto project (and company) that allows you to store your crypto, earn interest and obtain loans using your crypto as collateral.

  • LINK is a crypto project that provides data from the non crypto world (for example historical prices of stocks) for use in the crypto/blockchain world

  • and there are many other projects... AAVE, Uniswap (UNI), FileCoin (FIL), Cardano (ADA), Binance (BNB) and so on and so forth... (and yes Bitcoin, and Ether are also crypto projects)

Visit Coinmarketcap for an excellent list of crypto projects including their market caps and other details.

The answer to why one should invest in crypto is different for each crypto project. If you believe in the fundamental value of the project, and the ability of the project organizers (where this exists) to execute on the project you may decide to invest.

The Bottom Line

With all that said, the primary reason i invest in certain projects in the crypto space is...

I believe that many crypto projects are designed to provide a new or existing service more efficiently (either cheaper, faster or more effectively) than what exists today.

They often do this by cutting out a middleman, or expanding across geographic boundaries, or using superior technology, etc. and for the record this is the same rationale for why i would invest in Tesla, or 3M or any stocks.

Note: This is not financial advice

Would love to hear from you? Why would you invest in crypto?

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