Cryptocurrency is no longer only about meme coins and degeneracy (though it’s still that). It’s becoming a serious, mature industry transforming traditional systems and solving real-world problems.
The blockchain has evolved far beyond its roots as a speculative asset class. It’s now a foundation for technologies and financial systems reshaping the economy.
Skeptical? Don’t believe me? Frankly, I don’t blame you.
But if the crypto winters of 2018–2020 and 2022–2023 taught us anything, it’s that blockchain innovation thrives during moments of quiet focus.
This is the final issue of our three-part crypto series:
Today in Part 3, me and my colleague John Belitsky will show you how to carve out your wedge of the growing crypto pie.
Whether you’re into startups, defi, staking, or just want to chuck your cash into crypto ETFs, we’ve got you covered.
You’ll also learn about Altea’s CryptoONE opportunity and why I think it’s the perfect vehicle to capitalize on this moment of transformation.
Let’s go 👇
Table of Contents
Why invest in crypto startups?
Investing in crypto startups isn’t just about getting in early on the next big thing; it’s about being part of the groundbreaking journey shaping the digital economy’s future.
And blockchain startups are the heartbeat of the crypto ecosystem. They’re building the infrastructure, crafting the applications, and sparking the innovations that will set the industry’s course for years to come.
Direct access to these pioneering companies offers opportunities you rarely find elsewhere.
We’re talking about unparalleled potential for exponential growth, a chance to diversify your investment portfolio in ways traditional markets can’t offer, and even the unique opportunity to influence the direction of blockchain technology itself.
Scalable by design
The allure of startup investing in the blockchain realm lies heavily in the scalability of blockchain solutions. Unlike traditional businesses that often stumble upon logistical hurdles when scaling up (think manufacturing capacities, physical storefronts, etc) blockchain companies are inherently designed to be global from day one
A successful decentralized application (dApp) doesn’t need to worry about physical infrastructure; it can reach users worldwide with just a click.
Reshaping entire markets
Moreover, blockchain startups are often venturing into markets that are either untapped or primed for disruption.
Real estate is perhaps the most obvious and lucrative example.
This industry, worth over $340 trillion, has long been considered illiquid and inaccessible to the average investor. But blockchain startups are changing the game by enabling fractional ownership and streamlining transactions. They’re creating liquidity and unlocking value.
The same disruptive energy applies to areas like decentralized identity solutions. Startups here are tackling critical issues around data ownership and security.
Sector diversity
Investing in blockchain startups diversifies your portfolio from the jump because it provides the infrastructure to such a wide variety of sectors.
- Decentralized finance (DeFi), which is reinventing financial services
- Supply chain management, where transparency and traceability are being enhanced
- Gaming, with play-to-earn models
- or hyper-niche sectors like horse genealogy or collectibles accounting
Nearly every sector you can imagine will apply blockchain technology in innovative and transformative ways.
This diversity isn’t just exciting; it’s strategically advantageous. It provides a hedge against market volatility. When one sector experiences a downturn, another might be on the rise, helping to balance your portfolio.
For the altruists, the potential returns aren’t solely financial; there’s a sense of being part of something bigger — participating in a movement that’s pushing the boundaries of what’s possible.
How to think about investing in blockchain startups
Unlike most startups, early-stage blockchain companies offer more than one way to profit.
Equity investments
Equity investing in blockchain startups involves purchasing shares in a company aligning your interests with its long-term success. This traditional approach offers stability and the potential for substantial returns, especially if the company achieves a successful exit through an acquisition or IPO.
This is all very standard, and I won’t bore you with the details of equity investments in seed stage companies.
Token investments
This is where investing in blockchain startups hits different.
Token investments involve purchasing cryptocurrency or utility tokens issued by a blockchain startup. Equity investors often receive a bag of company tokens alongside their equity shares.
These tokens often serve as the lifeblood of a project’s ecosystem, powering its functionality and enabling users to interact with its services.
But token investing requires a nuanced understanding of tokenomics which can be difficult to grasp…
Supply-and-demand dynamics, use cases, and the broader market environment sometimes influence a token’s value in byzantine ways. However, tokens with strong utility, deflationary mechanisms, and adoption incentives are more likely to succeed.
Token investments also offer liquidity. Unlike equity, which may require years to realize returns, tokens can often be traded shortly after issuance. This liquidity provides flexibility, allowing investors to exit positions or capitalize on market trends.
How to pick blockchain winners
Unlike YOLO’ing into altcoins, Identifying successful blockchain startups isn’t about memes or puns. It’s a strategic process that blends technical savvy, market insight, and a keen eye for innovation.
Picking blockchain winners is analogous to investing in pharma startups. You need deep specialized knowledge of the industry in a way that just isn’t essential when picking food delivery apps or subscription box companies.
[Psst — CryptoONE does this for you]
Let’s unpack the key criteria to help you spot the next big player in the blockchain arena.
1. Team and leadership
Behind every groundbreaking blockchain project is a team of visionaries and tech wizards.
- Founders’ expertise: Seek out founders with a solid track record in blockchain and relevant industries. Their past successes — or lessons learned from failures — can be telling.
- Technical team: The developers are the engine driving the innovation. Assess their proficiency with blockchain technologies like Solidity or Rust. A team that’s adept in these areas is better positioned to turn ambitious ideas into reality.
2. Technology and innovation
In a sea of blockchain projects, cutting-edge tech is the lighthouse that guides you to the winners.
- Unique value prop: What real-world problem does the startup solve, and how uniquely does it tackle it? Maybe they’re introducing a novel approach to asset tokenization or revolutionizing decentralized storage.
- Feasibility: Innovation is great, but can the technology scale and remain secure? It’s crucial to evaluate whether the startup’s solutions can handle growth and fend off security threats.
- Competitive advantage: Does the startup leverage a breakthrough consensus mechanism or offer unparalleled interoperability? Distinct technological edges can set a project apart from the pack.
3. Market opportunity and competitive landscape
A brilliant idea needs a receptive market to flourish.
- Problem-solution fit: Ensure the startup is addressing a significant pain point. Whether it’s enhancing cross-border payments or providing secure decentralized identities, the solution should meet a real need.
- Market size and growth potential: Consider industries with vast potential. Tokenizing real estate, for example, taps into a multi-trillion-dollar market. Even a small market share can lead to substantial returns.
- Competitor analysis: How does the startup differentiate itself? If it offers lower fees than Ethereum or better privacy than other protocols, that’s a competitive edge worth noting. Always ask yourself: is the blockchain actually superior to what already exists?
4. Business model (and tokenomics)
Understanding how the startup plans to sustain and grow financially is essential.
- Revenue generation: Does the startup have a clear path to profitability? This could be through transaction fees, subscription models, or premium services that add value to users.
- Cost structure and scalability: Efficient scaling is key. Assess whether their business model supports growth without proportionally increasing costs.
- Token utility and economics: If there’s a token involved, its purpose should be crystal clear. Whether it’s for governance, staking, or transactions, strong tokenomics drive user engagement and ecosystem health.
5. Regulatory Compliance and Legal Considerations
In the ever-evolving legal landscape of blockchain, compliance isn’t just a formality — it’s a necessity.
- Legal structure: Does the startup operate within a jurisdiction supporting blockchain innovation, like Wyoming or certain European countries?
- Regulatory alignment: Compliance with securities laws and other regulations is vital. Clear definitions of tokens — as securities, utilities, or otherwise — help avoid legal quagmires.
- KYC/AML policies: Robust Know Your Customer (KYC) and Anti-Money Laundering (AML) processes demonstrate a commitment to legal standards and build trust.
- Intellectual property: Ownership of proprietary technology and respect for IP rights strengthen the startup’s position and appeal to investors.
6. Community and User Adoption
In blockchain, a passionate community can be the wind beneath a startup’s wings.
- Community engagement: A vibrant community on Discord, Telegram, or GitHub signals enthusiasm. It’s a good sign when users actively discuss and contribute to the project.
- User base and growth strategies: Look at how the startup plans to expand its user base. Incentives for early adopters or strategic partnerships can accelerate adoption.
- Feedback and reputation: Positive user feedback and a strong reputation in the blockchain space often foreshadow wider success.
7. Roadmap, Milestones, and Risk Management
A clear vision and preparedness for challenges set the stage for long-term success.
- Clear roadmap: Does the startup have achievable short-term and long-term goals? A transparent timeline helps track progress and manage expectations.
- Achieved milestones: Past accomplishments, like successful beta launches or key partnerships, indicate momentum and execution capability.
- Mitigation strategies: Effective plans for navigating risks show foresight. Whether it’s diversifying revenue streams or engaging proactively with regulators, preparedness is a positive sign.
Navigating the blockchain startup landscape might feel like venturing into uncharted territory, but with the right framework, you can confidently steer toward promising opportunities.
If you don’t have the expertise or access to do this yourself, you may want to consider investing alongside us via CryptoONE.
We understand how to identify innovative blockchain startups with the strategic foundations to thrive.
Express interest in CryptoOne →
Speculating in Altcoins: For the bold and brave
Prefer rampant speculation? We’ve got you covered.
Altcoins, or cryptocurrencies other than Bitcoin, represent one of the most dynamic and diverse areas of the crypto market.
What makes altcoins unique?
Altcoins are often specialized, designed to address particular challenges or opportunities within the blockchain ecosystem.
Ethereum, for example, powers decentralized applications (dApps), while Solana offers high-speed, low-cost transactions.
Privacy coins like Monero and Zcash cater to users who prioritize anonymity, and utility tokens such as Chainlink’s LINK facilitate smart contract integrations.
Fartcoin does absolutely nothing.
Each altcoin represents a unique value proposition:
- Ethereum (ETH): The backbone of DeFi and NFTs, Ethereum remains indispensable for dApp developers and users.
- Polkadot (DOT): Known for enabling interoperability between blockchains, Polkadot is a key player in the multichain future.
- Avalanche (AVAX): With customizable “L1’s or sovereign blockchains,” Avalanche empowers organizations to build bespoke blockchain solutions.
Strategies for altcoin investing
So many ways to lose your money:
- HODLing (Long-Term Holding): Less degenerate speculators buy altcoins and hold them over the long term, banking on the growth of their underlying ecosystems. For example, early adopters of Ethereum saw their investments multiply as the platform became the standard for decentralized applications.
- Day trading + swing trading: For those with higher risk tolerance and a knack for technical analysis, trading altcoins on short-term price movements can yield big wins (and the obvious converse). However, this approach requires constant market monitoring and a strong understanding of trading patterns.
- Niche sector investing: Identify promising niches, such as gaming tokens or DeFi protocols, and allocate funds to altcoins that dominate those spaces. For instance, Axie Infinity’s AXS token became a breakout success during the rise of play-to-earn gaming.
Risks and mitigation
Altcoin investing is difficult and risky.
Volatility can lead to significant losses, and the prevalence of low-quality projects or outright scams requires diligent research.
Before investing, analyze project whitepapers, evaluate tokenomics, and engage with developer communities. Diversification is also key—don’t put all your eggs in one digital basket.
Or just YOLO into Fartcoin. (Just kidding, don’t do this)
Diversifying crypto income streams beyond trading
Is startup investing too time-consuming and long-term for you?
Is throwing your inheritance into the Hawk Tuah coin a bit too…2021 for your liking?
There are lots of opportunities in the middle that may be right up your street.
From staking to governance participation, these opportunities allow you to earn passive or active rewards while supporting the blockchain networks you believe in.
Staking: Secure the network and earn rewards
Staking involves locking up your cryptocurrency in a network to support its operations, such as validating transactions or securing the blockchain.
In return, stakers earn rewards in the form of additional tokens. This method is particularly popular in proof-of-stake (PoS) networks like Ethereum, Polkadot, and Cardano.
For example:
- Ethereum 2.0: Investors can stake ETH to help secure the network, earning annual yields of 4–7%.
- Solana: Staking SOL provides rewards while supporting the network’s high-speed transaction capabilities.
Staking appeals to investors looking for a relatively low-risk way to earn passive income. However, staked funds are often locked for a specific period, reducing liquidity.
The idea is very similar to that of dividend stocks. You get regular yield but are subject to the fluctuations of the underlying asset, making it ultimately a bet on the token.
Suffice to say if you have confidence in the token and the project’s ecosystem, staking is a tool to compound the benefits of your conviction by earning more tokens for locking your tokens within the ecosystem..
Governance participation: Shape the future of projects
Many blockchain projects issue governance tokens, granting holders voting rights on key decisions. These tokens not only influence project direction but often come with financial incentives.
For instance, MakerDAO’s MKR token allows holders to vote on changes to the protocol while benefiting from its growth.
Governance participation is an excellent way for investors to engage with the projects they support. It combines financial returns with an active role in shaping the blockchain ecosystem.
Yield farming and liquidity provision: Earn from DeFi
DeFi protocols rely on liquidity pools to facilitate trading and lending. By providing liquidity, investors earn rewards in the form of transaction fees or additional tokens.
Yield farming, a subset of this activity, involves strategically moving funds between pools to maximize returns.
For example:
- Uniswap and SushiSwap: Provide liquidity to decentralized exchanges and earn a share of trading fees.
- Curve Finance: Focus on stablecoin pools for lower-risk, consistent rewards.
Crypto index funds: Simplify diversification
If you agree blockchain is the way forward but would rather focus on something else, crypto index funds offer diversified exposure to the market.
These funds pool investments across multiple cryptocurrencies, reducing the risk of holding individual tokens.
Examples include Bitwise’s 10 Crypto Index Fund and Grayscale’s Digital Large Cap Fund.
Crypto mining and infrastructure
While crypto mining has become less profitable for individual participants, niche opportunities remain.
Mining specific tokens or investing in mining infrastructure, such as renewable-powered facilities, can still yield returns. As the market matures, staking infrastructure has emerged as a lower-energy alternative, offering similar rewards without environmental concerns.
Decentralized Autonomous Organizations (DAOs): Earn through collaboration
DAOs allow participants to pool resources and vote on collective investments or projects.
Members often receive token rewards for their contributions, ranging from funding decisions to development efforts. DAOs provide a collaborative way to earn while engaging directly with blockchain ecosystems.
Closing thoughts
However you define your blockchain investment philosophy (you have a blockchain investment philosophy, right?), you have to nail the due diligence and research.
The cryptocurrency industry is entering its most exciting phase yet. The opportunities for innovation and profit are unparalleled, from the rise of altcoins and DeFi to the tokenization of real-world assets.
If you’re on board with this and want exposure to the best blockchain startups, consider investing in CryptoONE.
Express interest in CryptoOne →
That’s all for today!
Reply with comments — we read everything.
Until next time,
Wyatt
Disclosures
This issue contains no affiliate links.
- This issue was written by Wyatt Cavalier and John Belitsky. Editing was done by Stefan von Imhof
- This issue was sponsored by FNRP
- Neither Alts nor Altea has any current holdings in any companies mentioned in this issue — yet. This will change with CryptoOne.
- This issue contains no affiliate links.