Welcome to the second edition of the News Fix!
Now, I know what some of you are thinking: “I didn’t see the first edition of the News Fix!”
That’s because we posted that one straight to the Early Investing website. This is the first one we’re emailing directly to you.
We know it’s hard to keep up with the latest news on pre-IPO startups and cryptocurrencies. The mainstream media does a terrible job covering these topics. And it’s hard to find reliable news sources on cryptos and startups on the internet. That’s where the News Fix comes in.
Each week, we’ll gather the most important news on cryptocurrencies and pre-IPO startups and deliver them right to your inbox. We’ll tell you what’s being reported, why it’s important and offer some context to the news. This way, you’ll have the information you need to make informed decisions about how to invest your hard-earned money.
Now, on to this week’s News Fix.
Institutional Investors Are on the Way…
The crypto world has been waiting for Coinbase to launch its custodial service for big investors (Recode) – and it finally happened! On Tuesday, Coinbase announced the launch of Coinbase Custody, which gives pension plans, sovereign wealth funds and other large investors a secure place to store bitcoin and other cryptocurrencies. Coinbase is partnering with an “SEC-regulated broker-dealer” (CNBC) to store the digital assets.
Third parties holding assets is the norm for institutional investors. Without them, these investors couldn’t put their money in any commodity, whether it’s gold, silver or bitcoin. They count on third-party custodial services to provide this service (and assume the risk). In fact, there’s no way institutional investors could enter crypto markets with any scale without a custodial solution.
But Wait, There’s More…
Genesis Global Trading just received its license to operate in New York (Bloomberg). Genesis specializes in making large trades for institutional investors. New York is known for having one of the toughest licensing regimes out there, so getting a BitLicense (yes, that’s what they’re called) from it is a big deal. If Genesis can make it there, it can make it anywhere (cue the Sinatra music).
Does the Internet Need a Default Currency?
Jack Dorsey, CEO of both Square and Twitter, certainly seems to think so – and he wants it to be bitcoin (CNBC). Dorsey is a successful payments guy – Square revenue was $669 million (Investor’s Business Daily) in the first quarter. So when Dorsey says the internet needs a native currency, you sit up and listen.
One of the biggest problems the internet has is cross-border payments. Have you ever tried to order a gift or flowers for someone living in another country? It’s insanely difficult because global payments are a pain in the neck. A currency native to the internet would fix that and many other issues.
The SEC launched a fake website this week to warn people about the dangers of investing in initial coin offerings (ICOs).
(The) SEC’s website bears all the hallmarks of language and graphics used to entice investors to part with their cash, including a large countdown timer, promises to partner with established companies in other industries, promises to register with SEC itself, and, of course, high returns on original investments. (ZDNet)
Investors should be wary of ICO scams. But it’s also important to remember that, if done correctly and responsibly, ICOs can be a valuable tool for companies to raise money.
Don’t Forget About the Small Caps
Valuable investments can come in many sizes. Consider this:
Small-cap stocks in the Russell 2000 have outperformed the S&P 500, Dow Jones Industrial Average and technology stocks in the Nasdaq Composite over the past three months. (Investopedia)
So as you build out your portfolio, make sure you’re looking at companies of all sizes.
The First Blockchain Phone
HTC is building the world’s first blockchain phone. The goal is to bring “consumers the best decentralized application (DApp) experiences, including a built-in secure hardware enclave” (Medium).
HTC did build the first Android phone and the first Facebook phone, so it has a history of doing these things (BGR). But whether anyone is going to buy or use this phone right now is a serious question. Blockchain apps are certainly growing. But are they growing quickly enough to support a phone dedicated to serving them? Unlikely. But we shall see.
And in case you missed it, a blockchain beer vending machine debuted at Consensus 2018 this week. Consensus is the world’s most influential cryptocurrency and blockchain technology conference. The vending machine was created by Civic, a blockchain identity verification company, and beer conglomerate Anheuser-Busch InBev. You know blockhain is going mainstream when you can use it to buy beer.
Have a good weekend, everyone.
Senior Managing Editor, Early Investing