I was just talking about altcoins with a LeoFinance community member over discord and the time-old crypto question came up: should I invest in altcoins or should I just put my spare capital into Bitcoin?
My response: it's the dilemma of the moonbag vs. risk-free bet on crypto.
Bitcoin is virtually a risk-free bet on crypto. If Crypto is successful, BTC will be successful. If crypto is unsuccessful, BTC will be unsuccessful. I think most of us can agree that BTC isn't going to get replaced as the top-dog, gold standard in crypto.
Altcoins are a much different landscape. I look at many of them as moonbags: risky bets on smaller projects that - from a financial perspective - are looking to outperform BTC itself.
On MarketCap
Bitcoin has a massive market cap - standing at $320 Billion today.
Many altcoins have a much smaller market cap. Look to RUNE which only has a $424M market cap or HIVE which only has a $100M market cap or LEO which only has a $600k market cap.
It takes a much smaller inflow of capital to double, triple or 10x the price of these altcoins as compared to Bitcoin.
That being said, the reliability of those inflows is much lower: any little thing can put a hole in the ship of one of these smaller altcoins. This vs. BTC which has been through the ringer and is already the gold standard of crypto.
What you're looking at is the equivalent of investing in Apple vs. investing in a small Silicon Valley startup.
The startup has much higher potential returns but Apple is virtually guaranteed to dominate the tech sector for the forseeable future.
On Control
Control is another interesting aspect to this conversation. Let's use HIVE as a great example.
With Bitcoin, you have relatively low control and relatively low impact. That is, your ability to make a difference in the Bitcoin ecosystem is relatively small.
When you look at HIVE, that's radically different. Your ability to make a difference in the Hive Ecosystem is much higher.
You can share content, create content, engage with content. You can play games. You can engage in Discord servers.
You can build a brand for yourself on Hive and use that brand to your advantage and to the advantage of the ecosystem itself.
This level of control can add confidence to your investment in the ecosystem.
For example, holding $1,000 of HIVE and working hard to make a difference to grow the ecosystem vs. holding $1,000 worth of BTC and working hard to make a difference to grow the ecosystem.
Which do you think you'll have an easier time making a positive impact?
My Take
My take on this whole discussion of whether you should put your money into a moonbag or drop it all into BTC is relatively straightforward:
Do both.
Diversification is huge when it comes to investing. Now, you don't want to spread yourself thin and become the master of none. You want to ensure that you have a meaningful amount in each basket such that if you are right then you get paid.
Thus, I hold a lot of Bitcoin but I also hold a lot of RUNE, HIVE, LEO, CUB... Altcoins.
I hold a bag of BTC which is the foundational pillar of my crypto investing. It's the gold standard and it's what I can reliably count on to increase in value as crypto is more widely adopted.
I hold a moonbag in these altcoins which aim to outperform BTC and provide a much higher Return on Investment (ROI) in the long-run.
Obviously, I have taken the "On Control" aspect of this article to the ultimate extreme. With LeoFinance, I am simultaneously adding value to the Hive ecosystem by building a dApp on it and aiming to onboard users while also building value for the LEO token which makes up a significant % of my moonbag portfolio.
Confidence
The confidence I have in having all of this control over the future of LEO (and Hive) is what allows me to hold such a large bag in these altcoins. If I didn't have so much control over these small projects and their future, then I likely would just sit in Bitcoin and not worry about these altcoins.
Thorchain (RUNE) is something I've written about. I'd like to think that I've told a lot of people about RUNE and propogated some ideas about it. My impact there is FAR SMALLER than it is here on Hive and LeoFinance, but it's still much bigger than my impact on the growth cycle of Bitcoin.
So what is an individual investor to do? In my opinion, I like having the big bag of the risk-free play - Bitcoin - and have a big (but separate) bag for the moonbag play - LEO, HIVE, CUB, RUNE... - this balance is important.
The moonbag keeps me busy and building and has the potential to pay off 100x more than Bitcoin, but the Bitcoin bag provides security and knowledge that the future returns are still mine to keep.
Drop a Comment Below - How Do You Separate BTC Investing From Moonbag Altcoin Investing?
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