Jean Galea

Health, Wealth & Happiness

Nuri Review 2022 – Buy Bitcoin and Earn Interest from a German Bank

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With the steep rise in Bitcoin since 2017, cryptocurrencies have become a hot topic in society at large. Seasoned investors have been looking at opportunities that crypto can offer. While diversifying their portfolio by adding more Bitcoin and other cryptos, they are subsequently looking at ways how to get their holdings to work.

I grew up with the mentality that it was smart to put savings in a bank account to earn money on it. Perhaps back then it made sense when you could passively accumulate 5% in yearly interest. But those days are over and it is highly likely that your FIAT savings in the bank will now actually lose value.

Over the last few years, a growing number of crypto platforms have recognized this as an opportunity and are coming into play to plug the needs of those investors looking to maximize return on their holdings. While until a few years ago the only way to profit from Bitcoin was to sell it at a higher price than you bought it, nowadays you can also earn interest on it through these platforms.

Nuri Bank Account

Nuri is one of those platforms and a unique one for that matter. A German fintech, Nuri is the first European platform enabling all EAA (European Economic Area including Switzerland and UK) residents from a list of over 70+ nationalities, the opportunity to purchase Bitcoin and/or Ethereum and earn interest on them, directly from a regular bank account. Currently, Nuri does not offer its services to US residents or passport holders but the support team noted that Nuri is working hard to make this possible in the future.

Apart from giving you the option to open a Euro bank account and manage it for your daily finances in Euro via app or web, with the money in your account you can also tap on a variety of crypto-related money-making opportunities. With Nuri you will be able to save, spend and invest from one platform.

Equipped with a German IBAN, the Nuri bank account works in the same fashion as regular bank accounts, allowing you to send and receive SEPA transfers in Euro, set up monthly or quarterly standing orders, and use the details of previous transfers for new ones.

You may also get a Nuri debit card by post to pay with or withdraw cash from or to your Nuri bank account. Obtaining this card is free of charge and also does not incur any further fees. This card will also give you unlimited withdrawals around the world and can be locked and unlocked from the mobile app for added safety. No fees are charged by Nuri on ATM withdrawals. However, certain ATMs have their own fees associated with withdrawals. Before confirming a withdrawal, the fees are displayed to you, giving you the opportunity to agree or disagree with the charge.

Express transfers, SWIFT transfers and transfers in different currencies are currently not possible.

Trading Bitcoin or Ethereum from your Nuri bank account

Through your Nuri bank account, you will also be able to buy and sell Bitcoin or Ethereum directly. When buying these cryptos, you simply pay with the Euro balance from your Nuri bank account at the current exchange rate. The corresponding amount in Bitcoin or Ether will then automatically be sent to your wallet or vault. You will also be able to sell your cryptos in a reverse fashion.

Each trade will incur a fixed trading fee of 1% of the purchase or sale value, which I believe is reasonable. There might also be a network fee depending on whether you opt for a waller or vault (more on this below). Furthermore, Ether trades will incur a transaction fee (also known as a gas fee) which fluctuates depending on gas price.

When trading crypto on Nuri you can decide to either opt for a wallet or a vault. Wallets come as the default option upon creating a Nuri bank account. Wallets are held in custody with Nuri’s partner, Solaris Digital Assets, and come with a number of benefits amongst which are zero network fees, faster trade settlements (typically within an hour), quicker logins and a backup option in case you lose your login keys. In terms of security, the wallet uses face ID or fingerprint.

Vaults, on the other hand, refer to the more traditional wallets that only you can access and hold the security keys to. This obviously comes at a price in that if you lose these keys Nuri will not be able to recover them for you. The other drawback with using a vault is that you will need to incur network fees on every trade given they would be settled directly on the blockchain.

The minimum amount for a trade is €30 (if you use your vault this needs to be topped up with network fees, with the amount depending on the overall traffic of the crypto network you’re trading on). You can only buy as much cryptocurrency as you have in your bank account in Euro and only sell or send as much as you have in cryptocurrency in your wallet or vault.

The maximum trading limit is €50,000 for a rolling seven-day period. This means that you can still trade as much as there is left of this total amount over the next seven days. The limit per trade is €25,000. However, any number of trades can be executed successively, as long as you don’t exceed the weekly limit.

It is currently not possible to increase these trading limits beyond the current level. However, Nuri has indicated that their plan is to introduce professional tiers that enable higher volumes of trading in the future.

Earning interest on your Bitcoin balance

In my introduction I noted how passively earning 5% in yearly interest on your bank account savings was a thing of the past. While this is true of your Euro balances, with a Nuri Interest Account you can earn up to the same percentage in accumulated interest on your Bitcoin holdings.

This product is thus one-of-a-kind in that it allows you to earn interest on BTC inside a regular bank account.

Note: this opportunity is only available on Bitcoin. While you can trade Ethereum from your Nuri bank account, for the time being you cannot earn interest on it.

The interest rate on your Bitcoin savings changes weekly, but at the moment, if you deposit your BTC in this account you stand to earn up to 5%.

Generating a passive income is automatic; every Monday, you’ll receive interest payments on your Bitcoin investment directly in Bitcoin. There’s no minimum investment period to start reaping your rewards. You can withdraw from the BTC Interest Account any time you like. Interest is calculated every second, and you will not receive any penalty for withdrawing early – you just will not earn any further interest on the amount you withdraw.

How does this work? Nuri has partnered with Celsius, a network that specializes in Defi loans. Through this partnership, you can put your coins to work. Instead of holding your Bitcoin in your wallet, you invest them for interest. You can start investing with as little as €10 and you’ll only need to cover the small network fee from the interest received. There are no other fees and you can cash out at any time.

If you like the idea of earning passive income on your Bitcoin and you’re also bullish on its future prospects, with Nuri you can also sign up for a Savings Plan.

Crypto Savings plan

The Crypto Savings plan will let you buy cryptos on a recurring schedule and fully automate your investments on a monthly or weekly basis. This will take you from a scenario where you are pondering about where, when and how to invest to a cost-averaging strategy whereby Nuri automatically invests in your selected crypto of choice in line with your preferred schedule.

You first decide between Bitcoin and Ethereum, then choose an amount in Euro that you want Nuri to trade for you either each week or month, and pick a day for the transaction. Just like a standing order, the transaction will then automatically recur every week or month until you decide to cancel it. The timing and frequency of the savings plan can be changed any time without incurring any fees.

The aforementioned weekly trading limit of €50,000 will include the amounts in the savings plan and the minimum amount of €30 per trade is equally applicable here. The maximum amount for a single trade is also €25,000 and the usual trading fee of 1% for wallet trades applies.

While all trades are visible in the web platform too, setting up the Savings Plan and editing it is a mobile-only feature.

In case a trade can’t be executed due to insufficient funds, the market being offline or maintenance work, your order will be skipped for that month and will simply be tried again the next month. If you want to buy crypto earlier than that you can always trade manually as usual of course.

By creating your first savings plan through this link and let it run for 3 consecutive months, you will receive a 30 EUR bonus. This applies to both Bitcoin and Ethereum holdings.

Is my money safe with Nuri?

Nuri left no stone behind in ensuring security for its customers, whether it is bank accounts or debit cards. There are basically three ways to securely authorize an online payment: The use of biometric data, an mTAN and a security question. Nuri uses all three in tandem to ensure the maximum security of your account.

Nuri accounts come with a German IBAN and are fully regulated by The Federal Financial Supervisory Authority of Germany (Bundesanstalt für Finanzdienstleistungsaufsicht), commonly known as the BaFin. Through Nuri’s partnership with Solarisbank, a Berlin based white-label bank, each account is protected up to €100,000 by the Compensation Scheme of German Banks.

It is also good to highlight the fact that Nuri doesn’t offer overdraft facilities and hence does not need to assess your creditworthiness on opening an account. You can only spend the money you have on your account.

Opening an account with Nuri


Opening a Nuri bank account is relatively quick and straightforward. You can do it either via web app or mobile app. You are first asked to enter your personal data including your address and to accept the T&C. Once done, you will be redirected to Nuri’s partner, IDnow, to get your identity verified.

The verification is done through a brief video call directly in the Nuri app on your smartphone. Nuri does so to ensure that it’s actually the person who wants to open an account before doing banking and trading in cryptocurrencies.

In order to successfully open an account, you will need to be at least 18 years old and resident in the EAA (European Economic Area including Switzerland and UK) for which you might be asked to present a proof of address (such as bank statement or utility bill). On the video call, you will also need to present a valid passport or ID card (from a list of 70+ supported nationalities worldwide). Video verification is safe and complies with all legal requirements. Specialized agents guide you through the process and check your data against the usual KYC parameters and typically revert within a maximum of 24 hours.

Support quality

Nuri’s email support is active from Monday to Friday from 9 am to 6 pm CET (Central European Time) and response time is at max one business day. This excludes weekends, German public holidays, or bank holidays. There is also a chatbot service available on the website.

From a scan through Trustpilot reviews, I generally noted positive comments praising the intuitiveness of Nuri’s platform and also quick assistance from support. I did however also note a few complaints in terms of delays in receiving assistance, however, to Nuri’s credit, each such complaint was individually followed up by Nuri’s support. This conveys a good sense of customer care. In one of these follow-ups, the support agent also admitted that Nuri is currently growing its customer support team to meet the high number of incoming tickets being experienced at present which seems to indicate that popularity is on an upward trajectory.

At present, customer support is only available in 2 languages, English and German. In this regard, I believe that given Nuri is open to all EAA residents from over 70+ nationalities, expanding on the variety of customer support languages would be value-adding, and hence should equally be given priority.


Nuri also differentiates itself by taking a proactive role in educating its customer base by providing several guides to beginners on investing in cryptos. On Nuri’s website, you can also find a blog regularly updated with relevant guest posts. These posts are also featured in the Nuri newspaper which is circulated periodically. This is a sign that the Nuri team is not in it just for the money but also seeks to engage with its customer base in view of facilitating user knowledge and experience.

Concluding thoughts

What makes Nuri unique is the opportunity to trade Bitcoin and earn interest on it inside a regular bank account which you can also use for regular Euro transactions. Nuri also enjoys the benefit of operating out of Germany within safe and regulated parameters which adds another layer to peace of mind. The first €100,000 in your Nuri bank account is also guaranteed through Solarisbank, under the Compensation Scheme of German Banks.

In contrast with other legacy banks, apart from allowing crypto trading (whether as individual trades or as part of a savings plan), Nuri does not charge any fees for account management, debit cards and worldwide cash withdrawals. All crypto trades are subject to a 1% fixed trading fee.

The Nuri web and mobile apps have a minimalistic look with a user-friendly interface. As a user you are given the option to receive personalized push notifications about your transactions to remain always in the know. Nuri will also provide you with a crypto tax report in order to facilitate your personal tax return compilation.

Whilst I continue using the services of Nuri I look forward to it adding more cryptocurrency options on top of Bitcoin and Ethereum.

Sign up for a Nuri bank account

 

 

Get a Mortgage with your Bitcoin – Ledn Bitcoin Mortgages

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Ledn Bitcoin Mortgage

At some stage in your life, you will need to choose between renting a property or buying one to live in, unless you have it covered by your employment contract or are lucky enough to be gifted one! As with everything else, the choice between renting vs buying requires an assessment of pros and cons. In this article, I’ll be looking at the pros and cons of renting and outright purchases, as well as talking about Ledn, a crypto lending platform that has come up with an innovative solution of using your Bitcoin to get a loan for purchasing a home.

Renting a property

If we had to look at renting, the first benefit that comes to mind is flexibility. You get to pay a contracted amount of money per month in turn for accommodation for as long as you please, after which following a pre-agreed notice period you can easily exit and move on to another place. As such it comes with a relatively low level of financial commitment which is mostly limited to a prepaid deposit equivalent to a few months’ rentals plus the monthly rental payment thereafter. This works well for someone who does not intend to settle down in one place for too long, such as digital nomads or ex-pats on a definite contract. Another benefit of rental is that maintenance works and related costs, which can be quite a headache, are typically borne by the landlord.

On the flip side, an inevitable downside of rental is the need to adjust your style of living to any limitations imposed by the property’s finishing, layout, neighbours and location. Furthermore, from a financial perspective renting a place carries an opportunity cost in terms of foregone financial return otherwise arising from property ownership (as opposed to rental) in the form of value appreciation and if let out, in receivable rent.

Indeed the main distinction between renting and taking a home loan to get your own property is that in the former scenario you will simply be getting a place to live in while in the latter, on top of that you will be benefiting from the related financial return. And this added layer of return requires a higher level of investment, be it in money or time.

Purchasing a property

A property can be purchased for 2 reasons; habitation or renting out. If your purpose of obtaining a home loan is a habitation, you may opt to build a house from scratch and design it according to your personal preference. Alternatively, you may prefer something finished in order to move in there and then. While a finished house will be more expensive, it will save you from the effort, time and money typically required to finish it. On the other hand, when buying a property for rental, you will more likely compromise on personal taste in order to mitigate costs, thus increasing the return on investment.

Either way, investing in property through a home loan often translates into a profitable investment. Put that in the context of high inflation and it becomes even more attractive when the steeper the inflation rate the wider the spread over home loan interest rates. This is currently the case the world over (with no signs of stopping).

Before I dive deeper, I would like to identify the difference between home loans and mortgages given that this is a relevant distinction in the context of this article. In a home loan a borrower receives funds to purchase, build or renovate a property, which property is then kept as collateral against the loan. In the case of a mortgage, a borrower receives funds against a property being provided as collateral, with those funds being made available to the borrower to finance any financial obligation of his choice. Here the value of funding is determined by the market value of the property placed as collateral.

With that said, for the purposes of this article, I will be referring to the home loan described above as a mortgage.

Obtaining a home loan or mortgage

If you are in full-time employment and looking to get a mortgage, the bank will typically ask you to present your last 3 monthly payslips. If on the other hand you are self-employed and earning income through your business, the bank will typically only consider your application if you’ve filed your tax returns for at least 2 years. This is because banks rely on income forecasts (not assets) in ensuring the adequacy of liquid cash flows in view of maintaining the required debt/income ratio.

This poses a problem in that the banking system does not cater to those people who, notwithstanding their sufficient savings to afford a home loan, for varying reasons cannot provide the cited documentation. Perhaps you could have decided to quit full-time employment to unlock more free time or otherwise resigned from your job to set up a business related to your life’s passion. Regardless of your savings, it will be virtually impossible for you to get a mortgage from a bank.

Equally irrelevant to the banking system in providing mortgages are crypto holdings.

Indeed there is a growing number of crypto investors who have accumulated Bitcoin wealth worth millions and yet are unable to qualify for a mortgage in the absence of the required bank documentation. While for a number of years this issue has been very frustrating for these investors, there now seems to be a light at the end of the tunnel.

Enter Bitcoin mortgages

A number of crypto-friendly platforms are capitalizing on this deficiency from the part of traditional banks and have been introducing Bitcoin-backed mortgages which are innovative ways to service this niche. Given Bitcoin is the least volatile of cryptos, it lends itself more suitably as a means of collateral.

Ledn is the first platform to come up with this service. Founded in 2018 through a one-seed round of $3.9m, Ledn is a crypto platform licensed in Canada offering crypto HODlers (Bitcoin holders who do not intend to sell) a number of ways to leverage their Bitcoin (see more here). In other words, Ledn seeks to provide access to key financial products for those who choose to invest outside the mainstream of legacy banks.

One of these innovative products is Ledn Bitcoin mortgages.

What are Ledn Bitcoin mortgages and how do they work?

If you are looking to finance a purchase of property or to finish one you already own, Ledn will provide you with a mortgage equivalent to the value of your Bitcoin holding. Both your Bitcoin and the property will be kept as collateral and a loan is issued equal to 50% of the combined value of both assets. This effectively represents a Loan-to-Value of 50%. No down payment is needed when applying for the mortgage given the presence of joint collateral.

Anybody wishing to take out a Bitcoin mortgage needs to own Bitcoin equivalent to the property they are purchasing (or already own). So say you hold $600k worth of Bitcoin (at the current conversion rate) and you would like to purchase a house worth $600k. Ledn will provide you with a mortgage equivalent to your BTC, that is $600k which you will then invest in your property. Ledn will keep both your BTC and property as joint collateral while you gradually pay off the mortgage.

The Bitcoin mortgage is currently offered with a 2-year term. At the end of the 2 years, the status of the loan can be reassessed and renewed for another term.

Interest is payable on a monthly basis. The interest rate applicable on the loan will be determined subject to market conditions at the time of application, however, it will not be in excess of the 11.5% APY applicable on other Ledn products which I have separately reviewed, namely Bitcoin-backed loans and Ledn B2X loans. This is because the inclusion of real estate as collateral allows for a lower cost of financing.

Bitcoin mortgages will be available to Canada-based customers in Q1 2022 and then extended to US customers starting Q2 2022.

Apply for a Bitcoin mortgage today by signing up to Ledn’s waitlist below:

Concluding thoughts

The Ledn mortgages couldn’t come soon enough. While this opportunity will initially be restricted to Canada and the US, I am looking forward to this and other similar products being rolled out in the rest of the world.

The Bitcoin mortgage lets you access liquidity without needing to sell your assets, thus also avoiding taxable transactions. You no longer need to decide between holding your Bitcoin or owning real estate. And if you already own a home that is not currently financed, the equity in your home can be used as collateral to buy more Bitcoin.

Sign up for a Ledn mortgage

Investing in Real Estate – EstateGuru vs Reinvest24

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At some point, each investor who holds his stake in real estate through p2p and crowdfunding has faced the question of whether to go with EstateGuru or Reinvest24. These 2 platforms definitely stand out amongst other platforms on the crowdfunding scene, with quite a big community of investors who love them and others who are neutral.

During the past 3 years, where I have been investing in both while closely following their developments, I was able to spot some differences that might not be so obvious to new investors. At the end of the day, this comparison is not about determining the best in class, but which platform is best suited to your needs. So without further ado, let’s dive into this comparison.

The age, size and business model

Founder in 2014, EstateGuru is the biggest European platform for investing in real estate. At the time of writing, their investors community consists of 117,500 investors. Reinvest24 was founded later in 2018 and thus far has around 14,000 investors which means they still have quite some ground to cover. Both platforms are based in Tallinn and have international offices in Europe.

Whereas the EstateGuru business model is to finance 3rd party projects backed by real estate collateral, Reinvest24 are known for managing their own projects and for offering rental projects – a property type that allows you to enjoy the same benefits from renting out your property. The latter model, therefore, has more “skin in the game” given that in the event of a project’s default Reinvest24’s team has more to lose.

Projects

Both platforms operate with secured loans backed with real assets, all of which can be openly vetted by prospective investors. To date, while Reinvest24 funded €19m in projects, EstateGuru funded over €513m. Moreover, the number of new projects varies quite considerably between the two. In fact, while EstateGuru publishes an average of 30 projects per month, Reinvest24’s average currently stands at 8 per month.

At EstateGuru you can invest in development projects, bridge loans and business loans. With Reinvest24 you can invest in development projects, rental projects, real estate-backed loans and business loans.

As mentioned earlier, Reinvest24’s prime differentiator lies with rental projects. In this respect, an attractive trait is capital growth. With many real estate properties increasing in price over time, once they get sold the investor can benefit from the increase in capital growth.

A first glance comparison between the two platforms will seemingly return similar development projects, however, upon taking a closer look you will start to notice quite some stark differences. A case in point is that while at EstateGuru finance the 3rd party borrower, Reinvest24 finance and manage all the projects themselves. That being said, Reinvest24 is now also looking at financing 3rd party borrowers and so far they have done so with one borrower – KIRSAN Swiss GmBH, who happens to have recently become a shareholder in Reinvest24.

Moving on to collaterals, normally the LTV (loan-to-value) varies from 50 to 70%. Furthermore, Reinvest24 has so far had a clean record in terms of defaults. In comparison, EstateGuru’s default rate currently stands at 6.60% or €14,866,890. Nevertheless, there is still a possibility for this money to be recovered.

Minimum Investment

Both platforms can be accessed at relatively low entry points, with EstateGuru’s minimum requirement of €50 being half the amount set by Reinvest24 at €100. In terms of deposits and withdrawals, both platforms operate seamlessly with transactions typically processed within 2 days, which depending on your bank, can also be reduced to a matter of hours.

Interest Rates

As a result of EstateGuru’s recent introduction of fees deductible from borrowers’ interest payments, the average interest rate on outstanding loans dropped to 11.24%. From my experience, this is quite normal in the growth journey of platforms, with Mintos experiencing a similar path.

In this case, Reinvest24 gets the win given the current average interest rate of 14.8%. Even if one had to deduct the success fee, which is calculated on the invested principal, once a project is successfully implemented the average interest rate will still hover around 14%. This is not only higher than the one generated by EstateGuru but also than other real estate platforms. Reinvest24 can ultimately offer such high-interest rates because the majority of their projects are developed by themselves. This way they are able to optimize expenses more effectively, allowing more room for profits.

Geographical Diversification

The main market for EstateGuru is Estonia, however, I have also seen loans from Latvia, Lithuania, Finland, Spain, Portugal, Sweden and Germany. I expect them to keep diversifying geographically as they grow over the next few years.

Reinvest24 sources their projects from 5 markets – Estonia, Latvia, Spain, Germany and Moldova.

To date, these 2 platforms are the only Baltic real estate platforms that have entered the German market. Moldova is also quite an interesting up-and-coming market.

Fees

EstateGuru fees vary from 0% to 1% and are deducted from the borrower’s interest payments. While Reinvest24 have recently abolished upfront investment fees, they charge a success fee of 1% applicable on your principal amount when the project you invest in is fully implemented. I personally think that this way the fee structure is beneficial to both parties – whereas for Reinvest24 this constitutes its main income stream, this way investors can earn a higher return, firstly because the principal invested is higher and also because the subsequent monthly interest rates are higher. The latter can then also be reinvested on the secondary market.

Both platforms charge withdrawing fees. While EstateGuru charges €1, Reinvest24 charges €2.

Secondary Market

If you would like to liquidate your investment before the project’s maturity day you can do so by selling on the secondary market. The secondary market is quite active on both platforms.

EstateGuru charges a 2% fee to the seller while Reinvest24 charges 0% to the seller and 1% to the buyer. The secondary market of Reinvest24 is one of the most advanced ones I’ve come across, being similar to the stock market concept. Here you can start selling or buying from €1, which really helps to increase your returns since all your money is constantly at work.

Communication

I find both platforms to be very professional in terms of communication and sharing project updates. The EstateGuru statistics page is well-detailed and gives access to the most relevant information. Unfortunately, Reinvest24 still lags behind in this respect and similar statistics can be accessed only upon request. With that said, they are quite fast in attending to similar requests and they informed me that a statistics page should be made available shortly.

An additional feature available with EstateGuru is a downloadable loan book that lists all the 3k+ projects and as such makes it easier for the investor to keep track. This feature is not available on Reinvest24.

Regulation

The European Crowdfunding Regulation came into force in November 2021, allowing all EU platforms a transition period of 12 months. Both platforms are currently working towards aligning their processes to be in compliance with the rules.

Separately from these rules EstateGuru is already regulated and supervised by the Bank of Lithuania. Reinvest24 is in the final stages of receiving the license in Estonia.

Concluding Thoughts

EstateGuru is one of the cleanest and most transparent real estate crowdfunding platforms in the scene. The default occurrence to date has remained low with the platform also not showing any major red flags, which in my opinion makes it a good place to invest. EstateGuru is a good opportunity to invest in the Baltics, which market continues showing signs of generous growth. Read more: a deeper review of EstateGuru.

EstateGuru’s platform interface is also very user-friendly, enabling you to locate any information you need within a few clicks. If you are looking for a more passive way of investing you can use an auto-invest tool. Their projects continue getting funded quite swiftly and their project tally is one of the highest on the real estate market. The strongest trait of EstateGuru lies in the diversification of its options, with its projects geographically spread across 7 countries. Hence if you’re looking to invest smaller amounts across a variety of projects (starting from as low as €50) for an average interest rate of around 10%, I suggest you go by EstateGuru.

Invest with EstateGuru

On the other hand, Reinvest24 is growing rapidly, developing both their project line as well as country diversification. Despite the lacking the same level of information provided by EstateGuru (for example statistics page, downloadable financial reports and loan book) their platform has still improved considerably during the past years. Read more: in-depth review of Reinvest24.

The biggest advantage of Reinvest24 can be found in the quality of their projects and higher interest rates. To date, Reinvest24 can boast zero defaults. Their team has refrained from chasing rapid expansion into geographical areas they don’t have the expertise in and have instead prioritised consolidating their good results within their areas of competence prior to moving on to other countries. Their “skin in the game” is also higher than other platforms, given they are also financing and constructing their own projects which means that in the worst-case scenario they would be losing their own money and above all, tarnishing their reputation. If you are willing to invest a bigger amount of money (minimum of €100) then I would go for Reinvest24, given the higher average interest rate of 14%.

Invest with Reinvest24

Hedonova Review 2022 – An Easy Way to Invest in Alternative Assets

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A common trait between seasoned investors is the balanced matrix of their portfolios typically having a blend of short, medium and long-term investments with variable risk profiles across different industries.

If as an investor you are adequately exposed to lower risk assets and looking to venture into medium-to-higher risk long-term investments, Hedonova will provide you with an opportunity to diversify into alternative assets of this type.

Hedonova is an innovative fund that invests in multiple asset classes like art, cryptocurrencies and NFTs, unicorn startups, wine, equipment finance, real estate, music and a few more in different parts of the world.

Hedonova was founded in 2020 in US by Alexander Cavendish and Suman Bannerjee. As CEO, Alexander is an alumni of derivative modeling and investment banking at UBS and Morgan Stanley respectively. Suman, Hedonova’s CIO, has extensive experience in emerging markets and alternative investments. Both co-founders have been investing personal funds since inception, and have now opened up to retail investors. To date the team has grown to 16 members, including investors, economists, researchers, engineers and marketers spread across every continent.

Traditionally retail investors have been unable to tap on alternative investments due to regulation and investment size constraints. Hedonova has identified this niche and developed an investment fund whereby a retail investor can be allocated blocks (similar to shares in companies) in this fund at a low entry point of just $1,000.

With offices in Los Angeles, Paris, France and now in Tallinn, Estonia, Hedonova’s services are available worldwide. Being registered as a Delaware LLC (a structure that is often used by hedge funds) the fund is purposefully structured to be tax-friendly to international investors. In fact profits received from the fund are taxable in the country of the investor and as such Hedonova does not withhold any tax when distributing returns.

Hedonova’s Investment Portfolio

When you invest your money with Hedonova you are essentially receiving units or blocks in a mutual fund. Hedonova invests the funds’ money in 14 different asset classes which are set to increase with time. The below chart illustrates the spread between all the asset classes with cryptos and startups leading the pack at 17%, followed by listed equities and real estate at 12% and 11% respectively.


Hedonova invests in different asset classes through several alternative platforms such as Forge for startups, Masterworks for art and FundRise for real estate. As an investor in Hedonova you would therefore be investing in a fund of funds, as such amplifying your exposure to multiple asset types at a much lower investment than you otherwise would need to invest separately in each of those same investments.

Apart from asset class diversity, the fund consists of a wide geographical and currency spread ranging from commercial real estate in Singapore to unicorn startups in the USA. Hedonova’s assets tend to move independently of the stock markets as well as to each other. For example, art markets tend to perform better than stock markets during times of financial crises. The portfolio also contains stable assets such as farmlands and music royalties that provide cash flow and appreciation irrespective of the underlying macroeconomic climate.

Part of the capital invested is allocated to private and public equity to enhance the liquidity of the fund.

In going after new investments Hedonova first identifies a new asset class that is attracting liquidity and then performs a due diligence on a few selected firms within that class. When investing in listed entities Hedonova tends to go for quality stocks during temporary market crises so as to increase the potential margin for an upward valuation.

Hedonova’s team maintains the prerogative of when assets are bought and sold. With that said, most assets like startups, art and real estate require a long investment horizon. So you would expect that buying and selling in these is not frequent.

Potential Returns and Cash Flow

Since its inception in January 2020 Hedonova has generated a net return of 55.2% IRR, a large part of which came from cryptos, listed equities and the rise in valuation of unicorn startups.

This is an exceptional rate of return given the relatively low level of combined risk achieved through asset diversification. To add context, the performance to date represents an excess of 15.4% over S&P500 in terms of absolute returns.

Hedonova keeps its clients updated through weekly portfolio reports and also circulates regular investment updates via email. Separately, investors can track performance via personal web dashboard where one can view stats relating to returns, past performance and asset allocation.

In addition, given there isn’t always an abundance of insight when it comes to certain asset classes within the pool, Hedonova actively provides resources of information in this regard.

Fees

While there are no entry fees, the benefit for an investor of tapping into a diverse pool of assets without the need to personally undergo expert due diligence naturally comes at a cost. For this service Hedonova charges an initial 1% management fee on the assets upon initial investment and annually thereafter. In addition there is an annual 10% performance fee on any gains earned by the fund (both on capital gains and dividends) charged at the end of the year. Blocks are allocated after deduction of the initial management fee. According to Investopedia these fees are 60% lower than the industry average. I also noticed that these fees were recently revised down from 2% management fee and 20% performance fee respectively which makes investing in this platform even more attractive.

Any dividends or cash flows received by Hedonova from the various investment platforms are reinvested in the fund. The value of your investment within the fund is readjusted every time it happens. Any increase in value of assets is realised upon withdrawal.

Withdrawing money from the fund is easy and can be done any time. Investors can either request a partial of full redemption by submitting a request by email or via dashboard, subject to allowing at least 30 days notice. Other than that there are no exit fees or minimum lock-in period for an investment.

Risks

Apart from the inherent risk common to all hedge funds, as an investor with Hedonova you need to be mindful of a number of risks as detailed here. The following are what I believe to be the ones to be key:

Forex risk – Hedonova accepts investments in USD but may not necessarily invest using USD. This exposes your investments to currency risk. In order to hedge against this risk Hedonova uses currency derivatives.

Regulatory risk – Alternative assets are subject to regulatory reform. This could impact your investments and even the way Hedonova invests.

Macroeconomic risk – Government policies and social and environmental issues can impact the value of your investments directly or indirectly.

Market risk – Asset classes in emerging markets are riskier due to factors like political and economic uncertainties, inadequate liquidity and often poor disclosures and regulations among others.

Custodial risk – As described earlier, Hedonova invests in different asset classes through custodians or brokers who hold the investments or settle the trades. It is possible that, in the event of the insolvency or bankruptcy of a custodian or broker, the fund would be delayed or prevented from recovering its assets from the custodian or broker. Given these assets are not secured, in the worst-case scenario the money may therefore be non-recoverable.

In addition to this risk one should be aware that there is no secondary market to sell or transfer your investment in the fund. Furthermore, on their website Hedonova state that no such secondary market is expected to be developed. The only way to receive your money is either through the distribution of dividends or interests or by partly or fully withdrawing your investment which may come at a loss should the alternative assets underperform.

Customer Support

Hedonova offers investor support from Monday to Saturday via chat, email, voice and WhatsApp. More specifically, all investors are offered dedicated investment support in terms of taxation, compliance, portfolio and other related support.

I hopped onto TrustPilot to further corroborate the above. Even though there were only 15 reviews since their account was registered in May 2021, the comments had nothing but praise for the platform. In fact the current average rating stands at 4.5. One reviewer even noted that their customer service is what really makes them stand out from other similar platforms, confirming that he has been assigned a dedicated account manager. This opinion was echoed in other comments. Another reviewer indicated that the “investor relations team is exceptional, great for the level of communication and investment advice.”

There was also praise for the platform’s portal which is easy to use an intuitive.

Investing with Hedonova

Investing on this platform is straightforward. The first step requires you to fill a simple form with your name, email and contact number and an indication of how much money you’d like to invest. Once submitted, a Hedenova representative will contact you to explain their investment strategy and answer any questions you may have. you accordingly. This goes to show how Hedonova handles customers with care from the first contact point.

Post the usual KYC checks, you can start investing by adding capital to your account using any major payment gateway or wire transfer.

Conclusions

Hedonova is an investment fund with a portfolio of alternative assets like art, wine, P2P lending, equipment finance and others.  As an investor your holdings will be in the form of blocks, each block representing fractional ownership of the fund. With average returns to date since 2020 being 55.2% IRR, this platform is a great opportunity of trusting your idle money with a team of caring experts who will work towards maximizing your investment in a transparent manner against a reasonable 1% management fee and 10% performance fee. In the process you will be receiving regular updates on the performance of your investment while also being given the facility to monitor same proactively via the platform’s investor dashboard.

Apart from the attractive potential returns, my inclination towards Hedonova is fueled by our common mantra that “our ability, as citizens of the world, to invest must not be limited by political borders or hindered by arcane national policies. Assets created by people belong to mankind and anyone willing must have the tools to invest in them”.

Kudos Hedonova!

My Crypto Predictions for 2022 – The Best Portfolio Allocation

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crypto predictions 2022

I’ve been following the crypto space closely for more than 5 years now, and this is the first year where I don’t really feel sure in making any predictions for the coming year.

There are several reasons for this, so in this article, I’ll be working through my thoughts in order to attempt to arrive at some sensible conclusions on how to build a crypto portfolio going forward. I strongly believe that this yearly exercise of trying to predict trends on a yearly basis needs to be done by both new investors and others who have been investing in crypto for a long time.

The idea here is not to see how many of these trends you can guess correctly, but to force you to sit down and do some serious research. This keeps your thinking fresh and helps you to take input from several brilliant minds in the space, as well as learn new things. It’s a tough exercise that takes time, but it will help you immeasurably.

Due to the crypto space being so volatile, it is essential to enter positions with strong conviction, although you should always be ready to admit you were wrong and change your mind about things.

Before we start, some quick tips.

Using Safe Exchanges

Whatever you decide to invest in, make sure to use the very best exchanges:

Read more: The best crypto exchanges and trading apps

buy bitcoin from coinbase

Buy cryptos

Passive Crypto Income is Great

The past two years have seen immense growth in the crypto lending services sector. You can now do much more than buy crypto and wait for the price to go up. I would recommend you check out the following platforms that help you put your crypto to work and obtain some very interesting yields:

Buy crypto on Binance

Keep Good Records and Pay Your Taxes

Whatever you do, make sure you keep good records of all your crypto transactions by using a crypto portfolio tracking tool that can also double as a tax preparation tool. You can have a look at my review of CoinTracker, my favorite tracking tool.

I’m going to start with some important fundamental points that you should base your crypto investments on and then move on to some thoughts on portfolio components.

Don’t be a Maximalist

The first thing that is becoming increasingly evident to me is that being a maximalist about Bitcoin, Ethereum or some other blockchain doesn’t pay off.

Bitcoin maximalists are the noisiest of the bunch, so let’s talk about those first. I totally understand where these people are coming from. Bitcoin has completely changed my life and way of thinking, and I feel like I owe a lot to this revolutionary project and the incredibly talented people that have worked tirelessly to make Bitcoin a success against all odds. I consider myself to be part of this “Bitcoin army”, but I’ve never seen myself as a Bitcoin maximalist. I do think of myself as a freedom maximalist, and Bitcoin has helped me in so many ways on my path to freedom, but we’re far too early in crypto to pass judgments on alternative projects and niches, let alone take the maximalist position that only Bitcoin will survive in the long run.

Over the past two years, we’ve seen the rise of the Ethereum maximalists, mostly as a reaction to the Bitcoin maximalist crowd. Again, I think very highly of Ethereum and its stakeholders, but there is even less scope for being an Ethereum maximalist than there is for being a Bitcoin one. The main reason is that while Ethereum is a very ambitious project, and there is a significant degree of uncertainty in the near future due to its impending shift to proof-of-stake that should happen later this year or early the next. Also, while Bitcoin has carved out a niche where it stands as a dominant player with no real rivals (apart from Ethereum itself), Ethereum is facing some tough competition from newer blockchains that solve two big pain points with Ethereum in its current form: gas fees and throughput.

I wanted to start off with this piece about maximalism because it really defines the rest of my thoughts. Over the past year or so, I’ve seen tremendous growth in applications, acceptance, and technology related to crypto. The crypto landscape has widened considerably, to the point where I’m questioning whether the term “crypto” really applies anymore. For lack of a better descriptor, I’ll continue to use it, but I think we’ll be speaking about this space differently in a couple of years’ time, rather than lumping everything under the crypto terminology.

Invest in Crypto Infrastructure

While protocol tokens have gotten a lot of attention over the past years, I think investors have not paid enough attention to the technological infrastructure that needs to be in place for crypto to really go mainstream.

Take wallets for example. There is a huge need for better solutions to wallets and recovery. Using seed words isn’t really acceptable if we want mass adoption – it’s too complex and prone to user error/scams/theft and catastrophic loss of funds. Even the idea of a wallet and its purpose is a bit antiquated. In Web3, wallets are not only a way of visualizing your token holdings but become your digital identity.

Then we have mining infrastructure. For Bitcoin, it requires a lot of technical knowledge and substantial investment and management in hardware. For most other blockchains, there is a need for innovative staking solutions.

There are many funds investing in infrastructure. For example, the Ten31 fund specializes in Bitcoin Infrastructure companies.

You can also look at Angellist for more accessible opportunities to invest in crypto infrastructure. I do believe that if you’re immersed in the Web3 space you will also come across opportunities to invest in new startups at a very early stage. The best way to encounter these opportunities is to build relationships with other investors and attend many conferences and talk to as many people as you can.

The bottom line on this is that infrastructure companies present a different risk/reward tradeoff compared to the protocol tokens themselves and can even outperform the tokens of the blockchain they’re catering for.

If you have the ability to build products, then you should most definitely give it a shot. It’s no wonder we’re seeing many developers leave their jobs at Google, Facebook and other big tech companies (cushy jobs) to become entrepreneurs in the Web3 space. Building the future is exciting, and I think it will also be very financially rewarding.

Due to my deep dive into NFTs over the past half a year, I’m pretty familiar with the need for products in this space. The nice thing is that many of the NFT-related tools offer lifetime passes in the form of NFTs to their early users. One easy way to get exposure to the potential upside of crypto software products is to buy up these lifetime passes at mint stage or even on the secondary market.

LooksRare is another platform to keep an eye on. As I write this, you can get upwards of 500% APR on staked LOOKS tokens. This is yet another way to invest in crypto infrastructure. As we’ve seen, there are many ways to do it, and you don’t need to be a venture capital fund to gain access.

Don’t Try to Do It Alone

I’ve made a significant shift in the way I invest over the past few months, and I expect this to be a determining factor in the future for me.

Up till now, I’ve been traveling alone on this journey in crypto investment. I’ve read a ton of books, consumed an ungodly amount of podcasts, and kept updated daily through blogs and newsletters. Sure, I’ve also blogged regularly on this website and hosted an investment podcast, which led to me meeting many interesting people, but on a daily basis, it was still just me analyzing everything and taking important decisions.

I know I’m not the only one, as crypto was such a small niche that it was hard to even find someone that understands what you’re talking about, let alone share the interest at the same level of intensity and dedication.

But things have changed completely now. Web3 is all about community and social investing. I’ve embraced this fact and during the past year, I’ve joined a few small communities focused on investing, especially in the crypto space. I also started my own group for my closest investor friends (reach out to me if this is of interest to you). Some can be a firehose of random opportunities, but the best groups can deliver an incredible amount of curated alpha and be a time saver.

I’ve also started hiring in order to build a team rather than trying to take care of everything myself. Even if investing in crypto is not your full-time job, you should think about building a team of people that can smoothen your journey. For example, having an accountant/tax lawyer familiar with all the aspects of crypto is invaluable. You can outsource all the portfolio tracking and tax preparation to them, saving you worry and time.

Solutions like Syndicate and Party Round make it easy to invest as a group. Investment DAOs are another option. Social investing will become a bigger thing, although we still need to see the legal aspects ironed out first.

Building a Crypto Portfolio

While in previous years, I felt I was able to quite easily narrow down my focus to a few blockchains that I was interested in investing in, this year feels different. I will therefore be pointing out a few niches in crypto and pointing out a few interesting plays within each niche. There is now much more nuance than simply buying Bitcoin, Ethereum and a couple of other project tokens and hodling them.

Every investor needs to think about this specific allocation based on his goals and needs. While crypto investments still sit clearly in the “high-risk” portion of a global investment portfolio that includes other asset classes like real estate and stocks, we can also talk about a risk/reward spectrum that’s quite broad within the crypto niche itself.

Store of Value

The use-case of Bitcoin as a store of value has grown significantly over the last year, in my opinion. The ‘digital gold’ narrative has clearly won out against other narratives such as means of payment. This can be seen by the biggest Bitcoin news items in 2021: El Salvador making Bitcoin legal tender, and MicroStrategy doubling down on making Bitcoin its treasury asset. I think we’ll be seeing more countries following El Salvador, while Bitcoin in company treasuries is already a thing. MicroStrategy might be the biggest buyer of Bitcoin in the corporate world, but they certainly aren’t the only ones playing that game.

What this means is that Bitcoin is seen primarily as a hedge against the significant inflation we are experiencing with fiat currencies. Any individual or company that has material wealth currently stored in fiat currency and gold should be looking at switching (at least in part) to Bitcoin as the superior alternative, due to its fundamental properties. See my list of best Bitcoin books if you want to learn more about that.

Hence, I consider Bitcoin to be the best base currency. Rather than keeping fiat currencies like USD and EUR, one can consider holding Bitcoin instead. This is even truer if your currency is not one of the major pairs, as you will probably be experiencing the negative effects of inflation even more significantly.

While it remains very volatile compared to most other assets, I don’t expect to see huge returns from Bitcoin this year (being very optimistic: 3-4x). On the other hand, for me, it is the easiest crypto asset to allocate to, as I’m very convinced of its fundamental properties and chances of long-term survival.

To wrap up this point, if you have a significant portion of your wealth in crypto, then Bitcoin will be an important allocation for you, as it provides the opportunity for long-term safety, protection against inflation, and the possibility of price appreciation that is still way better than most other risky assets like stocks.

If, on the other hand, you’re just starting out with crypto and see this part of your overall portfolio as a moonshot, you’ll probably want to go after cryptos with more growth potential, and perhaps substitute Bitcoin for Ethereum as the bedrock on your crypto portfolio.

Leaving price, risk and growth potential aside, I still recommend that people learn how Bitcoin works and immerse themselves in that ecosystem (books, podcasts, technical knowledge) before moving on to other projects, because that will give you a very good mental framework for looking at the crypto space in general and what the grand goal is all about (revolutionizing the traditional financial system and the power structures built on top of it).

I feel that an often overlooked opportunity is investing in crypto infrastructure. Grant Gilliam explains why Ten31 is investing in Bitcoin Infrastructure companies. The main argument is threefold. First, for any non-100% BTC portfolio, Bitcoin companies present a different risk/reward tradeoff. Second, some Bitcoin companies can outperform Bitcoin. Third, Bitcoin companies are not as volatile as Bitcoin is. The argument makes a lot of sense from a capital allocator perspective and we’ll see how this thesis works in a world of post-modern investing.

My last note on Bitcoin – ETFs will be a game-changer whenever they get approved in the United States. I don’t expect it to happen this year given the number of recent denials by the SEC, but keep an eye out on things to that respect. Once ETFs are available, there will be a big influx of institutional investment as well as inflows from traditional retail investors that don’t feel comfortable buying Bitcoin directly and taking responsibility for the custody of their coins.

In Europe, you can already invest in Bitcoin through your regular stockbroker, but the biggest impact will be felt when it becomes possible in the United States as well.

A Multi-Chain Present and Future

Bitcoin and Ethereum are the product of the first iteration of blockchain development, born in times were blockchains were a totally new concept. The aim in those early days was to prove that this technology can work and can provide value to the world. Thus, developers approached the challenge from a monolithic, one blockchain rules-all mentality. This mentality is what gives rise to the maximalist subculture, but it is increasingly out of fashion.

There is a popular analogy doing the rounds that I think explains the situation particularly well.

The analogy asks us to think of blockchains as nations and cities. Ethereum can be compared to a city, say New York. It’s where everybody wants to be, but as it gets more popular, problems arise. Moving around takes time as there is congestion, and physical space becomes very expensive. Scaling to cater for more users/citizens/businesses is a challenge. New York scaled upwards through the use of skyscrapers. With Ethereum, the skyscrapers are layer 2 solutions. You still, however, have a problem when you need to move from one building to another in New York, and the same goes for Ethereum. As soon as you need to go from layer 2 to layer 1 you hit the bottleneck once again. However, the idea is that there will be less traffic on layer 1, as most of the lower value activity will happen on layer 2.

This brings us to the second part of the solution: application-specific blockchains. You can think of these as other cities or other nations. They can become specialized in other industries, or in the case of blockchains, applications.

The connections between these cities/nations will be done using smart contract hub protocols like Polkadot and Cosmos.

Ethereum is itself becoming modular, with the race for a leading layer 2 scaling solution already well underway. If you have no idea what these layers mean, here’s a short primer. Layer 1 is the term that’s used to describe the underlying main blockchain architecture. Layer 2, on the other hand, is an overlaying network that lies on top of the underlying blockchain. Bitcoin is layer 1, and the Lightning Network is layer 2. Ethereum is also layer 1, while Polygon, Arbitrum and Optimism are layer 2.

It seems likely to me that modular blockchains are the future, so if you agree with me on that, it would make a lot of sense to dig into layer 2 solutions for Ethereum, and possibly allocate to them. If the thesis holds true, they should see bigger growth than Ethereum itself once they become mainstream.

We also need to consider two other big protocols that have been around for a number of years already and maybe primed for some action: Polkadot and Cosmos. They are both protocols that provide an interface for different state machines to communicate with each other. Both protocols are predicated on the thesis that the future will have multiple blockchains that need to interoperate with each other rather than individual blockchains existing in isolation.

Again, I’m a firm believer that this will be part of our blockchain reality in the near future, so I think we should spend a good amount of time digging into these ecosystems and making some bets there.

There are several projects built on Polkadot and others on Cosmos. Developers have built hundreds of blockchain projects on Cosmos, including Binance Chain (BNB), Terra (LUNA), Crypto.com Coin (CRO), Cosmos Hub (ATOM), and more. On the Polkadot front, you can have a look at Polkaproject.com for an indexed collection of projects.

Finally, we need to keep an eye on layer1 competitors to Ethereum. Although “Ethereum rivals” is the most frequently used term for these blockchains, this is not always necessarily the case. Several of these “competitors” are really trying to deliver value for a specific use-case, while Ethereum is a generic protocol meant to be used for anything.

Some protocols to keep an eye on in the layer 1 segment are Solana, Terra, Avalanche, Near, Harmony, Celo and Fantom.

While I think that Ethereum will maintain a very important position in the years to come, I also think there is a strong possibility that other specialised chains also manage to carve out a very important niche, and that the “connector projects” will thus also become very important.

Web3 – NFTs, DAOs, Social Tokens…

I’ve written extensively about NFTs; they’ve really been one of my favorite deep dives that I’ve done in recent years, and I do have a few favorite NFT projects that I’ve doubled down on. If you know what you’re doing, you can see some incredible returns. Just ask the early holders of Cryptopunks, Bored Apes, Cool Cats and Doodles who held their assets right from the start till the latter part of 2021, when valuations soared.

Timelines in Web3 are incredibly short. A long-term NFT investment can be just a year or even less. The downside is that there is a ton of stuff happening and it’s really hard to invest in NFTs in any structured way unless you’re doing it full-time. If you can only dedicate a few hours a week you’ll probably end up gambling rather than investing.

Here’s where having a group of trusted and competent investor friends can really be useful. If they are specialized in NFTs you can save a ton of time and rely on their recommendations, although you should always have your own NFT evaluation checklist to go through before investing. With dozens of projects launching daily and new NFT use-cases being discovered on a monthly basis, being able to limit the number of projects you look at is very valuable.

Due to my web development background and my love of analytics tools, I’m extremely interested in the myriad NFT trading and analytics tools that can be used to gain an edge. As I mentioned earlier in this article, I think being a builder in this space is very lucrative, and if not, you can always by up the lifetime passes for the leading products that you use.

I think it’s still a bit too early for DAOs and social tokens, but I strongly believe that NFTs will have another great year. They are easy for people to understand and we have only scratched the surface of what they can be used for. Moreover, big brands are making their NFT plays while many famous personalities have also bought NFTs, and we all know that people love to copy the rich and famous.

Gaming NFTs are widely expected to be very popular this year, although I’m not sure about my abilities to make the right picks on that front.

A Sensible Portfolio

To put all the above thoughts into practice, here’s what I would think of as a sensible token portfolio for this year. The usual suspects are in there together with some more speculative bets with potentially more upside.

  • Bitcoin (BTC)
  • Ethereum (ETH)
  • Solana (SOL)
  • Polkadot (DOT)
  • LooksRare (LOOKS)
  • Avalanche (AVAX)
  • Fantom (FTM)
  • Terra (LUNA)
  • Polygon (MATIC)
  • Near (NEAR)
  • Cosmos (ATOM)
  • FTX (FTT)
  • Helium (HNT)
  • Celo (CELO)

Bitcoin and Ethereum would still be my anchors, although I would lean more into Ethereum this year. It’s not really possible to get any yield on Bitcoin unless you trust centralized lending platforms, while Ethereum offers a 5%+ yield just by staking ETH.

Polygon is a good bet if you think that layer 2 will become more important for Ethereum going forward.

Solana and Polkadot are both quite well-consolidated and offer unique properties in the current market, thus they are a good hold. Cosmos could take off this year if the concern about their tokenomics wears off.

LOOKS are a play on the possibility of LooksRare taking a chunk out of OpenSea’s pie. This might be a short-term play, so I’m monitoring the platform on a daily basis, making sure that the risk/reward ratio still makes sense. If LOOKS can maintain a stable price and a high APR while the platform demonstrates steady user growth, this investment is a no-brainer.

Avalanche has already had a great run in 2021, and if the big promises made by its founder materialize, then it will continue to gain market share. He does seem too bullish to my liking though, so I’m investing with a cautious approach. I look forward to trying out the DApps available on Avalanche, however, and getting a better feel of the tech myself.

Fantom, Near and Celo are other bets on the immediate need for cheaper and faster transactions.

FTX is the token of one of the fastest-growing exchanges.

Terra has a nice chance of becoming a leading decentralized stablecoin ecosystem.

Helium is a bet on alternative wireless internet infrastructure.

As for NFTs and other Web3 projects, you can read about my favorite NFT projects, but there are new projects being released every day, so it is really impossible to make any recommendations as I’m sure we’ll see some blockbusters this year that have not been released yet. You should also keep an eye on metaverse tokens and NFTs. At a very basic level you could hold some Decentraland (MANA) and The Sandbox (SAND) tokens. Overall, I would be quite comfortable having 25-35% of my total crypto portfolio in this niche of NFTs, Web3 and Metaverse plays.

Wrapping Up

While in previous years my thoughts were concentrated heavily on where to allocate my money, with only a few real contenders to choose from, as from this year, the bigger question is where should I allocate my time.

I’m personally fascinated by NFTs and the possibilities being unleashed in that space. DAOs and social tokens are also extremely interesting, although I consider them to be a bit too early. If they manage to maintain a steady rate of growth and the legality of DAOs becomes clearer during this year, I can see myself devoting more time to those two niches next year. This year, mostly due to time constraints, I’ll be limiting my financial exposure to those sectors, unless I get some strong recommendations from my group of investors.

While much of the above has been a personal take on the crypto space and my personal strategies for the coming year, I wanted to end the post with some thoughts that could apply to other investors as well. I’ve been observing many participants in the crypto space, and thinking about how I would approach my involvement in crypto depending on where I’m coming from.

Here are a few thoughts/recommendations:

If you’re just starting off in crypto, want to learn what the hype is all about, and are not in it to get rich quick, I recommend you stick with Bitcoin and dedicate most of your time to learning how Bitcoin works. When you’re done with that, maybe think of Ethereum and continue delving down the rabbit hole (layer 1s, DeFi, NFTs, metaverse) in line with your bandwidth and financial position. If you have little interest in the philosophical underpinnings of Bitcoin or the technical fundamentals of crypto tokens, then I think it would also be a good approach to dive straight into NFTs. After all, many consider them the trojan horse that will onboard many millions into crypto.

If you’re a developer/builder, then Ethereum and other layer 1s should probably be your focus this year, together with NFTs and metaverse. These all intermingle and if you can figure out winning combinations and even build something on top of that you’re going to see big returns.

If you want to quit your current job and move into crypto full-time, I’d suggest you look at DAOs and NFTs. That’s where I see the most diverse range of work opportunities. There’s really something for everyone, and if you have good skills and are not happy with your current job, chances are you’re going to be able to make a big leap in job satisfaction by finding work in this space.

One last thing. There are many projects that are not worth your time and money, and the biggest differentiator between those who succeed and those who fail will be where they focussed their energies. It is ok to make mistakes, but you need to realize as quickly as possible, cut your losses and regroup/refocus.

An example of this for me was Cardano. I dedicated some time to it last year, and also invested in it, but at a certain point, I realized that mostly this project is vaporware and that the biggest contributor to its market price is the messianic visions of founder Charles Hoskinson. I find him to be a likable character and his ideas are captivating, but ultimately there is little substance. The devotees of this blockchain and the amount of developer activity do not give me much hope, so I decided to exit that project and focus elsewhere.

None of the above should be taken as financial advice. I write these kinds of posts mostly to make sense of things and to take a snapshot of my current thoughts so I can look back in the future. I suggest you take the time to read widely and write your own thoughts in a journal; this practice has been one of the most invaluable tools in my investment journey.

Hope you’ve enjoyed this article, and I welcome your thoughts, whether you agree or not with my analysis.

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Jean Galea

Investor | Dad | Global Citizen | Athlete.