Altcoins: Which Are The Best Investment?


Toaster with an Edison screw fitting, c. 1909

Both Warren Buffet and Paul Krugman believe cryptocurrency, e.g. Bitcoin, is a bubble.  Moreover, these well-respected gurus of the economy and finance say we should expect to see a bad ending.  Sorry to say, they’ve got it wrong.  When and where do cryptocurrencies end? They don’t.

Bitcoin is not a bubble.  Cryptocurrencies will never end.  Taken one at a time, a coin may or may not get the following it needs to thrive.  Some coins will see tremendous support and soar in value.  Still, others may grow and shrink in fits and starts.  But as a basket, you are going to see growth in the never-before-seen-as-an-investment category.  That is where we are at the moment.  New initial coin offerings (ICOs) and token sales are appearing daily.  New currencies are raising tens of millions of dollars in funding in just a few days time.

Having a basket of different cryptocurrencies is a form of diversification within the space, mitigating the risk.  Bitcoin is the most uncorrelated asset there is when compared to the stock market.  That means its movement is unrelated to how the stock market moves.  Fund managers, always looking to diversify, love uncorrelated assets to further reduce risk.  So should you.  Where we are today, however, is at a place where almost any coin with an active development team behind it will go up.  I know how flaky that sounds but I believe you can buy almost any coin and experience large returns in this moment in time.

This is similar to a period of history just after Edison electrified Lower Manhattan.  To supply enough electricity to power his street lighting and then indoor lighting for the Financial District Edison had to patent at least ten new inventions including the dynamo. By the time he had finished, buildings throughout Lower Manhattan were powered by electricity.  Suddenly, all of the ideas that had been floating around for decades that were never taken seriously or mass marketed because they ran on electricity, and electricity wasn’t available, were possible.

There was the idea for fans for moving air, fans for cooling, toasters to bake bread, elevators to lift people, stamping machines for manufacturing, signals for directions and signage, clocks to tell time, clocks to manage industrial processes, illuminated signs at night, musical instruments, mixers in the factory, blenders in the kitchen, washers for clothes, dryers for paint shops, lifts for industry, vacuums, motors, drills, vibrators, and scales for weights and measures, could be electrified and sold, and made available in every office across the city. Bonanza!  Eureka!!! But which idea would sell?  Which would become a viable product?  THEY ALL WOULD!!