I often write about the importance of using strategies when it comes to cryptocurrency. This time I want to zoom in on one of the aspects of the strategies that I use and which cryptocurrency play an important part in reaching my goals.
Unlike traders I am interested in the purpose of coins. Whenever I get a tip from someone I always ask: So what does this coin do? For me it is important to know what the use is of a certain coin, this for me is more important than the hype surrounding that coin.
I think it is of the utmost importance that when you are going to invest in something that you know exactly what you are investing in.
Utility
The coin/blockchain technology has to have purpose. An added use besides just being a means of payment. The technology has to be used to solve either an existing problem or enhance a product or service.
This added value of the coin has to be more than the obvious advantages of blockchain technology like faster payments, cutting out the middle man, security etc (you know, all the standard buzz words used to sell an ICO).
In short the coin needs an unique selling point.
Community
The coin has to have strong community support otherwise this coin is just another speculative coin that will tank as soon as there FUD surrounding the coin or when the market takes a dive. Coins that are hyped tend to be more volatile and when things take a turn for the worse the investors are more likely to cut their losses.
For example, a lot of my friends are heavily invested in Verge, which undoubtedly is a solid cypto coin but they are only investing in the coin for the money (which isn’t a bad thing). As soon as this coin goes to the moon they will dump everything they have for the payout without ever having used the coin or wondered about the benefits of using the coin. This is why I tend to avoid coins like Verge and Ripple.
Innovation
It is important to know what a project is trying to achieve and that they keep improving their product. The people behind the project need to keep innovating to keep their project relevant. When you have a strong community backing you also get a lot of feed back for improvement. It is then up to the developers to turn that feedback in to real updates/upgrades. A coin that has a roadmap and keeps updating their project has a better chance to stand the test of times.
Investment mechanics
I couldn’t come up with a better description but what I mean with this is that it is important that the coin has a mechanic that promotes long term investments in the project. This can be done by either interest/dividend for holding a coin, Proof of Stake or giving you influence based on the amount of coins you hold. This is an often underestimated aspect of a cryptocurrency because people tend to consider these mechanics as a hindrance rather than a benefit.
Steemit for example promotes investing in Steem by giving you an upvote based on the Steem Power you have. Your investment is controlled by a Power down system where you are not able to withdraw your entire investment but rather over a period of 13 weeks. At first this seems like a disadvantage but in reality this benefits you as an investor because it makes the value of Steem more stable compared to other coins.
ICO
Go to WorldCoinIndex or CoinMarketCap, take a coin that has been around for a while, look at the price when the coin launched and look at the price where it is now. Now imagine if you would have invested in that coin at the initial price tag. What would your investment be worth now? Without a doubt your return on investment would be insane.
New coins are still hitting the market at a constant rate, any of those coins can turn out to be the next Ethereum or Bitcoin. There is a high risk with investing in ICOs but with the right research you can make bigger profits than with day trading.
Now let’s put all those things that I find important together into a strategy.
First I am going to build a farm. You are probably thinking...what now? But let me explain. On this farm I am going to hold P.I.G.s. (A P.I.G. is a Passive Income Generator.) And I am going to feed those P.I.G.s until they become big and plump.
What do you feed those P.I.G.s you might ask? Well, you feed them crypto, crypto earned from ICOs to be precise.
As those P.I.G.s are fed they will payout interest and dividend for me to use. The output from the P.I.G.s can be used to either feed the P.I.G.s or spend on other things.
For a P.I.G. to be valuable it needs all the aspects stated above. The added value of the use of the coin has to be proven. The coin needs to have a large community backing, a community that believes in the coin and support it even when things get tough. Even more important for the P.I.G. is that there are effective incentives in place that encourage investors to a) invest in the coin and b) keep investing for the long term. But the obvious most important aspect for a P.I.G. is that it pays interest/dividend in one way or another and that the output is worth your while.
Steem
Steem has proven to be one of the most effective P.I.G.s for me. It has the community support, great updates that are community driven. A clear focus on the future and mechanics that reward you for investing, the more you invest the bigger the output.
Someone with $100,000 investment in Steemit will earn more than someone who has invested $100 in the platform.
In a period of 6 month I was able to generate a constant stream of revenue from Steemit just by using my ICO profits to power up.
SmartCash
Although I have just started with SmartCash I am totally hyped about this coin. SmartCash has a strong community focus and addresses one of the major problems of crypto...instant payments. Their goal is to make it possible to buy goods/services and instantly pay without having to wait 30 minutes for the transaction to be confirmed and at low transaction costs (Merchant focus).
Investing in SmartCash gives you the power to vote on community funded projects, the more SmarCash you hold, the more influence you have (Smart-Voting). So you it pays to be part of the community because you have a say in how the money earned is going to be spent. SmartCash does everything in its power to promote community involvement, the developers start projects but then leave it to the community to decide how it will evolve. The community is also encouraged to take part in the projects that are meant to improve SmartCash (Smart Hive).
SmartCash has a clear roadmap designed to keep improving the coin and its services. Because of the community support (like with open source projects) SmartCash has everything that it needs to be future-proof.
But like I said two of the most important features of a P.I.G. are the investment mechanics and the interest/dividend and this is where SmartCash really shines.
If you hold SmartCash in your wallet and have more than 1000 coins (per address) you will be monthly rewarded (5.2% at time of writing). So it pays to have and hold a minimum amount tokens in your wallet. The brilliance of the mechanic is that you can not withdraw coins from the address that is eligible for the payout if you want to receive your SmartRewards. The incentive is to keep as much SmartCash for as long a possible in your wallet, this way you can get the most out of the SmartCash reward system.
The effect is that SmartCash holders are not quick to cash out or sell their coins (just like with Steem). Also the reward is paid out in SmartCash so the amount of SmartCash that you have will grow over time.
For example if you start out with 1000 SmartCash and the SmartReward is averaging 5% a month then after a year you will have earned 795 SmartCash.
The money is not “stuck” and you can withdraw SmartCash anytime you want however withdrawing your SmartCash means that you will not receive a SmartReward payout that month.
SmartCash rewards you (and rewards you well) for being a part of the community and investing long term in the platform.
It just simple like that!
There are more coins that can be considered good passive income generators. Besides Steem and SmartCash I will also be investing in Kucoin, Bankera and Nexo. But for now Steemit and SmartCash have the biggest upsides of being a worthwhile investment.
Which coins do you consider to be good long term investments that also earn you interest/dividend? Let me know in the comment section.
If you would like to learn more about SmartCash please visit https://smartcash.cc/ (or click on the banner below)
