This special, FREE edition of The Coles Report can be collected and owned as an NFT on Mirror by clicking HERE. A limited edition audio NFT can also be collected by clicking HERE.

Blockchains make cryptocurrencies, NFTs, DAOs, Web3, and the Metaverse possible. The technology on which blockchains are built has the potential to completely level the global economic and social playing fields. The whims, judgment, greed, and exclusive financial networks hoarded by a few are on the brink of losing their monopolized, or better yet centralized, power and control.   

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Have you ever shared a Google document with a peer? That document was distributed between everyone that had been given access to it. When you made changes to the copy on your end, those changes were immediately reflected to the document, and could be seen by all participants in real time. The document was distributed, and was accessible to everyone that had rights to edit, read, or write to it. Any changes made could be seen by whomever it was shared with.

Blockchains are also distributed. For example, any changes made to the Bitcoin blockchain can be seen by everybody. The entire history of transactions that have been made to the blockchain are publicly accessible. When new changes are made, everyone can see those changes. The transparency and public record of the Bitcoin blockchain is one of the features that give the public confidence in it as a digital form of currency.

[..] there are at least 1,000 different blockchains.

A common misconception is that there is a singular phenomena called “The Blockchain”. In actuality, there are at least 1,000 different blockchains. Bitcoin operates on its blockchain. Ethereum operates on its blockchain. Cardano operates on its own blockchain. There are numerous blockchains. Each one serves a specific purpose for its developers and users.

The Structure Of Blockchains

While there are many different blockchains, there are four different types of blockchain structures. They are public blockchains, private blockchains, hybrid blockchains, and consortium blockchains.

Public blockchains are open and available to anyone with internet access. This type of blockchain is ideal for cryptocurrency and document validation. Private blockchains are used by small networks within an organization. Permission must be granted to access a private blockchain. They are commonly used for asset ownership and supply chain.

Hybrid blockchains combine public and private blockchain technology. In this case, a public network is set up alongside a private network. This allows control of who has access to certain data, and what is publicly accessible. These types of blockchains work well with real estate and medical records. Consortium blockchains are similar to hybrid blockchains. They have both public and private blockchain features. However, their access is restricted to a specific group or members. Having members ensures that no single entity controls the network. Consortium blockchains are useful for supply chain, banking, and research.

Genesis

Blockchain was originally described in 1991 by a group of researchers. It was intended as a way to timestamp digital documents so that they couldn’t be backdated or tampered with. This would be similar to a notary. The original blockchain technology was adapted in 2008 by Satoshi Nakamoto to create bitcoin.

[..] immutable, which means that it’s irreversible

A blockchain is a distributed database. We’ll focus on public blockchains which are completely open to anyone. Once data is recorded on a blockchain, it is nearly impossible to change. This is why blockchain technology is said to be immutable, which means that it’s irreversible.

The type of data that the Bitcoin blockchain stores is transaction details. It is more or less a ledger that documents every single transaction that happens on its network. When Person A sends one bitcoin to Person B, the transaction details (including wallet addresses, timestamps, etc.) are stored on a “block” along with other transactions. Each block on the Bitcoin blockchain is limited to 2,400 transactions, and typically takes around 10 minutes to process, or validate.

Hash It Out

In addition to the data that’s stored, a “block” also includes something called a hash. A hash is a unique, identifying number for the individual block. It functions sort of like a fingerprint, and identifies a block and all of its contents. Bitcoin miners use powerful computers to solve cryptographic puzzles. When these puzzles are answered correctly, the only hash that makes a block valid is revealed.

Once a block is validated, it is closed, and the cycle repeats. In addition to its own unique hash, the top (or header) of each new block also includes a reference to the hash of the previous block. Remember, the hash is like a fingerprint. This connection between new and previous blocks is what links, or chains, all of the blocks together. Hence the term “Blockchain”.

So now we have data that is stored on blocks. Each block has its own unique hash that is output through the work of miners. Once a block is validated it is added to the blockchain. Each new block that gets validated references the hash of the previous block.

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Nodes Hold It All

The blocks are stored on a peer-to-peer network of nodes. Nodes are servers and computers (or mobile phones) that run network software. Miners are simply a specialized type of node. There are also other types of nodes in the network. All in all, nodes form the infrastructure of a blockchain. They store, spread, and preserve the blockchain data. Theoretically, the blockchain exists on nodes.

There is no one, central authority that controls the data or the system.

Since nodes also verify the blockchain data, the system is considered decentralized. There is no one, central authority that controls the data or the system. Since all of the nodes have a copy of the entire blockchain, they all can see when changes are made to it. If someone were to try to hack the system by changing the data on a block, the nodes would recognize the discrepancy and not validate the block. All legitimate transactions within that block would be moved to another block for validation.

To sum it up, blockchain technology allows for trustless, decentralized, peer-to-peer networking that does not rely on governments, banks, corporations, or other centralized third parties. Trustless means that the participants involved do not need to know or trust each other for the system to function. As stated earlier, Bitcoin is one of many blockchains. In the case of bitcoin, its blockchain protocol was designed for payments and transactions. It is a pure digital currency.

Smart Contracts

Ethereum is another decentralized blockchain platform. Ethereum brought smart contract functionality to the industry. Smart contracts are software programs that are stored on a blockchain that run when certain conditions are met. The Ethereum blockchain is designed such that developers and organizations can build their own decentralized applications, or dApps, on top of it. The Ethereum ecosystem is fully programmable and scalable. This has led to the creation of dApps in numerous areas including NFTs, DAOs, and decentralized finance.

With smart contracts the execution of agreements and workflow can be completely automated without the need for third parties or human intervention. Imagine a vending machine that operates purely on software code that is run on a blockchain. There could be a condition that says if a person puts $1 into the machine, and pushes button A1, release a bag of peanut M&Ms. Another condition could say when the machine is out of peanut M&Ms, automatically send an order to the supplier for more peanut M&Ms.

On the supplier’s end, a condition could be called to load more peanut M&Ms onto a fully automated delivery truck. A program could then enable that delivery truck to go to the location of the vending machine. From there, an automated robot could be prompted to load the new peanut M&Ms into the vending machine. Smart contracts could allow such an automated system to exist.

Smart contracts are simply code, or software programs, that automate the execution of agreements and workflow when certain conditions are met.

The Birth Of A New Nation

So now you can see how powerful blockchain technology is. Blockchains store data and transactions in a decentralized and trustless way. Some blockchains also allow for software code (or smart contracts) to be stored on them. This opens the door for the creation of applications that enable economic and social freedom like modern society has never known.

There are numerous applications that have been born from blockchains and smart contracts. Decentralized finance allows for lending, borrowing, exchanging, and earning yields without the need for banks or third parties.

Imagine being able to take out a loan for your small business without having to deal with the subjectivity of approval and interest rates from traditional banks. Or, how about earning interest on your funds that is 3-5 times more lucrative than a traditional savings account? Maybe you’re a trader who desires to play the higher stakes game of day trading without the need for a brokerage account. All of these options exist today. Blockchains such as Ethereum, Cardano, Polkadot, Avalanche, and Solana offer applications that have ushered in this decentralized era in finance.

DAOs are another type of application available on blockchains. DAOs are decentralized autonomous organizations that allow groups of people, or communities, to utilize blockchain and smart contract technology to reach coordinated goals. A DAO operates very much like an LLC, except you don’t have to go through any of the local, state and federal government red tape to set one up. In fact, you could spin up a fully functional DAO in a matter of minutes.

DAOs have no central leadership and are governed by the community that is built around it. All community members hold DAO tokens which give them voting power and ownership interest in the organization. DAOs could be built around anything from starting a book club to purchasing real world assets, such as land and buildings, to raising funds for a political lobby. The sky is truly the limit. Bring a community together around shared goals and interests, and you have the makings of a DAO. Most DAOs today run on the Ethereum blockchain.

Non-Fungible Tokens

NFT stands for non-fungible token. It is a type of digital token or asset. When you purchase an NFT you buy the rights to that specific asset. There are art-based NFTs, music-based NFTs, and NFTs that represent digital land and other assets. There are also NFTs that offer various types of utility. For example, Gary Vaynerchuk’s NFTs offer access to him.

Non-fungible means that an NFT can’t be changed or split up; and no two NFTs are exactly the same, even if the difference is just in the ID numbers. A token is just a small piece of data that you own that doesn’t change with time. Of course, that data lives on a blockchain. That piece of data, which represents NFT ownership, resides at a crypto address. If you own the crypto address, you own the NFT. It’s all verified on the blockchain where the owner history is always trackable.

[..] NFTs will bring tremendous, untapped value to individuals and groups across industries and socio-economic positions.

Fortunes have been made investing in NFTs. Projects such as CryptoPunks, Bored Ape Yacht Club, and CryptoKitties have racked up millions of dollars worth of real financial value to their owners. Other NFT projects have allowed recording artists to earn significantly more revenue than if they just relied on streaming platforms, record labels, and touring. I believe the development and use cases in NFTs will bring tremendous, untapped value to individuals and groups across industries and socio-economic positions.

The Creator Economy

Web3 is an idea. It can be thought of as the next iteration of the internet that is built using decentralized blockchains. It has the potential to replace traditional economic systems that are built upon third parties. These third parties (i.e. Amazon, Google, Facebook, Apple, etc.) accumulate the majority of the wealth that is brought about by users of their systems.

When networks become decentralized, communities that create, build, and use them have the potential to develop their own economies. These communities could create their own tokens and currencies that represent value, and enable governance and the codification of ownership.

What if the forefathers and early adopters of hip-hop music had an ownership interest in it from the beginning? Each new era and cultural adopter of the art form would add to the overall value of the genre, which would in turn increase the wealth of the pioneers and early adopters. Those who were the actual creators and early users of hip-hop would now benefit substantially from bringing it into existence, supporting it, and building culture and community around it. This same “what if” could extend to blues music, reggae music, various inventions, etc.

Blockchains and smart contracts make it all possible.

Web3 has the potential to bring about a world in which creators, as well as their supporters, build economic and social communities around their work and ideas. Value flows to the creators directly from their supporters, who can also be given ownership interest in the new creations. As communities grow, and more and more members join, the creators and early adopters would financially benefit from the growth of their movements. This is the potential of Web3. Blockchains and smart contracts make it all possible.

Total Disruption

Decentralized, peer-to-peer, trustless protocols built on blockchain technology will disrupt numerous industries including insurance, medical records, notary, banking, payments, ride sharing, online music, real estate, gaming, and many more. Even voting could be done utilizing blockchain technologies. The day could actually come when we won’t have to rely on the honesty, integrity, and good faith of politicians and political machines when it comes to voting for our representatives. It all could be handled via blockchain, free from corruption and manipulation.

This issue of The Coles Report is also available on a blockchain. You can own this issue as an NFT by clicking HERE, or by clicking the main image directly above the text version of this installment. As this issue gains traction and potentially gets published and referenced in other publications, you’ll have an ownership interest in it.

The ability for supporters to own the creations in which they support is powerful.

There is also an audio NFT that has been minted for this issue. It’s just below this paragraph, and bestows an ownership interest in that asset, as well. The ability for supporters to own the creations in which they support is powerful. It creates new economic ecosystems that operate outside of traditional third-party systems. Your investment in this issue’s NFTs not only helps the newsletter, it also adds to your own asset base.

40 Acres and a…

Blockchain technology has already changed the world through the creation of cryptocurrencies. But, as you can see, the potential is vast, and extends well beyond the idea of digital money. I have only scratched the surface. We all owe it to ourselves to learn about the technology, and capitalize on all of the possibilities.

Let’s accumulate our own 40 acres via blockchain technologies. We can do it using DAOs, NFTs, decentralized finance, or investing in the next Dogecoin. The Coles Report is your educational super highway to financial freedom, equity, and generational wealth. It’s not financial advice. But, I am excited to continue to share what I already know, what I’m learning, and what I continue to learn in this brave new Metaverse.

Peace.

Cryptocurrency is the internet’s native currency. There are more than 12,000 cryptocurrencies in existence. That is significantly more than all of the different fiat currencies in the world. Fiat currencies are government issued “legal tender” that isn’t back by a commodity (i.e. gold, silver, or other precious metals). Examples include the U.S. dollar, euro, peso, and the British pound.

With so many options available, what is the best way to approach crypto? DYOR, or do your own research, is constantly thrown out there by online crypto influencers after they’ve hyped you up on the next 1,000x gainer. When I first started investing in crypto, I often took the word of these influencers. Following their YouTube videos and Twitter posts was my research. I eventually found out that that was a big mistake.

Following their YouTube videos and Twitter posts was my research.

Bulls, Bears, and Frigid Winters

In crypto, there are bull cycles and bear cycles. Bull cycles are sustained periods of time in which the prices of cryptocurrencies are on the rise. Bear cycles are when prices fall over a sustained period of time. In the 15 months that I’ve been involved in crypto, I’ve experienced 1 traditional bull cycle, 1 “micro” bull cycle, 1 “micro” bear cycle, and what could potentially be 1 traditional bear cycle. In fact, as of this writing we’re in the midst of that potential bear cycle. And we’ve been here since mid-November 2021.

During bull cycles, every crypto influencer looks like a genius. So-called “experts” spring up out of the wood works when the market is hot. Those same experts and geniuses use the “I told you to do your own research” line when the market heads south for the winter. Well, as of now, it’s winter.

Continue reading and I’ll explain what I mean by traditional bull/bear and “micro” bull/bear cycles.

The Halving

No one knows exactly how long the current bear cycle will last. Some suggest that prices might not turn around until 2024. That prediction is based off of Bitcoin’s traditional bull cycles which are closely tied to something called “halving”. Make no mistake about it, as of this writing, Bitcoin is the leading indicator for what will happen in the entire crypto market. The rewards that bitcoin miners receive from validating transactions on its network get cut in half every 4 years. That is what is meant by halving.

[..] Bitcoin is the leading indicator for what will happen in the entire crypto market.

Bitcoin miners run specialized computers that solve complex cryptographic puzzles. Miners are the backbone of bitcoin’s blockchain because they validate and monitor transactions on the network. There are over 1,000,000 bitcoin miners in the world that share this responsibility. This constant validation and monitoring ensures the absolute integrity of the network. There is no 3rd party or central authority (i.e. bank or government) required. This is what makes bitcoin fully decentralized.

Mining is also how new bitcoins come into existence. These new bitcoins are what miners receive as rewards for running the systems that solve the mathematical problems. The total number of bitcoins that will ever exist is 21 million. As of this writing, there are 18.9 million bitcoins in existence. The remaining 2.1 million bitcoins are projected to be mined by the year 2040.

Every halving, the bitcoin rewards that miners receive are cut in half from the previous period. The first halving occurred in November 2012, when the bitcoin price was around $11. Within a year, the price rose a hundredfold. The second halving occurred in July 2016, when bitcoin’s price fluctuated between $500-$1,000 before ballooning to $20,000 by December 2017. The third halving was in May 2020. At the time, the bitcoin price was around $9,000. It rose to $30,000 by the end December 2020. By mid-April 2021, bitcoin reached an all-time high, to that point, of nearly $65,000.

Using the “halving theory” to project bitcoin’s bull cycles is popular in many crypto circles. If one subscribes to that theory, the next bull cycle will begin in 2024.

All-Time Highs

Other industry leaders, such as analyst Willy Woo, believe that crypto’s traditional bull and bear cycles are a thing of the past. Woo is an on-chain analyst that uses real-time, actual blockchain analysis to gauge market conditions and direction. He believes that the market is maturing, and we’re going to enter a new era in which bitcoin does not have obvious bull and bear markets.

Woo’s theory has been somewhat validated by the fact that, 1) after markets dipped for several months after reaching an all-time high in April 2021, there was another run up that led to new all-time highs of 69,000 in November 2021; and 2) the typical bear market drop of 80% that could take as long as a year to shake out, did not happen in April, and has not happened since the November all-time high. In fact, bitcoin is only down 45% from that high point.

Reversing Course

Whether we’re in a bitcoin “supercycle”, which is a prolonged period of upward price momentum; or experiencing micro bull and micro bear cycles is yet to be determined. My earlier statement that in 15 months I have realized 1 “traditional” bull cycle, 1 “micro” bull cycle, 1 “micro” bear cycle, and what could potentially be 1 “traditional” bear cycle is based on the price action that I’ve seen over that time.

In hindsight, that reversal looks to me like a “micro” bull cycle.

I believe that we came out of a traditional crypto bear market in mid to late 2020. At that time, a traditional bull market started, which seemed to sputter out in mid-April 2021. For 3 months, crypto prices dipped into a “micro” bear cycle that reversed course in the preceding 4 months. In hindsight, that reversal looks to me like a “micro” bull cycle.

Currently, we’re in a nearly 4-month downtrend which could either be the beginning of a traditional bear market, or another “micro” bear market. I’m hoping for the latter. If prices do turn back around and the bitcoin price rallies to $100,000 in 2022, which has been predicted, some might end up classifying the entire time period since mid to late 2020 as a supercycle.

The King Kong of Crypto

Two key lessons that I’ve learned about crypto is that, 1) nobody really knows what will happen, until it happens. Hindsight is always 20/20; and 2) The price of bitcoin, the leading indicator for the entire crypto market, has consistently trended upward over time.

YouTube University was the first place that I sought out the secrets.

Bitcoin was the first cryptocurrency, and has the largest market cap. It is the king kong of crypto. Yet and still, it is one of more than 12,000 cryptocurrencies in existence. Because of this, the first several months that I was involved in crypto were confusing. Which crypto should I invest in? What do cryptocurrencies do? How should I diversify in the space? These were all questions that that needed to be answered. YouTube University was the first place that I sought out the secrets.

Honestly, YouTube was a good start for me. It made me aware of some of the more common cryptocurrencies that were on the influencers’ radars. That was helpful. However, because I stumbled upon crypto during a very prosperous moment in a bull cycle, everyone did seem like a genius.

While I decided to invest in Ethereum and Bitcoin based on my own research, I started buying other cryptocurrencies on the advice of several YouTube channels. That taught me a lot of lessons. Not the least of which was to fully understand the “use case” of any cryptocurrency that I invest in.

Problem Solvers

Generally speaking, I’ve found that the cryptocurrencies that hold the most value are those that solve, or attempt to solve, some type of real-world problem. In other words, they have an actual use case beyond just being a digital form of currency.

I’ll end this issue with a breakdown of the real-world problems that 5 of the more than 12,000 cryptocurrencies attempt to solve. Full disclosure - I do hold some, but not all, of these coins.

1. Bitcoin
   (market cap: $793.9 billion at the time of this writing)

Legend has it that Bitcoin was created by Satoshi Nakamoto, who to-date is anonymous and pseudonymous. No one knows who he or she is. Launched in 2009, Bitcoin was created as a digital cash system that removes third party intermediaries (i.e. banks, governments, etc.). It offers scarcity in the fact that there will only ever be 21 million bitcoins in existence. In that sense, some consider it to be digital gold, and a potential hedge against inflation. Bitcoin is intended to provide an alternative payment system that is free from central controls.

1. Ethereum
   (market cap: $322.4 billion at the time of this writing)

Co-founded by programmer Vitalik Buterin, Ethereum launched in 2015. Ethereum is an open source, decentralized blockchain that enables the use of smart contracts. It’s native token, Ether, is the second largest cryptocurrency in the world. Ethereum is a powerful ecosystem that helps developers to create decentralized applications (dApps) on top of its blockchain. Its smart contracts feature has fostered numerous protocols in the areas of decentralized finance, decentralized exchanges, gaming, new crypto token standards, NFTs (non-fungible tokens), and more. The majority of NFTs that exist were minted on the Ethereum blockchain. If Bitcoin is digital gold, Ethereum is digital oil.

1. XRP
   (market cap: $36.5 billion at the time of this writing)

Launched in 2012, XRP was developed by software engineers David Schwartz, Jed McCaleb, and Arthur Britto. The three were eventually joined by Chris Larsen, and together they formed a company that is now known as Ripple. XRP’s primary use case is to facilitate cross-border payments between countries. It solves the problem of high transaction costs and low transaction speeds.

There has been controversy surrounding Ripple and XRP. In December 2020, the SEC charged Ripple, along with two of its executives, of raising more than $1.3 billion in an unregistered offering of digital asset securities. Due to its centralized infrastructure, the SEC’s claim was that XRP should be considered a security, and not a decentralized cryptocurrency. The lawsuit caused the token price of XRP to initially plummet. It’s made up some ground since then, but the charges are still pending. Ripple executives believe that they will win the lawsuit against the SEC, which could have major implications on the future of other cryptocurrencies.

1. Solana
   (market cap: $27.9 billion at the time of this writing)

Solana is also an open-source blockchain that supports smart contracts, NFTs, and decentralized applications. It was created in 2017 by Anatoly Yakovenko and Raj Gokal. Solana solves the problem of blockchain processing speed. Ethereum, the leader in the space, has very slow processing speeds compared to Solana. As a result of the slow speeds, transaction costs on the Ethereum blockchain can be high when the network is congested. Solana solves this problem, which has made it ideal for blockchain game developers and NFT creators. One of the controversies surrounding Solana is that they may have sacrificed true decentralization in order to achieve super fast speeds and cheaper transaction costs. Nonetheless, it is one of the most highly used blockchains today.

1. Dogecoin
   (market cap: $16 billion at the time of this writing)

Dogecoin was created in 2013 as a joke. Its creators, software engineers Billy Markus and Jackson Palmer, developed the token as a way of making fun of the overhyped and inflated speculation in Bitcoin and other cryptocurrencies at the time. Dogecoin features the face of the Shiba Inu dog from the “Doge” meme as its logo and namesake. Considered a meme coin, Dogecoin has a loyal and dedicated following.

It took Amazon 13 years to deliver a 10,000% return to its investors. Investing in Dogecoin at the beginning of 2021 would have delivered those same returns in 5 months. With the public support of Elon Musk and Mark Cuban, Dogecoin has gone from merely a joke, to potentially a viable digital currency that could be used to purchase goods and services.

DYOR

When researching various cryptocurrencies, I’ve found that market cap and use case are extremely helpful features to understand. There are more than 12,000 cryptocurrencies. Many of them won’t last for the next four years. Those that do will undoubtedly offer value to vast networks of users and speculators, as well as solve real world problems.

Obviously, the opinions expressed in The Coles Report are meant to be informational and educational, not investment advice. My goal is to provide useful guidance in the areas of cryptocurrency and blockchain technologies. We’re in the very early days of an economic and societal transformation. Let’s make sure that we stay on the bleeding edge of it.

2021: The Year Of Crypto

2021 seemed to be the year that brought mass awareness to cryptocurrencies. News about Bitcoin, Ethereum, Dogecoin, Shiba Inu, and other tokens had many folks wondering how, and if, they should enter the crypto market. Since I made my first investments in both Bitcoin and Ethereum in November 2020, I found myself fielding a lot of questions from family and friends as to how to approach this entirely new financial opportunity.

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For me, the decision to invest in crypto was initially based almost entirely on use case, as opposed to investment speculation. I could see that the efficiencies, reduced friction, and dissolution of middlemen made possible by blockchain technologies (which enable the existence of cryptocurrencies) would change the world as we know it. And that is no exaggeration.

…an investment of $1,000 made in Shiba Inu on January 1, 2021, would have ballooned to $994,144,083 by the 1st of November that same year!

After I made my first crypto purchases and began to research the market, I started to see how parabolic the potential returns could be. For example, a $1,000 investment in Bitcoin on January 1, 2021, was worth $2,077 on November 1, 2021. The same $1,000 investment in Ethereum during the same time period would have grown to $5,921. Had you allocated that sum to Dogecoin on January 1, 2021, it would have been worth $47,797 on November 1st that year. And, most earth shattering, is the realization that an investment of $1,000 made in Shiba Inu on January 1, 2021, would have ballooned to $994,144,083 by the 1st of November that same year! Talk about life changing, generational wealth!

Those results are what have so many people interested in crypto. In fact, more than 55% of all crypto users entered the market in 2021. This statistic is incredible considering that Bitcoin, the very first cryptocurrency, became public in 2009. It took one year to more than double the users of an asset that had already existed for 12 years.

It’s All About Strategy

My crypto investment strategy was all about time horizon. I wasn’t looking for a get rich quick opportunity. I also wasn’t looking for a lottery ticket. So, I approached my investments in crypto with a longer-term time frame in mind. I feel strongly that the current cryptocurrency market capitalization, or overall value, of more than $1.8 trillion will be worth substantially more in the next 5 to 10 years. Some experts suggest that that number could grow by 50 times, or more, in that time.

We’re still very early in crypto and blockchain technologies. While no one can predict the future, consider this:

He bought two Dominoes pizzas for 10,000 BTC…

On May 22, 2010, became the first person to use bitcoin in a commercial transaction. He bought two Dominoes pizzas for 10,000 BTC (bitcoin tokens). At the time, the total value of the transaction was $41. Today those bitcoins are worth $340 million. Can you imagine making that purchase 12 years ago? The opportunity cost of purchasing those two pizzas that day versus holding the bitcoin was $340 million?!

The Future Of Crypto

The largest determent of the growth and success of crypto is network adoption. The more people that participate in the network, the more the the industry will grow. There are currently around 300 million crypto users. Research implies that the total number of crypto users is snowballing toward 1 billion by 2024. Some even think it could possibly reach that number by the end of 2022.

Crypto’s growth is comparable to the early growth of the internet. In 1994, very few people believed, or could even conceive, that the internet would be so widely adopted and used as it is today.

In March 2000, there were 300 million internet users. Today there are almost 5 billion people online. That’s tremendous growth! The early stage of internet usage saw a growth rate of 63% per year. The crypto user growth rate is 113% per year at a comparable stage in the industry’s evolution.

Even if crypto’s usage rate slowed to a level comparable to the growth of the internet, there will be 4 billion users by 2030. Either way, as more and more individuals, institutions, and governments adopt cryptocurrencies the total market value will rise accordingly.

It’s early. Investing in solid crypto projects with sound fundamentals, and holding them, will ensure that you don’t relinquish what could potentially be millions of dollars of future value for a couple of slices of pizza.

The First Step

When I made the decision to invest in crypto, the first thing I did was open a Coinbase account. Coinbase is a secure online platform for buying, selling, transferring, and storing cryptocurrencies. An account can be open on either desktop or mobile, Mac or PC. It’s pretty easy to set up a Coinbase account. If you choose to use your mobile phone, you can simply download the free Coinbase app. On a desktop, go to the Coinbase website and sign up for a free account.

After entering basic information such as your name, email address, password, home address, last four digits of your social security number, etc., you’ll also need to link your bank account. If you already use online banking this will be a simple process. The reason that you need to connect your bank account to your Coinbase account is so that you can draw funds to purchase crypto. I’ve included a video below that walks through the entire set up and purchase process on mobile.

COINBASE ACCOUNT SETUP (VIDEO DEMONSTRATION)

Fear Of Missing Out

Meme coins, such as Dogecoin and Shiba Inu, are just as likely to wreck a portfolio as they are to take it to the moon.

A little earlier in this issue I detailed the return on investments that would have been achieved by purchasing Bitcoin, Ethereum, Dogecoin, and Shiba Inu in 2021. While it is easy to be tempted by 1000x returns, the reality is that crypto can be quite volatile. Meme coins, such as Dogecoin and Shiba Inu, are just as likely to wreck a portfolio as they are to take it to the moon.

The term “FOMO” (Fear Of Missing Out) is used in the industry to describe the act of jumping into a crypto investment based on the hype surrounding said investment. When a cryptocurrency is realizing a parabolic rise in price, and people are starting to talk about it on social media, reddit, the news, etc. it can create anxiety and panic that causes others to rush in so as not to miss the opportunity. That is what it means to FOMO into an investment.

Unfortunately, FOMOing can get you wrecked. Typically, the faster the price of a cryptocurrency rises, the faster it crashes back down to earth. And usually those who FOMO’d in at the end of the hype cycle are left holding the bag. So be careful!

Risk Versus Reward

As you know, The Coles Report is not a guide to investing, or meant to be investment advice. It is information and education that is based on my own personal experiences. The first two cryptocurrencies that I purchased were Ethereum and Bitcoin, in that order. Those are the Big 2 in crypto. They have the highest market caps (market capitalization) which is calculated by multiplying the total number of coins in circulation by the price per coin. Bitcoin’s current market cap is $844.9 billion. Ethereum’s market cap is $362.3 billion. Analyzing the market cap of cryptocurrencies is one way that I’ve been able to determine the risk of an investment. I knew that I couldn’t go wrong if I initially focused on the top 10 coins based on market cap.

Mid-caps, which have market caps between $1 billion to $10 billion, can reveal some hidden gems with untapped potential. But they also pose more risk than large-caps (greater than $10 billion). Small-cap cryptocurrencies (less than $1 billion) can yield huge rewards, but also come with dramatic price swings based on market sentiment. This could result in huge losses if one is not careful. A great resource to find the market caps of cryptocurrencies is Coinmarketcap.com.

Intergenerational Wealth

Crypto has presented a new opportunity for both novice and seasoned investors. At the time that I invested in Ethereum and Bitcoin I didn’t have any stocks in my investment portfolio. So, crypto made me feel like I was “getting into the game”, so to speak. It’s been 15 months and I haven’t regretted it. I’ve learned a lot, and I still have a lot more to learn. My goal is to achieve intergenerational wealth. I believe investing in crypto and blockchain technologies is the way to do it. Only time will tell.

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Disclaimer: All information contained in this newsletter is intended for educational and information purposes only. The Coles Report doesn’t offer any investment advice. Be sure to do your own research if your intent is to get involved in the cryptocurrency or blockchain technology markets.

Blockchain technologies are the great disrupters that will change society as we know it. It’s the dawn of a new age. Cryptocurrencies, NFTs, DAOs and the Metaverse will conceive generational wealth and innovation like we’ve never seen before. The Coles Report is your secret weapon to learn, interact, benefit, and grow in this brave new world. 

Creativepreneur (cre-a-tive-pre-neur) noun- an entrepreneur who fuses a passion for the creative arts with business to expand income and/or influence.

In the summer of 1995, I began a career as a financial analyst. As a recent graduate of Creighton University (Omaha, Nebraska) with degrees in finance and marketing, I was continuing along the path that was expected of me. Even though my greatest passions/desires at that time were to own my own business and be creative (primarily via music). I had just finished four years of college, been adequately programmed to be a worker bee, and stepped up on the first rung of the ladder (or was it a hamster wheel?).

I often thought back to my childhood which was full of music. In elementary school, I played a few musical instruments before settling in on the drums by the age of 12. In the 2nd grade, I started writing songs. There were countless talent shows and a few plays along the way. Even though being creative gave me life and allowed me to experience the world in the most colorful, enjoyable, and fulfilling way, the idea of a career in the arts wasn’t even an afterthought. So, I did what so many of us do – follow the career/life path of least resistance.

So, I did what so many of us do – follow the career/life path of least resistance.

Now, back to my early career. I was a financial analyst for Union Pacific Railroad (Omaha, Nebraska). Since I was also born and raised in Omaha, the ‘O’ was all that I knew up to that point. A somewhat segregated Midwestern town that gave birth to both Malcolm X and Warren Buffet (each of whom would inspire and inform me at different stages of my life), my hometown instilled the values of family, community, and work ethic in me. I honestly wouldn’t be the person that I am today were it not for my family and Omaha, Nebraska.

The Hamster Wheel

From Monday to Friday, just before 8:00 am, I would arrive at my cubicle at Union Pacific Railroad (U.P.). As much as I loved financial analysis, I knew early on that I could not spend the next 40-50 years of my life on that hamster wheel. Furthermore, a few of my buddies who did not end up going to college had started building their own home recording studios. It was the mid 90s, so the studios certainly weren’t state of the art by today’s standards, but new music was being created, captured, and replayed daily. And to me, that was simply AMAZING!

Before long, I was running to these home-based recording sessions every day, 7 days a week. It was a cathartic experience for me. I had found nirvana. At first, I was mainly writing and performing songs that I had written. As time went on, I began learning how to produce the music, as well. Recording and audio engineering came a little after that.

Going to work at U.P. got a lot harder during this phase, which was about a year out of college. In fact, many days between cranking out return on investment (ROI) analyses and economic development spreadsheets, I’d be writing songs. The clock couldn’t move fast enough for me. All I could think about was getting off work and recording new music.

The Tipping Point

My passion for creating music got so strong that I ended up investing in my own home studio equipment. It wasn’t much, but it was enough to ensure that I could constantly create. Within months, I, along with my buddies Dre and Lucky, produced and recorded a song that ended up getting airplay on a local radio station. That was the tipping point for me.

Just shy of two years at Union Pacific Railroad, I decided that I had to follow my heart. Unsure how to really make it work, I applied and was accepted to the Wharton School in Philadelphia, Pennsylvania to embark on an MBA. My girlfriend at the time lived on the East Coast, and this move was the transition that would allow me to be with her, try to elevate my music career, and step off the hamster wheel. I boarded a Greyhound bus in the fall of 1997 with a keyboard and a duffle bag. I arrived on the East Coast. However, I never set foot on Wharton’s campus. My girlfriend and I didn’t make it either. But the music has been in full effect ever since.

The Crypto Rabbit Hole

After more than two decades I have found my sweet spot as a music entrepreneur (a creativepreneur – if you will). The entirety of that journey will unfold, in time, in The Coles Report.

I bring you to this point to tell you about my introduction to crypto.

After more than 20 years in the music business, I started doing research into how the music industry would change in the near future. I was interested in technologies and innovations that would alter the way my industry operates. I came across an article that mentioned how record labels, managers, and middlemen in general would no longer be necessary because of the “blockchain”.

I had never heard of this “blockchain”, so I continued to research. I found that there were online platforms that supported recording artists by allowing them to be totally funded directly by their fans and supporters. The “blockchain” that made this possible was called Ethereum. The more I read about Ethereum I was so intrigued that I invested in some Ether (ETH), the native tokens of the Ethereum blockchain, using an app called Coinbase. Within a week and a half, I had profited more than $1,500 on that investment.

Within a week and a half, I had profited more than $1,500 on that investment.

I talked to my wife about this Ethereum and how I thought it would change the music industry, as well as many other industries. My wife is very risk averse, so it took some prodding. After a couple of days, she decided to also invest in ETH. Another week or two passed, and her investment had grown significantly. This was mid-November 2020 when Ethereum’s price was around $500. As of this writing, ETH is $2,639. I have seen it grow as high as $5,000 per ETH token.

Now I was starting to peek down into the crypto rabbit hole. The idea of investing excited me. It reconnected me with my financial analysis roots. It was literally like coming full circle in my career. From finance to music, then music to finance – a creativepreneurial yin/yang.

I sat down with my wife to talk about investing a portion of our savings into crypto. As you can imagine, that was initially met with hesitation. But I felt like it was time to buy some Bitcoin. At the time, Bitcoin (BTC) fluctuated between $16,000 and $18,000. Fortunately, after a few days of persuading, my wife agreed to investing in BTC. As of this writing, Bitcoin is $38,213. I have seen it go as high as $69,000.

Our modest investments, which came from both income and savings, had increased our portfolio by multiple six figures within 4 months. I was now a believer. It changed everything. I knew what the future had in store and blockchain and crypto were smack dab in the middle of it.

Our modest investments, which came from both income and savings, had increased our portfolio by multiple six figures within 4 months.

The Purpose

As of this writing, I’ve been active in crypto for around 15 months. So, I’m still learning. But I have dedicated nearly 1,000 hours to researching and investing in cryptocurrencies and blockchain technologies in that time. I have found crypto, NFTs, DAOs and the Metaverse to be absolutely fascinating! The possibilities are mind boggling!

The purpose of The Coles Report is to share all that I have learned up to now and continue my journey down this rabbit hole with you. I’ll share the pitfalls that I’ve experienced so that you can avoid them. I’ll also share the strategies that I have employed that have compounded my investments. Technical and fundamental analysis will also be explored along the way. However, this is not meant to be financial or investment advice. It is information, education, and entertainment that I hope will provide you with inspiration, motivation, value, and enlightenment.

…this is not meant to be financial or investment advice.

As a creativepreneur, I look forward to sharing my thoughts and insights into the creator economy, which the blockchain will totally influence, as well.

The Coles Report will be published weekly. A monthly subscription is less than 20 cents per day. It will be one of the best ways that you can splurge on two dimes daily. Let’s learn, build, and grow together.

Creatively yours,