PRESENTS WHAT IS ? It’s digital money.

MAYBE A LITTLE MORE THAN THAT?

Cryptocurrencies are It takes its name from the fact that it’s secured by cryptography, or codes GLOBAL DIGITAL CURRENCIES that are deciphered by digital keys. that are becoming widely adopted as an alternative to fiat are not backed by currency or commodities like gold and silver. They can be used any one bank or government, unlike for secure online payments with no middleman like a credit traditional money. card company to take a cut.

The first cryptocurrency, , was created in 2009 by an anonymous person or group going by the pseudonym “.” Since then, crypto has grown to over a trillion dollars in value spread across thousands of individual coins.

Cryptocurrency is based on technology, which is a decentralized HOW DOES of every transaction ever conducted. When a new transaction is made, it is checked by every computer in the blockchain network and must then be agreed upon as valid, which makes counterfeiting almost impossible.

IT WORK? Think of it like owning an acre of land. You can’t physically hold it in your hand, but your ownership is recorded in a ledger with the local government. If a dispute arises, you can point to the ledger with your name as the recorded owner to prove that you bought and own the land.

With cryptocurrency, it’s money instead of land, and it’s worldwide.

HOW ARE CRYPTO COINS CREATED?

In crypto mining, a computer If the miner is the first to solve In essence, miners are being solves complex numeric this puzzle before all the other offered a reward for doing the puzzles to verify blocks of computers on the network, job of keeping the blockchain cryptocurrency transactions the miner is rewarded with a verified and secured, thus and add them to the worldwide cryptocurrency coin, which then preventing fraud. blockchain network. enters into the worldwide supply.

HOW DO YOU STORE IT? Crypto coins are stored in a wallet, which is a software program that holds the balance of your account. As the owner of this virtual wallet, you have a secure private key that allows you to make transactions online. Wallets can be accessed on desktop computers, mobile devices or via secured hardware devices that plug into a computer’s USB port.

CRYPTOCURRENCIES TOP 5 BY MARKET CAP

Bitcoin (BTC) 1 $673B

Ethereum (ETH) 2 $295B

Tether (USDT) 3 $62B What about Doge? (pronounced “Dozh”) just misses the top five, checking Cardano (ADA) in at number six by market cap. It may have 4 $55B started as a joke based on an internet meme of a shiba inu dog, but this crypto has serious value at the moment. Coin (BNB) 5 $53B

0 100 200 300 400 500 600 700 800 Billions ($) Market cap data as of 6/1/21 according to CoinMarketCap RISKS AND BENEFITS OF CRYPTOCURRENCY

BENEFITS

OUTPERFORMANCE NO COUNTERFEITS PRIVACY SPENDABLE Let’s look at 2020, the most Because it’s based on Transactions made with Cryptocurrencies are recent full year. This was a blockchain technology, it’s cryptocurrency are anonymous increasingly being accepted as banner year for the stock nearly impossible to create in the sense that coins are payment by businesses large market, but crypto gains counterfeit cryptocurrency sent to and from addresses and small. nonetheless blew away the or “double spend” the coins with no personally identifying FUN FACT: The first “real” indexes. because all transactions information. purchase using crypto are checked and verified S&P 500: +16.3% On the other hand, all occurred in 2010, when a simultaneously around the Nasdaq: +43.6% transactions are transparent Florida man paid 10,000 world. Bitcoin: +305.5% and recorded in a public for two Papa John’s : +461.2% With traditional money, ledger, so if someone tied you pizzas—worth $41 at the time, (Data from 12/31/19-12/31/20. counterfeiting is still a to your crypto address, they now worth over $360 million Index price data via MarketSmith. worldwide problem. could theoretically see your (the bitcoins, not the pizza). Crypto price data via Coindesk.) transactions.

RISKS

VOLATILITY SPECULATION SECURITY WHALES Cryptos trade 24/7 around the Cryptocurrency is highly There have been a number of Some cryptos have a high world and are susceptible to speculative and isn’t hacking incidents involving concentration of ownership large price swings based on considered a reliable cryptocurrencies. in a small number of accounts news headlines, government investment vehicle by many (these high rollers are called The most notorious one regulations, Elon Musk financial advisors. “whales”). occurred in 2014 and involved tweets—pretty much any That attitude may be changing, Mt. Gox, the world’s largest This increases the danger of factor you can name. but crypto is still not directly crypto exchange at the time. In extreme volatility and price tradable in almost any 401(k) total, around 650,000 bitcoins manipulation, but that varies or IRA account. were lost or stolen— worth over depending on the specific $20 billion today. crypto.

CRYPTOCURRENCY-RELATED STOCKS AND ETPS

STOCKS AND ETPS WITH DIRECT EXPOSURE

Grayscale Bitcoin Trust Grayscale Ethereum MicroStrategy (MSTR): (GBTC): GBTC tracks the Trust (ETHE): Similar to This enterprise software price of Bitcoin and trades GBTC, this ETP seeks returns and analytics company bills like a stock. Grayscale buys pegged to the price of itself as the first publicly bitcoins and stores them, Ethereum. traded company to invest while investors holding GBTC significant assets from its shares reap the profits/ treasury in Bitcoin. They losses as the price of Bitcoin have spent a staggering fluctuates. $2+ billion buying bitcoins, meaning their profits are very much tied to crypto prices.

INVESTING & BANKING STOCKS

CME Group (CME): CME Goldman Sachs (GS): Signature Bank (SBNY): operates exchanges that The head honcho of global This New York-based com- offer Ethereum futures, investment banks, Goldman mercial bank has started Bitcoin futures and options, Sachs announced the offering banking and deposit and Micro Bitcoin futures for creation of a dedicated services to cryptocurrency 1/10 the size of one bitcoin. cryptocurrency trading desk customers including the dealing in crypto derivatives largest crypto exchanges. like futures. SBNY makes a healthy mar- gin by lending with these low- and no-interest bearing deposits.

FINTECH STOCKS

Square (SQ): This digital PayPal (PYPL): A (COIN): payment provider not only competitor to Square in the Coinbase is the third-largest allows users of its popular digital payment space, they Cash App product to trade offer users of their PayPal by volume, allowing its crypto, but Square as a and Venmo services the customers to directly buy company has also directly ability to buy and sell crypto and sell crypto and store purchased over $200 million starting at as little as $1. in their personal digital in bitcoins as a corporate wallets. They make money by investment. charging commissions and fees for transactions.

CRYPTO MINING STOCKS

Nvidia (NVDA): A Marathon Digital Riot Blockchain (RIOT): manufacturer of GPUs for Holdings (MARA): A U.S.- A dedicated bitcoin miner computer gaming that based company that mines similar to Marathon Digital, happen to be excellent cryptocurrencies at scale. Riot Blockchain’s U.S.-based at solving the complex They buy vast amounts of operations include the single equations required to mining hardware, acquire largest Bitcoin mining facility mine coins. Now Nvidia has massive amounts of energy in North America. announced new crypto at a lower cost and then hold mining chips that promise the coins they mine as they increased performance for appreciate or sell them at a dedicated miners. profit.

HOW TO TRADE CRYPTOCURRENCY

CRYPTO EXCHANGES BROKERS PAYMENT APPS You can buy and sell crypto directly Some traditional equity brokers offer Popular payment apps including Venmo, on a cryptocurrency exchange, which direct cryptocurrency trading and PayPal and Cash App offer crypto works similarly to a stock exchange like some don’t; check with yours to see. trading, though the selection of coins is the Nasdaq or NYSE. Dedicated crypto For those brokers that don’t (like limited to Bitcoin, Ethereum and a small exchanges (Binance and Coinbase are TD Ameritrade, Charles Schwab and handful of others. two of the largest) allow you to trade Interactive Brokers), they may offer the largest variety of crypto coins. alternative exposure with instruments like Bitcoin futures.

IBD Digital gives you instant access to proprietary ratings for over LOOKING FOR THE NEXT 7,000 stocks and ETFs that tell you if a stock measures up based on fundamental and technical analysis. It’s a great way to check whether the next hot crypto play is a potential winner or all hype. BIG CRYPTO PLAY? Join IBD Digital today and unlock all of our cryptocurrency coverage, JOIN IBD DIGITAL. exclusive ratings, stock lists, market analysis and so much more. For new members, it’s only $8 for your first 8 weeks. Cryptocurrency can be volatile, which is why it’s critically important to make sure you’re invested BECOME A MEMBER in the right crypto stocks, ETFs and coins.