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696: Crypto Assets - an Education in the Basics - for investors

05-16-2021 team

Cryptocurrencies or Crypto Assets -  Summary

Cryptocurrency probably has an incorrect name - instead of currencies that are used to purchase goods and services, they are better described as "assets" or crypto assets.

Currencies and Assets:  It's generally understood that currencies are a "medium of exchange" and a "province of governments" - currencies are deemed to be non taxable on transfer. If someone exchanges a currency - no tax is due on transactions.  However, with regard to cryptocurrencies (or crypto assets), tax is due on capital gains on the trading or exchange of "cryptocurrencies" - and for this reason and others - they are better described as crypto assets. The US IRS deem cryptocurrencies as "property" and most other countries do the same - e.g. an asset or property asset - not a currency. The main exceptions within the 6000 coins - that aim to be a currency rather than an asset - are :  Dogecoin (DOGE), Lightcoin (LTC), Bitcoin Cash (BCH) and Nana (NANO).  

Taxation on Assets:  Governments and Central Banks are most likely to embrace crypto assets - as fairly new and other asset class - because of and as long as they are - taxed. Any capital gains tax it likely to be a deferred tax until the asset is sold back into a fiat currency.

Blockchain: All crypto assets use blockchain software technology for transactions and creating a secure ledger or database of transactions. The foundation of crypto assets is blockchain. Both blockchain and Bitcoin were invented after the year 2000.    

Competition: Most thought leaders think Bitcoin competes with gold and silver as a store of value, along with possibly bonds and ETFs and does not really compete against currencies. It is an asset, property and a store of value. 

Bitcoin - is referred to “digital gold”, is a store of value, uses blockchain technology, it's code does not change, it is a digital store of energy akin to a gigantic battery. It has never been hacked since it's invention in 2008 and release Jan 2009. As store of monetary energy. This energy can be transferred around the world as lightening speed between two parties. It's market cap is ~$1.0 Trillion (May 2021).

Ethereum -  can be referred to as “digital electricity, digital oil or digital energy”, it is software platform, is built using a hard fork of the Bitcoin blockchain software – it's code can be changed – it can be programmed, it is the foundation for DeFi (decentralised finance) and smart contracts, plus cryptocurrency transactions and e-business. It is an "Alt Coin". It's market cap is $0.4 Trillion (May 2021).

Other Alt Coins  - these can be referred to as software coins, tokens or software companies-entities – that use Ethereum as a platform or other competing platforms to deliver Defi and smart contracts. All use blockchain technology. Some are cryptocurrency exchanges, websites for selling-trading NFTs (non fungible tokens), gaming site, fan/sports tokens and other financial-entertainment or business services entities. Their total market cap ~$0.6 Trillion, there are around 6000 coins-tokens offered on multiple exchanges available to every person who has access to the internet - in all countries of the world.

Investing in Alt Coins:  One should consider "Alt Coins" as ventures. If you invest in one of these high risk ventures - you should be prepared to lose all your money. However there is also a huge upside, they might go up 10 to 1000x. There will be a few big winners and many coins will go to zero. You need to say to yourself - can I afford to lose all the capital I invest into these venture coins? They are very exciting, they can skyrocket, but they can also crash.   

How Things Might Evolve - in the next 3-10 years - it's likely that Bitcoin will develop into the worlds "digital gold" and store of value displacing gold further.  Many central banks are likely to create their own national digital currencies - e.g. USD, Euro, Sterling - and these are likely to be traded between Bitcoin and these new national owned currencies - the national digital currencies are highly likely to be "fiat digital currencies" - e.g. they can be inflated at will be central banks and governments/politician/treasuries   depending on their fiscal and monetary policies of the day. 

Applications of Blockchain Technology - Cryptocurrencies

1 Store of value - Bitcoin

2  Business – Ethereum and other Alt Coins

Types of Cryptocurrency - Digital Assets  

Bitcoin – is the only coin or asset-entity like this - its is

Bitcoin has four key attributes that create huge value -

Bitcoin - has four key characteristics

Market Cap of Sectors and Metrics for Comparison

Many people thing Bitcoin will firstly take the $10.5 Trillion of value from gold then eat into bonds, derivatives, stocks as a store of value (or an asset class)

Fiat Currencies

M1 Money Supply in the USA and global - Trillion US dollars over recent time














The adoption forecast for Crypto Assets


























Technology Adoptions - similar new technologies and the speed of adoption














Bitcoin Is Non Fiat

How Many Bitcoin Users Are There?

~100 million Bitcoin Owners
~0.4 million -  Bitcoin Users added per day
~200 million - Bitcoin Wallets  (25 million active)
~53 million - Bitcoin Traders
18.5 million – Bitcoins

Supply constrained - halving cycle every four years
Rapidly increasing demand from:
New private users
Future corporate treasuries, ETFs, institutional investment

Cycles (possible Super Cycle)
Halving cycle (started May 2020, ends Sept 2021)
Fiat currency printing cycles (started March 2020, unlikely to end

Markets for the Purchase/Use of Cryptocurrencies

“Perception” has been  - nerds, geeks, cyber punks, anti-establishment, contrarian

Retail small investors – private individuals (small subset - people needing to escape countries, NGOs)
Family offices
Private small business people

From start of 2020
Corporate treasuries of some large US companies – Microstrategy, Tesla
Some hedge funds
Small number of investment banks

Central banks of smaller countries
Other companies
Mainstream investment banks and financial services


Hackernoon-internet vs cryptocurrency





















Tax   (not advice, seek professional advice)   Governments and Central Banks are most likely to embrace crypto assets - as fairly new and other asset class - because of and as long as they are - taxed. Any capital gains tax it likely to be a deferred tax until the asset is sold back into a fiat currency.

Central Banks Cryptocurrencies – could they compete with Bitcoin?  Completely different – likely to be launched but:

Bull Market Timing

Network Effects  -  Bitcoin Ethereum and other Alt Coins have network effects – meaning:
















National Usage Cryptocurrencies Crypto Assets


















Cryptocurrency - are unlikely to be banned by governments because:

Instead, government likely to focus more on the on and off ramps for fiat currency into cryptocurrency– and use of “stable coins” pegged to their currency – albeit these support their currencies

Traits Gold, Bitcoin and Fiat (national currencies)















Bitcoin Size and Brand

Took 12 years to reach $1 Trillion – the world’s first digital economic network (or digital monetary network)
It is not a company. It is a brand. It is a decentralise blockchain technology computing network.

Questions:  The question investors should ask themselves – should I learning about Cryptocurrency now, potentially invest in the asset class – after 12 years, or wait and see or not ever invest in this asset class? In any case, should I not at least educate myself on blockchain technology?

Competitors in a financial portfolio:  gold, cash, bonds, stocks

Key Threats - Risks

Key Opportunities - Upside

Gross Domestic Production - projected blockchain storage - (Courtesy Technology Use Compressor)














Bitcoin vs Ethereum-price













Humanitarian Use Cases

Bitcoin Energy Usage  (~2020) 
Cost $Bln    Energy Used (M GJ)
Gold Mining                              105                   475
Paper Currency and Minting         40                     25
Banking System                         28                  2340
Governments                         1870                  5861
Bitcoin Mining                             4.5                  183

Bitcoin energy use 38% of gold mining and ~8% of banking system

Renewable Energy:  Bitcoin stimulates renewable energy – estimated cost of electricity 0-2 cents (rather than 8-11 for normal industry) because using unwanted or off-peak electric from hydro, solar, wind – small amount from coal/fossil fuels mainly in China – energy usage likely to drop after price decline. Energy use will crash once mining ends 2040 (19 years time). Its worth noting that Bitcoin mining is estimated to use 76% renewable energy (and only 24% from hydrocarbons, oil-gas-coal). This proportion is far higher than the banking sector as a whole.  

Investing in Crypto Assets: Anyone interested in investing in crypto assets should firstly get themselves familiar and educated in crypto assets - there are many good YouTube videos that can be seen. Then one can sign-up to a Cryptocurrency Exchange - examples (7 top exchanges in terms of daily traded volume 15 May 2021 - in Billion $):

Binance         46.9    -  356 coins  (largest, most varied offering)
Huobi Global  14.7    -  332 coins 
Coinbase       6.9      -    64 coins  (US based, floated in US stock market)
Kraken          2.3
KuCoin          2.6
Bitfinex         1.8

Ventures:  You should consider yourself privileged to have the opportunity to invest like a venture capitalist in early stage start-up companies (coins, tokens) or more established entities like Bitcoin (BTC), Ethereum (ETH), Binance (BNB), Coinbase (COIN) and possibly Ripple (XRP), Polkadot (DOT) and Cardano (ADA). Another very exciting aspect is that the crypto markets are open 7 days a week, 24 hours a day - they are truly global. This means there is action on all crypto asset prices levels all the time. Some might find this exhilarating though others might find this stressful and/or distracting, so you need to consider the type of person you are and the risk level-appetite you have before investing (buying) and/or trading (buying and selling) and the tax considerations of trading.   

Technology Innovation:  One should consider Crypto Assets as one of a number of superb new innovative technologies that will change the face of business in the next 3-10 years - all disruptive. We will cover these in more details in the next few months, but just to highlight this for now:

Closing Comment - We hope this special report is insightful and good educational material to get property investors and all investors up to speed with cryptocurrencies - their uses, benefits, risks and opportunities - and how crypto assets will have a huge impact on the global internet and financial system in the next decade. If you have any queries, please contact us on


Disclaimer     This presentation material and discussion around it – is for education and information purposes only. It is not financial advice.  Investors in cryptocurrency do their own research and seek professional advise as appropriate. 

Disclosure    We are not paid by any entity. We do not get paid for this material. We do own a portfolio of crypto assets.   

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