1 words - 1 min read.

If you bought on January 1st, 2017, you'd make a boat load of money that's what would happen. I took the closing value of the top 30 cryptocurrencies by market cap on HitBTC as of January 1st, 2017 and compared it to today's price. Of the 30 currencies, only 20 existed as of January 1st, so any that didn't exist on January 1st are excluded. Assuming a $100 USD investment in each (total investment of $2000 USD), your total return in 8 months would be approximately 2009% (an increase of $38,187.06 USD):


Unfortunately, many folks (me included) have no idea which of these currencies to invest in, or even how to get started. Most of these currencies have no intrinsic value (bitcoin, litecoin), some are mere ponzi schemes (OneCoin, Gnosis, and basically any ICO (Inital Coin Offering) that increases the price as more investors join in), while others are simply a vehicle for obtaining venture capital without going out to the market for capital (ICO's). In most cases, everyone is buying them in order to sell them to the next sucker 3 months down the road.

So how do you choose which ones to invest in? You simply buy them all!

The Hypothesis

Investing in cryptocurrencies that are backed by underlying assets (either a company or something with intrinsic value) sounds like a reasonable strategy, but in world where capital is cheap, and hype for cryptocurrencies is overwhelming, you'll likely be buying in at a peak. Most ICO's these days are raising money for a product that doesn't exist, and may never exist, leaving you with nothing.

Investing in established digital currencies like bitcoin, litecoin, and ethereum also sounds reasonable, but you have to wonder how much upside remains. Bitcoin's current market cap is around $70 billion USD; getting massive 10x or 100x returns on high market cap currencies is going to be rather difficult unless something game changing occurs. If one of these currencies obtains real utility, i.e. if it was adopted by a major retailer as a form of payment (Amazon?) that could certainly make a significant difference. However many technical hurdles remain before those opportunities can become reality. The Lightning Network, which uses Hashed Timelock Contracts (HTLC's), is rapidly advancing and has the potential to move bitcoin closer to mainstream, thereby driving up it's inherent utility as a currency, and possibly providing increased stability.

Instead of trying to come up with a coherent strategy or framework for evaluating digital currencies, I'm going to buy $10 USD of the top 30 cryptocurrencies by market cap to see how they perform over a year period.

The Plan

I've signed up with QuadrigaCX, a Canadian exchange/trading platform that accepts CAD and allows users to trade CAD for bitcoin, litecoin, and ethereum. This will allow me to fund my account using Interac Online (a system that Canadian's use for debit transactions and email money transfers), purchase bitcoin, and then transfer the bitcoin to an exchange like HitBTC or Poloniex which will give me access to buy or sell dozens of cryptocurrencies.

I'll purchase $10 USD worth of each of the top 30 cryptocurrencies; the top thirty will be determined based on their market cap. I'm not entirely confident in this strategy, as exponential growth is more likely to occur in alt-coins that are very new and worth very little. However, by investing in more established alt-coins, it also reduces the chances that I will lose my entire $10 USD investment.

It would probably also make sense to set a threshold at which I sell some of my alt-coins that have significantly increased in value to lock in some of my gains, but I'm not going to and I'll tell you why: if I had purchased bitcoin back when it was only $10 USD per BTC, and sold it when it rose 2000%, I would have only made $190 USD. When I purchased my first 19 bitcoins back in 2011, if I had actually cared enough to watch them (or properly put them in cold storage) I most definitely would have sold them around 2012 or 2013 as their valued multiplied. There is almost no scenario in which I would have held on to them long term. The same principle applies here; I don't know what potential (if any) these alt-coins have, and as such I'm going to re-evaluate in a year. I will likely lose some money on some, and hopefully make some money on others. Either way it will be fun!

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