Crypto Update

Crypto price volatility provides risks and opportunities. Here's my latest update.

Crypto Update
Photo by Maxim Hopman / Unsplash

The volatility in crypto markets is nothing new but it can be confronting for many.

Large price movements provide huge opportunities for traders but it also opens the door for those of us who buy and hold to accumulate.

That's what I have been doing over recent weeks and anticipate doing so in the months ahead. I have also added two new holdings to my portfolio.

In accordance with previous disclosures, most of my additional purchases have been in Ether and Bitcoin.

The former because I think it will form the backbone of the DeFi infrastructure and the latter because it offers a scarce digital store of value.

Of course both could amount to nothing.

That entirely depends on how they are perceived...just like anything else of 'value' with limited utility.

Even things that do have utility can be massively mispriced which is why we have boom and bust cycles in almost every investment market.

The secret to great wealth is to buy in the bust and hold through most of the boom.

Once you are already wealthy enough you don't even have to think of selling as you can afford to hold through the next bust cycle too.

The killer in that scenario is leverage. If you borrow to purchase an asset, that investment can become a yoke around your neck. You are subject to loan to value ratios (LVR), interest rate risk and cash flow threats.

Most people can and do accept those risks in investments like property but if you are a leveraged crypto investor you are playing with fire (and risk losing everything).

I strongly discourage anyone from borrowing to finance crypto punts.

Here is some information on the two new tokens I have purchased.

ChainLink describes itself as:

“The ChainLink network provides reliable tamper-proof inputs and outputs for complex smart contracts on any blockchain.”The Chainlink Network,

It is a concept dedicated entirely to making smart contracts more connected to the outside world. The smart contract concept was first introduced by Ethereum; however, their smart contracts can only manage data on the blockchain.

They miss a bridge to real-world businesses. ChainLink aims to help in decentralising the internet to create a link between blockchain and their real-world applications.

It could connect existing applications like PayPal with the Ethereum blockchain. It could also help users in sending payments directly from their smart contracts to their bank accounts.

I purchased my LINK tokens at AUD 22.72

The Graph (GRT)

This token is somewhat more complicated and I have to confess to following someone else, far more knowledgeable than me, into the trade.

GRT is a means of searching the blockchain in a fast and efficient manner. Much like a search engine makes it easier to find things on the Internet.

GRT makes money as consumers pay indexers in GRT for each query and as the blockchain grows, it's a bet on increasing search. Unlike human search though, the future of blockchain search is going to be driven by computers, seeking confirmation across hundreds of millions of transactions.

The punt is that GRT will grow into the major player in this space and will grow earnings.  Like everything else in the DeFi space, success or failure will depend on so many factors that it is almost impossible to predict.

I purchased my GRT tokens at $AUD 0.85

DISCLAIMER: None of the above is investment or financial advice and I am not encouraging anyone to do what I have done. This post is just a statement of record about what I have done with some of my money in the Crypto space.

I have no special expertise or insights and am only trying to educate myself while doing rather than observing.

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