Edmund, welcome to Kreative Circle. Please introduce yourself and share with us why you decided to transition from working in the tech and media space to focus on creating a Cryptocurrency Literary Network.
Credit: Edmund McCormack
I have been involved in cryptocurrency and blockchain since 2012. The initial draw was the technology and how it can address glaring issues with the current internet model: 1) censorship by governments (i.e. the internet experience of someone in China is much different than you and I; 2) relentless data breaches of governments & corporations by hackers; and 3) lack of consumer data protection & privacy.
The latter became tangible for me in late 2015 when I was working at Apple and I saw Tim Cook speak about Apple’s rapidly-growing stance on user privacy. Personally, it meant that my days were numbered at Apple as they moved to distance themselves from the advertising world; however, I also realized that the current internet model – where companies & governments store your data on their servers – would need to be disrupted. Blockchain offered the solution, and it would not only disrupt how we surf the web but banking and even the money that we use (i.e. crypto).
Coincidentally, this is when the crypto market started its historic rally that brought the word “cryptocurrency” and “blockchain” into the mainstream. It brought in droves of investors that “threw caution to the wind” and invested into markets that they didn’t understand from a technical or financial standpoint. Unfortunately, many of those investors were caught off-guard 12 months later when Bitcoin, along with the rest of the cryptocurrency market, collapsed. I can’t blame those investors though because most of the credible sources on crypto were highly technical. Individuals who could understand the financial indicators and updates on development knew that the end was near. With a little information and trusted hub to be a “safe haven,” many of those investors could have mitigated their losses.
Today feels very much like early 2016. Crypto is gaining in popularity, except this time they are backed by major financial institutions and significant development advancements. I wanted to create an online destination that made the information, often seen as intimidating and inaccessible to those outside of tech & finance, available for all. This is where the name “Dchained” came from – unlocking this investment & technology space that could change people’s lives.
What were the common misconceptions related to cryptocurrency when it was initially introduced in the market? What misconceptions still need to be addressed in the cryptocurrency and blockchain technology today?
In the early years, cryptocurrency had a stigma of being the currency to finance illegal activity. I’m happy that we’ve out of the “dark days” of the Silk Road, as it becomes further embraced by governments and financial institutions.
The biggest misconception today is that you need to be technical to invest in blockchain and cryptocurrencies. The terms "blockchain" and "crypto" sound foreign to many, but so did HTML and IP Addresses in the early 90s (i.e. the internet). While most people still couldn’t explain how the internet works, it's hard to argue that investing in the early players involved in shaping the internet was a bad decision: Apple, Microsoft, Google, and Amazon. They're also the #1, #2, #3, and #4 largest companies in the world, in order. This has the potential to match or exceed that investing opportunity (no time travel required).
Dchained provides a platform to educate oneself on cryptocurrency without complexity. Which topic is the most popular within the Dchained community that delivers utility value among members and potential investors?
By far, most traffic has come to our section outlining Bitcoin. However, it’s been fascinating to see that nearly half the traffic is over the age of 50 to our Bitcoin content. In general, investing strategy for many starts to shift to assets with less risk as the individual moves closer to retirement age. However, this trend makes sense as the yields from Treasury bonds have decreased steadily as the Federal Reserve has increased the supply of money to support the US economy during COVID. This practice, known as quantitative easing, has led investors to seek out two of the most stable investment assets available: gold and Bitcoin.
Cryptocurrency serves as a potential investment vehicle for investors. What are the top three questions prospective investors should ask, or research, before extending their resources into the cryptocurrency market? Are there any insights you've acquired through your investing activities?
The top three questions that investors should ask themselves: 1) what is your goal and risk tolerance, 2) how diversified do you want to be (i.e. should you invest in an exchange traded fund (ETF) or purchase a coin directly from an exchange), and 3) what trusted sources are available to stay up-to-date.
My advice to anyone interested in starting, or growing, their crypto investing portfolio is: 1) take the time to learn the fundamentals (i.e. how is Bitcoin different than Ethereum), 2) store your cryptocurrencies on a hardware wallet instead of the exchange you use to buy from, and 3) do your own research before you make any investment decision.
Risk comes with all forms of investment. On a scale one to ten, how would you rate the risk factor for cryptocurrency investments in general? Has the risk factor increased or decreased due to the Coronavirus pandemic? What does the potential forecast of cryptocurrency demand look like in the next five and ten years?
The cryptocurrency market delivers opportunity at both ends of the risk spectrum. For example, Bitcoin has been drawing praise from major institutional investment firms, such as Goldman Sachs, and publicly traded companies in the face of our current economic situation. Its limited supply and strength in the face of the weak US economic and jobs data have drawn parallels to the stability that gold offers. In fact, MicroStrategy (a publicly traded business intelligence company) exchanged USD for Bitcoin in its reserves to more effectively store value due to fears of USD devaluation from the Federal Reserve’s steps to increase the supply of money to support the economy during COVID.
While I don’t have a crystal ball to predict where prices will go, it’s clear that cryptocurrency (specifically Bitcoin) is being rapidly adopted in developing countries. For example, the rate of adoption of crypto in Latin America has been inspiring as they turn to cryptocurrency as a solution to staggering inflation and increasingly unstable banking systems. It’s also worth noting that there are 2 billion people globally who do not have access to banking systems, often referred to as “unbanked,” but are actively using mobile phones. It will turn a mass amount of people into participants in the global economy, while creating demand on the limited supply of cryptocurrencies like Bitcoin (increasing the value for investors).
You've been engaged in the cryptocurrency market for at least a decade. Engagement in this niche requires good sense and implementation of good strategies. What has this form of investment taught you about decision making skills in life and business?
Behind all the acronyms of the cryptocurrencies are people who are leading technology projects. I have taken a focus of trying to invest in technology that I believe can be transformative, and I’ve used this approach to build confidence and conviction in my investing strategies. The crypto market is heavily influenced by emotion, as seen in the last bull run in 2016 and 2017, and there is no shortage of people who will give you their advice. It’s important to remember that there is no shortcut for doing the due diligence, creating a plan, and maintaining composure during short-term challenges.
Investors are constantly seeking opportunities to acquire diversified return on investment in their portfolios. What are the top four types of cryptocurrency popular in the global markets? Are cryptocurrency investments ideal for individuals seeking short term or long term returns? Is there any way to offset risk for short term losses?
The crypto market has assets that can appease varying levels of risk & reward that investors can incorporate into their overall portfolio. Personally, I think investors should analyze what is the function of the crypto and what it represents.
1. Stablecoins, which is cryptocurrency that is backed by fiat currency (i.e. USD or British pound) or commodities such as gold, offer a conservative investing opportunity with minimal volatility and modest returns. Given its association with national currencies, stablecoins provide a higher level of stability.
2. Bitcoin offers a unique opportunity where it’s a proven store of value but it has significant upside potential given its limited supply. The use case where it can be utilized for large-scale payments, such as government to government, draws further parallels with gold.
3. Ethereum is an investment in whether it will be the future backbone of digital infrastructure. Investments can net higher returns as Ethereum becomes more widely adopted across industries and further development enables further growth for the platform. However, there has been an influx of competitive technologies that are creating a technical “arms race” with Ethereum to provide the foundation for our connected lives.
4. Decentralized Finance (DeFi) is a high risk/high reward investment. Its goal is to remove “intermediaries,” such as banks, by allowing individuals to conduct financial activity through “smart contracts.” Investments resemble the practice of stock-picking as you’re financially back that a specific project or offering will become the leader in its specific sector of financial services, such as lending or earning interest on asset holdings.
Is there a recommended minimum amount needed to invest in the cryptocurrency market? What type of investment strategies have led third parties to lose money in this specific area of investment?
There is no minimum required to invest, as long as you cover any necessary fees charged by the exchanges to buy the cryptocurrency. With that said, there are a few things to consider. The golden rule is that you do not want to invest any amount of money that could put yourself in financial distress if you were to lose it. Additionally, it’s advisable to utilize a dollar-cost averaging investing strategy where you are investing a consistent amount of money consistently on a scheduled basis. This strategy helps investors avoid mistakes often made when trying to “time the market.” Lastly, it’s imperative to do your research and not invest based on the potential of “missing out.” This led to a lot of investors making poor decisions in the last bull run.
As a subject matter expert and entrepreneur, how have you built your investment network of highly skilled team members which include lawyers, financial advisors and business leaders? Did you find them or did they find you? What guidance do you have for business professionals building a robust network?
Over the years, I have met individuals both professionally and personally who provide their clients with advice on cryptocurrency in their respective fields. I’m a client of many of these specific individuals, as I’ve sought advice on topics such as filing gains/losses on my tax returns or how to claim crypto holdings when applying for a mortgage. It’s interesting how people involved in the crypto space have sought to offer introductions to help build the community. I want to help open that community up to those who are now getting involved.
Some people perceive the cryptocurrency market to be a clandestine network which hosts fraudulent activities. How can prospective investors find a peace of mind knowing their identities and resources will not be compromised when participating in the network?
The clandestine reputation was deserved in the early days, as crypto became associated with the “dark web,” but the world is a much different place with cryptocurrency today. Large financial institutions are focusing their long-term strategy on building crypto investment options for their customers. The Federal Reserve is collaborating with MIT on if/how they roll out digital legal tender.
Blockchain, which is built to provide anonymity and security, is looked at as a solution to consumer data privacy. I would ask someone to think about how many times they’ve had issues with illegal activity on their credit card, or even worse if their identity was compromised. It’s extremely easy to do because that information is stored on a physical server that hackers can attack. With blockchain, there is no central target for hackers and its use of cryptography make it almost impossible to breach.
How can this form of investment win over the trust of millionaires who strongly oppose investing in a cryptocurrency market that isn't reliable enough due to its young age, and/or the bad information circulating on the financial platforms online? What are the credible stock exchanges that provide valuable information and services to clients wanting to start their crypto journey?
The opinion of wealthy investors have shifted more in favor of cryptocurrency, such as Bitcoin, more in the last year than the 9 years preceding it. Regulation and policy changes from the US government and financial regulatory groups have set the stage for crypto to become mainstream. Large institutional banks are creating funds dedicated to cryptocurrency, such as Fidelity’s upcoming $1B Bitcoin fund, while several leading players in the crypto market are contemplating the move to becoming publicly traded companies.
Similar to the stock market and politics, there is no shortage of misinformation and people willing to offer it to you. This is why we wanted to create a platform that acts as a safe-haven, where you can build an education in the overall space and stay up-to-date on the latest developments.
Edmund, do you have a favorite quote or a favorite song? How does it inspire you with the work you do?
It’s a bit cliché to quote Warren Buffett, especially if you’re involved in investing, but he has a quote that is spot-on in the crypto world. “Risk comes from not knowing what you’re doing.” Crypto is dangerous for investors who think that it’s an apples-to-apples type of market with the stocks and bonds. It’s a whole different beast and you have to know what’s a market signal out of all the noise. This is where we come in as we are focused on building a platform where investors can learn about cryptocurrencies and leverage all the services that we offer our members to invest more effectively.
Please share with audiences how they can support your work.
We host a volume of free content and instructional information on our site www.dchained.com. Also, follow us on our Facebook page facebook.com/dchained as we will be announcing a virtual video workshop on “How to Get Started in Cryptocurrency.”