Category: Money & Investing | Page 3

How to Keep Your Crypto Safe in Self-Custody

Published: September 03, 2020Leave a Comment

Self-custody is currently the best way to keep your Bitcoin secure, provided that you have the time to plan it properly and implement a few best practices. The idea is that you become your own bank and don’t rely on anyone else to protect your store of value.

This sits right in line with Bitcoin’s principle of self-sovereignty and censorship-resistance.

In this article, I’ll describe what I believe is the best setup for self-custody that we have at the moment.

What you will need:

The first item we will need is a tool for cold storage. The “cold” part means that we are keeping the private keys stored in a device that is not connected to the internet. The Ledger Nano X or a Trezor will do that part of the job perfectly.

The next thing we need when working with any hot or cold wallet, is a way to store the backup seed, which contains 24 words. With this seed, you will be able to recreate your wallet should you lose it.

This is as important as your wallet, in fact, I would say it is even more important. If someone gets possession of your wallet, he won’t be able to do anything with your crypto unless he knows the password to that device, but if they get your backup seed they need nothing else to be able to recreate the wallet and transfer all your crypto assets to their own wallet.

And that is why we need to be very careful about how we store this backup seed. Traditionally, the easiest way to store the backup seed has been a piece of paper stored somewhere safe. In fact, cold wallets such as the Ledger Nano come with a cardboard sheet that is prepared for backing up your seed.

However, after so many horror stories of these papers being thrown away, displaced, or simply destroyed in some for or another, it became apparent to serious holders of Bitcoin that a better solution was needed.

Here are some typical scenarios:

I had my seeds written in a paper notebook that I put in my safe which was 4 1/2 feet off the ground. During Hurricane Harvey we got 6.5 feet of water. I had $1 million of [cryptocurrency], now I have nothing.

Enter the Billfodl, a stainless steel device with laser engraved tiles. It serves as secure storage for your backup seed.

Why do we choose something like the Billfodl instead of just writing the seed words down on a piece of paper? There are several reasons:

Fireproof – Forged to withstand more than double the average house fire.
Waterproof – Marine-grade 316 stainless steel means it will never rust
Shockproof – Shockproof up to 1 million volts means serious protection
Hacker proof – Seeds and keys remain completely offline
You proof – Unlike a piece of paper, you will never accidentally throw away your Billfodl

The Multishard setup is essential, in my opinion. With the Multishard, you are given 3 single-sided stainless steel units very much resembling the original Billfodl. However, each of these units only stores 16 of the 24 words your seed phrase is made of. Each unit tells you which 16 of the 24 words to load, and after full installation, you will have backed up each seed word twice. Any recovery efforts in the future will require 2 of the 3 devices because that is the only way to know the entire seed phrase.

Anyone with a significant amount of crypto who is relying on paper seeds or any other similar means of backup should consider switching to the Billfodl Multishard setup.

How to Setup a Billfodl

Setting up is straightforward, but make sure you have some time reserved for this procedure, in order to make sure you understand what you are doing and double check everything.

The best way to explain how to set things up is to show you, so just follow this 5 part video tutorial and you’ll be all set.

https://www.youtube.com/watch?v=7mRjwOYHsgo

Alternatives

We can talk of two types of alternatives. There are other devices that help you backup your backup seed securely, with the

The main alternative to this setup is to use an online service such as Casa or Unchained Capital’s Vault service to implement multi-signature security.

This means that in order to transact with your crypto you will need to have multiple signatures that approve the transaction. This could be, for example, a 2-of-3 or a 3-of-5 key setup. This is a good setup however you have to pay these companies monthly for the service.

It might be a good solution for those with very little technical knowledge, institutions or those who absolutely don’t want the burden of responsibility for taking care of their cold storage wallet and seed phrase setup.

Yet another alternative is to set up your own multisig setup using the open-source tool Caravan, which was developed by Unchained Capital. The downside is that this is still quite a new tool, while the cold storage wallet + seed phrase setup has been in use for many years now.

It is true that a hardware wallet device, when used by itself to secure funds, is a single point of failure. Using hardware wallet devices as part of a multisig setup offers greater resilience.

My Recommendation

The best value and most convenient setup for most holders of Bitcoin and other cryptos is the combination I mentioned:

The Ledger and the Trezor are the undisputed top dogs when it comes to cold wallets, while the Billfodl is cheaper than competition while at the same time using better materials and making it very easy to set up.

For just $89 for the Billfodl or $199 for the Billfodl Multishard (my recommended purchase), plus the Ledger or Trezor, you will have a very secure setup that is pretty much hacker-proof, meaning you can rest safe with the knowledge that your crypto investment will be there for you tomorrow or years ahead.

Get the Billfodl today

Do you have any questions about crypto custody or have explored other setups that I didn’t mention? Let me know in the comments section.

Big Exchanges Continue to Report Fake Volumes in 2020

Published: August 31, 2020Leave a Comment

As we are entering the last quarter of an eventful crypto year, exchanges are gearing up for a long-awaited bull market. With a sharp increase in new users, as well as daily trading volumes, platforms are doing everything possible to get in front of their audience.

And it’s not the first time this happens. Back in 2017, exchanges utilized all kinds of ways to grab the top ranks of price-tracking websites like CoinMarketCap. One rather “unethical” way of doing this was through the manipulation of reported trading volumes.

This article will discuss fake trading volumes, the progress that has been made, how CoinMarketCap evolved over the past two years, and what you need to know in order to buy bitcoin safely. Let’s start by taking a look at the past events that led to the issue at hand.

A quick look back

Two years ago, Bitwise released a report, outlining all the “shady” practices that exchanges were using to climb in the top ranks of CoinMarketCap (CMC). Approximately 95% of the exchanges they looked into reported fake trading volumes to portray their platforms as very popular and highly liquid.

After the report was made public, Chief Strategy Officer and interim CEO of CoinMarketCap Carylyne Chan mentioned that Bitwise’s findings were correct. The company vouched to look into the issue and rearrange the ranking of exchanges.

A few months after the release of Bitwise’s report, CMC introduced the “liquidity” filter. The new metric proved helpful for investors, making it more difficult for exchanges to take advantage of the loopholes.

Chainalysis Report

About a year after Bitwise’s findings, research firm Chainalysis discovered that exchanges decreased the apparent inflation of their reported trading volumes. According to their report, the crypto ecosystem seems to be clearing up, but there is more work to be done.

Some large exchanges, including Bitforex, still follow unethical methods when it comes to the reporting of trading volumes. This is done to improve their rankings and increasing the liquidity of their platform. The study points the finger at a total of 12 cryptocurrency exchanges that still report over-inflated trading volumes in order to get higher spots in the exchange list of CoinMarketCap.

For reference, the Chainalysis report was published in November 2019, just a few months before CoinMarketCap was acquired by Binance. The latest has since changed a large number of ranking metrics, making the reported trading volume a less important factor.

How Binance improved CoinMarketCap

Earlier this year, Binance acquired CoinMarketCap for an undisclosed amount. The popular exchange vowed to help the platform reach its full potential while remaining completely objective to the presentation of data.

Naturally, many users felt hesitant about this transition. According to them, Binance could easily manipulate the data or emphasize the importance of Binance and BNB. However, half a year after the acquisition took place, we can see that this is not the case.

Currently, the exchange list is conveniently split in Spot and Derivatives. This makes it easier for traders of all experience levels to find exactly what they are looking for.

The inflated trading volumes posed a great problem for the exchange list related to “Spot” trading. Since April, however, the ranking methods have changed completely.

While liquidity and the 24-hr trading volume are still relevant when it comes to rankings, CMC now determines the final placement based on the Web Traffic Factor – a collection of data from multiple web traffic sources, cross-checked with the reported volumes. Naturally, this leads to more honest rankings and fewer attempts to “cheat” the system.

Is the problem solved?

When looking at the past 6 months, we can confidently say that we are headed towards a good direction. However, it may still take some time until the problem is eliminated. As long as there are platforms reporting fake volumes, CoinMarketCap may experience ranking issues.

For many, the challenge seems easy to solve – simply remove all platforms that report fake volumes from the exchange list. While this would solve the problem, it would take away the democratic approach that Binance has maintained all along. Many users would be upset since the platform would no longer present data in an objective manner.

Looking at the past few months, we can see that the platform is working very hard to improve the space and motivate others to do the same. This is all done in an unbiased manner, with the user in mind. If this trend continues to unfold, the future of cryptocurrency seems bright.

What to expect in the future

If the market follows historical patterns, we would now be getting ready for a surge in demand – a new bull market. And this would be very interesting for cryptocurrency exchanges. With more new users, it would become imperative for CoinMarketCap to operate at the highest possible standards. This would lead to the elimination of fake volume reporting, with the most popular platforms taking the majority of market share purely through their reputation.

Aside from that, investors are no longer entering a fully unregulated “wild” market. Those that were around in the last bull market (2017) are well aware of these issues, and will likely educate new users to avoid the same mistakes they made. This also goes for new project listings, who will try to get listed on popular exchanges, even if this means paying a premium.

Overall, it is important to remember that crypto is still a small-sized market that is prone to manipulation. In the past 10 years, industry leaders have managed to improve the way data was presented, but there is still work that needs to be done. More specifically, users should be able to navigate through price-and-data tracking platforms easier, making educated decisions easier. We hope that the next few years will improve this issue, making cryptocurrency a mainstream name on a global scale.

Brickstarter Review 2020

Published: August 28, 2020Leave a Comment

Recently I had the pleasure of interviewing the CEO of Brickstarter on my podcast Mastermind.fm. Brickstarter is a crowdfunding platform based in Estonia and it currently focuses on Spanish vacation rental properties. These properties are available on Airbnb, so the idea is that instead of buying one property and managing it to obtain returns on Airbnb, you as an ainvesttor are able to put up the money on Brickstarter and reap the benefits of diversification, Brickstarter’s data analysis advantage as well as their economies of scale in managing the apartments.

What intrigued me about Brickstarter when talking to their CEO, was the data-heavy approach they have taken. These are not a bunch of guys that are in this for a quick buck and relying on their experience to make the choices for apartments to invest in. All the decision process is based on hard facts and data analysis based on Airbnb’s data about hot location, apartment types, prices, amenities etc.

This is very attractive to me as an investor, as in many areas of life I prefer to rely on hard facts and data rather than the whims of some person or team of people. Of course, the team is important, and Brickstarter does not disappoint in this regard, as the people behind this platform have a great track record within the finance and real estate industries. However, they themselves prefer to put most of the weight in the decision process on data analysis.

Brickstarter have stated that their goal is to become the safest investment platform. This is why they decided to be focused on real estate assets and mezzanine loans, where you have 2 sources of profit: rental yield and capital appreciation when the apartment is sold.

Let’s take a deeper look at how this all works.

Opening an Account on Brickstarter

Brickstarter is available to investors worldwide, and opening an account is simple enough. Once you’ve logged in and transferred the money (using Lemonway, an extra layer of security for the investor), you are able to choose from the available investments and go ahead and invest. The minimum investment is just €50.

Coronavirus Effects and Coliving

Sadly, Coronavirus is hitting Europe and forcing millions of people around the world to be in quarantine, and this has dealt a severe blow to the vacation rental market.

There is uncertainty in the economy as we are seeing the stock markets and other alternative investments collapse (Bitcoin, Oil, Forex…).

Brickstarter has not been lying on its laurels, however. The plan B investigation has started and Brickstarter has been studying other verticals. In particular, they have several co-living opportunities on the table that they are studying with their partners.

Coliving assets are a great business and the Brickstarter team is confident that they will be the next real estate revolution the same way vacation rental properties did in the past.

Brickstater wants to help you invest in the best coliving opportunities out there, and they are therefore working on becoming the 1st real estate crowdlending platform focused on coliving.

How Brickstarter Investments Work

Real estate investment has always been a safe haven during times of financial stress. In this scenario of uncertainty, with close-to-zero interest rates, and not knowing the real impact of this crisis on the different industries, investors will probably focus again on real estate. Brickstarter have a strong product, since they choose apartments in the best city centers with a high rental yield.

The way you invest in apartments on Brickstarter is through mezzanine loans. All investment opportunities are debt-free. This means that the opportunities don’t have any debt commitments and therefore are risk-free. The capital of your investment is secure, so the only risk is not achieving the forecast yield, but investors won’t lose the original invested capital.

How do investors profit? Here’s the simple calculation:

Total yield = rental yield + capital yield.

Your yield in the sum of the monthly interest you get from renting the apartment and the capital appreciation of the property when its sold.

Brickstarter is focused on vacation rental properties as it has many benefits in comparison to traditional rentals: higher yields, prepaid model, insurance by the main platforms (Airbnb, booking.com) and short-term rentals.

It also means that the impact of the coronavirus is going to be limited in time. Defaults on traditional rentals are more difficult to deal with, and we already know that this crisis is going to affect also traditional rentals.

So in the current scenario of uncertainty and bearish markets caused by COVID-19, having invested in real estate with Brickstarter is probably one of your safest investments.

Conclusion

The Spanish real estate market is notoriously difficult to invest in due to the bureaucracy involved. Even crowdfunding platforms are hard to sign up to for international investors, as they are typically only available in Spanish and require investors to register for a NIE number in Spain before being able to invest.

Therefore by being based in Estonia Brickstarter has removed a lot of these problems for investors, which is a very positive thing. On the other hand, the team that runs the platform and negotiates the apartments is all Spanish and based in Spain, so you get the best of both worlds.

As I described earlier, you profit from your investments in two ways with Brickstarter. On one hand, you will receive monthly benefits from renting the apartment to tourists and, when the property is sold, you will be able to receive the surplus of your investment. Using Big Data analysis, Brickstarter also estimate the best selling time. It is also able to determine the next hot spots in Spain and enter while the prices for buying are still relatively low.

Based on what I’ve seen so far and having spoken to the team behind Brickstarter, I would not have any reservations about recommending Brickstarter.

Invest with Brickstarter

Lessons Learned in Investing

Published: August 25, 20201 Comment

I’ll be keeping note of my lessons learned as a private investor and also my previous experience as a tech entrepreneur.

In a market, only 1 thing matters: Supply & Demand. Never fight the present strongest force that drives price & direction. In Equity Markets, from 2009-2019, it was QE/Fed Printing pushing up Stocks. In 2020, again, the Fed has pushed up Stocks. Opinions don’t matter.
Risk and worry go hand in hand. If you’re not worried then you’re probably not risking enough. Always play for meaningful stakes but don’t bet amounts whose loss would bankrupt you. Nobody becomes rich without some kind of big risk taken.
I agree with Gerald Loeb, one of Wall Street’s great traders, when he once said: “All investment is speculation. The only difference is that some people admit it and some don’t.”
Focus 70% of your resources on near term payoff base-hits, 20% on longer term doubles and triples, and 10% on transformational home runs.
Always take your profit too soon: short modest winning streaks are the most common. Decide in advance what you want from a venture, and when you get it, get out. This is extremely important especially in highly volatile markets like crypto.
Cut your losses; you are right at most 50% of the time. When the ship starts to sink, jump. Take small losses to protect yourself against big ones. Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain.
Be cautious about long range plans. Planning is useful but you must adjust as you go. Periodically evaluate all that you have invested in.
The majority is probably wrong: think things through on your own. Never follow a fad: the best time to buy something is often when nobody else wants it.
Optimism is expecting the best, confidence is knowing how you will handle the worst. Never make a move if you are merely optimistic. Know how you will handle the worst.
Your intuition can be trusted if it can be explained. First determine if you have a rich enough experience base to have formed a viable hunch. Don’t confuse a hunch with a hope: put more trust in hunches about negative outcomes.
Beware of getting too comfortable. Do not become trapped in a souring venture because of loyalty or nostalgia. Keep your eyes open to better opportunities at all times.

Best Anonymous Bitcoin Wallets

Published: August 20, 2020Leave a Comment

Irrespective of what your long-term investment goals are – if you plan to buy and hold Bitcoin or even alternatives like Ethereum from exchanges such as Coinbase or Kraken, you will need to store your coins in a digital ‘wallet’. Depending on what your needs and requirements are, there are hundreds of anonymous Bitcoin wallets to choose from.

With that said, the one you opt for will ultimately be dictated by the level of ‘safety’ and ‘convenience’ that you require. For example, if you are looking to invest a substantial amount into Bitcoin – then you will likely be best suited for a hardware wallet.

At the other end of the spectrum, if you think that you will need to perform frequent transfers, then you might want to consider a mobile wallet. With this in mind, I have decided to cover the best anonymous Bitcoin wallets for each use-case.

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