In This Issue
- For this weeks portfolio tip, I’ll be talking about contrarianism.
- Sam has a report for you on how NFTs will change the art world.
- David has 4 ways to keep your crypto safe.
- Rebecca has this week’s top trending coins.
- What is Flare Network?: In Jesse’s weekly altcoin report he breaks down Flare Network and this one is a must read…
- Portfolio Updates: A few new moves this week and a lot of thoughts about what I might be doing shortly.
- NFT mints: 3 upcoming NFT mints to keep an eye on.
Lark’s Portfolio Tips
Reflecting On Contrarianism
One of the hardest things in markets that we will all struggle with, and yes I am far from immune, is groupthink.
The truth is that most of us end up being trend followers. What is the hot new thing right now? Quick, buy it!!! Or on a grander scale, markets are shit, sell everything or markets are so hot, buy everything!!!
Yet, the best investors are the ones who do the opposite. They buy when everyone else wants to sell, and they sell when everyone else wants to buy.
This comes back to old man Buffett’s saying “be fearful when others are greedy and greedy when others are fearful”. It sounds so easy, right? And yet, most of us get it wrong most of the time.
The basis of this conversation is that at the extremes of markets or individual assets that the majority of investors are wrong. That last guy who clicked buy when Bitcoin hit $69,050 on Binance was late to the party. The person selling him that Bitcoin was the contrarian betting that markets were overheated and it was time to take profit.
The market rarely stays at the extremes for a long period of time. Ever notice how tops and bottoms go pretty damn fast? At the 69K top, you literally had a few hours to sell. At the 15k bottom, you had a few hours to buy, on five different days in 2022. Not very long at all. But those points were literally when the most wanted to buy and sell.
Being a contrarian is not easy, if it was then everyone would do it, but then being contrarian to the contrarians would be the right move. LOL.
Investing is often a lonely affair. If you want the warm and fuzzies of being part of the herd and doing what everyone else is doing when they are doing it then your chances of profitability are reduced.
To be a successful contrarian you need to:
- Be prepared to be wrong
- Watch for extreme market conditions
- Challenge conventional wisdom
- Search for assets below their intrinsic value when buying, and look for prices above an asset’s intrinsic value when selling.
- Be flexible in your approach. Neither bear nor bull, just fluid.
That being said, the crowd isn’t always wrong all the time, so contrarianism only works to a point. You must pay attention to the prevailing market sentiment and macro factors. Also, while there are times when all markets are moving in unison, there are also mini bubbles that form and this can provide constant opportunities for a contrarian to buy, short, and sell.
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How to Keep Your Crypto Safe by David
Much ink has been spilt discussing the finer points of self-custody cold wallets. From heads-up comparisons, to in-depth security analyses, to the best cold wallets for 2023, the internet will take good care of you when it comes to choosing the right self-custody cold wallet.
What doesn’t receive as much attention is how to create and maintain a proper cold wallet safety regimen. This deserves as much or more attention then choosing the very best cold wallet.
That’s because self-custody cold wallets are like guns. You probably need one, but if you don’t know what you’re doing, you’re much more likely to hurt yourself rather than some hacker absconding with your crypto. So this article will be focusing on just that. How to avoid shooting yourself in the face with your self-custody cold wallet.
So behold! I present to you the Four Cold Wallet Security Commandments . . . and some other considerations.
Commandment #1: Write Down Your Recovery Phrase
Disheveled Dan didn’t have the patience for his Ledger Nano X setup booklet. That’s why he failed to write down his recovery (or “seed”) phrase. So when Disheveled Dan predictably lost his Nano X, he also poured his all his BTC down the drain forever.
The golden rule of cold wallets is to write down your recovery phrase. The recovery phrase recovers your crypto in the event that your cold wallet device is lost, stolen, or damaged. Simply input the recovery phrase in a new cold wallet device and those funds are then recovered there. Note that when a recovery phrase is used, the old wallet is automatically wiped clean, so the funds will no longer be accessible on the former device.
Remember this: you can lose your cold wallet device, or you can lose your recovery phrase, but you cannot lose both.
If you lose your device, use your recovery phrase to recover your funds. If you lose your recovery phrase (assuming no one stole and used it), retrieve it again from your device. But if you lose both, well then it’s game over, thanks for playing. Your crypto is gone forever.
Commandment #2: Write Your Recovery Phrase on Physical Paper
Tech Timmy was a real tech genius. Paper and pen are so 17th century, so who needs these silly hard-copy recovery phrase sheets that came with his new Trezor Model T. Instead, Tech Timmy emailed himself his recovery phrase. That worked great until someone gained access to his account, stumbled across the email titled “Trezor Recovery Phrase”, input the phrase on a new device, and was granted all of Timmy’s ADA stash. Poor Tech Timmy was in for a real surprise when he later opened his Trezor to see a zero balance.
Never write your recovery phrase in any digital format. This phrase should only be transcribed and kept on physical paper. Having the recovery phrase in digital form exposes you to online threats, and thus defeats the entire purpose of a cold wallet.
Commandment #3: Store Your Recovery Phrase and PIN in a Separate and Secure Location from Your Cold Wallet
Efficient Elenor was all about efficiency. That’s why she stored her recovery phrase, access PIN code, cold wallet together neatly in her office desk drawer. That wasn’t an issue until her ex came looking for revenge and found this package. He got his revenge indeed by acquiring all of Elenor’s ETH!
This one is pretty simple. Prying eyes and quick hands might think your cold wallet looks interesting. So for the love of everything good and decent, don’t store either your recovery phrase or PIN in the same location as the device itself! In the wrong hands, the device alone is useless. But give those wrong hands the device and PIN (or just the recovery phrase), then kiss your crypto good-bye.
And if you haven’t figured it out by now, make sure you store your recovery phrase and PIN in a secure location. Secure areas of the home, personal safes, and safety deposit boxes all come to mind.
Commandment #4: Store One Additional Copy of Your Recovery Phrase in a Separate, Secure Location
Unlucky Uriah was always getting the shaft. Both his cold wallet and recovery phrase were destroyed when lightning struck his house and burned it all to the ground. Now all his DOT is destroyed too!
Another straightforward commandment, but often not followed! Store one additional copy of the recovery phrase in a separate, secure location from your other recovery phrase. When thinking about the two locations, run through some low-probability, high-consequence events and ask yourself, “could one adverse event take out both copies?” If the answers are no, then you’re good to go.
How to Keep Your Crypto Safe: Other Considerations
If you’re able to follow the four commandments above, then you’ve done a decent job and will likely not shoot yourself in the face with your cold wallet. Congratulations.
However, let us hone in on some other considerations when it comes to cold wallet hygiene.
Consider Your Unique Situation
You need to consider your situation, and use your own brain to figure out what security measures are appropriate for you. Are you storing $1,000 or $500,000 in your cold wallet? How much of your net worth is in the cold wallet? Who all knows that you own crypto? How secure is wherever you’re storing your recovery phrase and PIN? Who all has access to these locations? These are just some of the questions you’ll want to ask yourself. Tailor your security measures accordingly.
Consider Writing Your Recovery Phrase on a Metal Tablet
Paper and ink. You just can’t trust them. Fire, water, and Grandfather Time will reduce your recovery phrases to dust. There are plenty metal tablets on the market designed to protect your recovery phrase from the elements.
Consider Concealing, Scrambling, or Separating Your Recovery Phrase
If you were certain that no one would ever find your recovery phrase, then labeling it appropriately and writing the words in order is the obvious action. However, if there’s significant risk that someone will find your phrase, then there’s a few actions you can take to further protect yourself.
Concealing: You could write a short story, letter, or poem with one recovery word in each sentence. No one would ever likely suspect that your recovery phrase was hidden in the text.
Scrambling: You could write the words in an alternate order than what’s set in your wallet. This makes the list more difficult to use by a thief.
Separating: You could divide your phrase into separate lists, and disburse these lists in various locations. Instead of having one list of 12 words, have three lists of four words.
Note that there are certain risk trade-offs with each of these strategies. You might forget your words with the concealment or scramble method. And you’re more likely to lose one of three lists rather than just one. You need to think about the second-order risks for each action you take.
Consider Having a Back Up Cold Wallet on Stand By
Having a clean back up cold wallet on stand by is not a terrible idea. If you discover that your recovery phrase has been compromised, then it’s a race against the would-be thief for who can first use the recovery phrase on a new device.
Consider Memorizing Your Recovery Phrase
Remember when King Saylor said you can cross any border all while securing your bitcoin within your own head? This is what he was talking about. I recommend memorizing your recovery phrase regardless, but you’re playing Russian Roulette if you don’t have any physical-backups.
Taking self-custody of your crypto is a liberating experience. It truly does help an individual break away from the clutches of the modern banking system. However, this liberation comes with a degree of responsibility and risk. So take time to analyze your self-custody security environment, and then initiate some steps to improve your security posture. Even small changes can make a huge difference! Best of luck, and I hope some of the ideas expressed here will help you better secure your assets.
How NFTs Will Change the Art World by Sam
NFT art is an always-on, non-stop carnival for outsider art, but it also steps everything up a meta-level, as not only are the artists and the art outsider, but–by using tokens on a blockchain–the medium of delivery and exchange is also outsider.
Outsider art on outsider tech sounds disruptive, but let’s examine how exactly the art world might be changed by NFTs, on a practical level.
Replacing the Art Market Movers
Portrait of art patron Madame de Pompadour, by Maurice Quentin de la Tour
Who decides which artists make it big? Historically, that’s come down to wealthy patrons and collectors, who exert influence over which artists become celebrated, and also over the valuations attached to their work.
In the world of web3 and NFTs, the promise is that these roles shift to you, the digital collector, along, of course, with all the other collectors out there on a more level playing field.
As an analogy, think about the new stars of social media who have huge audiences and regularly outperform traditional channels. They did that through being chosen by viewers, not chosen for viewers, and NFTs can bring a similar dynamic to the art world.
Anyone Can Trade Anything With Anyone
The Incredible Journey by Damien Hirst
In the high-end, traditional art world, who an artwork is sold to and where it will be displayed can be critically important, meaning dealers sometimes choose (or restrict) who they sell to. There are artists who break from this circuit, such as Damien Hirst, who, back in 2008, took his work directly from studio to Sotheby’s, but he’s an exceptional case (and he now sells NFTs too).
In the world of NFT art, the situation is very different. Yes, there are gas wars, whitelists and in-group favors, but, on the whole, the set-up is geared towards anyone trading anything with anyone.
Image credit: Oncyber
Although some institutions, such as Pace Verso and Kate Vass Galerie, explore digital art, there are no overbearing NFT art galleries dominating the environment and influencing what people look at, and it’s easy for individual collectors to set up their own displays at minimal cost, using a platform like Oncyber.
No. 22 (Reds) by Mark Rothko. Don’t hang it upside down.
If you saw the documentary Made You Look, you’ll know that the art market is awash with forgeries, up to and including Rothko fakes that sold for millions of dollars.
On the other hand, although crypto has acquired a reputation among some cynics for occasional shady behavior, NFTs actually greatly reduce the potential for forgery.
While verifying the provenance and authenticity of physical art relies on signed papers and credentialed consensus, which are demonstrably unreliable, with NFTs, records are locked flawlessly onto the blockchain, and cannot be tampered with or faked.
Programmable Royalties and More
Web3 gaming company Limit Break recently published plans to make NFTs more dynamic, enabling royalties and other variables to be programmed on-chain. Although Limit Break, which is behind the DigiDaigaku collection, is focused on gaming, these concepts could affect all kinds of NFTs, including artworks.
Not only is there a mechanism for artists to receive hard-coded, continuing royalties on secondary sales, but novel systems can be enabled, such as shared royalties split between creator and initial minter. Other features can be programmed too, potentially opening up unexplored possibilities for art creation, collection and trading.
The 100 Fans Theory
Photo by Kelly Sikkema on Unsplash
In 2008, the 1,000 fans theory gained traction. This predicted that in the internet age, creators would be able to make a comfortable living online by cultivating a fan base of around 1,000 true fans willing to pay for content. Then, in 2020, this was updated in an Andreesen Horowitz post that posited only 100 true fans were necessary in order for creators to ditch the day job.
Selling NFTs online not only fits with such models, but makes them more easily achievable via the ability to generate income from secondary sales. Where once there were artists who depended on a single wealthy patron to survive, NFTs can allow artists to make a creative living through connecting with their own niche communities.
Expanding the Art Market
Photo by Omar Flores on Unsplash
Although the traditional art market is culturally influential, it’s actually relatively small. Global art sales through dealers and auctioneers in 2021 were tallied at $65.1 billion, while by comparison, Apple, a single tech company, had global revenue of $365.8 billion.
For NFTs, 2021 trading volume in the art and collectibles category comes to $11.1 billion. That’s significantly lower than the figure for traditional art, but keep in mind that NFTs only entered mainstream awareness in 2021, and–unlike traditional art markets–place importance on onboarding newcomers, and are part of the growing crypto industry.
It’s still just a possibility, but, potentially, the NFT art market could open up and expand beyond the parameters of the traditional art world.
On the Other Hand…
When confronted with new tech, and particularly when some users are suddenly becoming rich and famous, you can get carried away by the enthusiasm, so let’s also consider a counter-point.
When it comes to preventing certain individuals and entities from solely dictating trends, there’s a real possibility that what you end up with is just a different set of individuals and entities dictating trends. Sure, vive la revolution, but there are already traders and groups who have large influence over small NFT markets, and who elevate the artists they personally favor.
This is not automatically a bad thing, and–while not wanting to write a sociology essay–may simply be the way that human culture works, but it suggests that NFTs may not break away entirely from ingrained tendencies.
More optimistically, what’s different with NFTs is that these forces aren’t as entrenched, and it’s possible to join some interesting and influential groups simply by acquiring a certain NFT.
Image credit: gmDAO
If you want access to PROOF Collective, for example, you can go to OpenSea and buy a pass. They’ve become expensive, but spend time in the NFT art world, and you’ll come across other, in-flux opportunities before they fully take shape. And for some cheaper-to-access art communities, you could also take a look at Le DAO, GEN.ART and gmDAO, for a start.
Additionally, as web3 is a nascent space with a strong DIY ethos, if you’re really into art and crypto, there’s plenty of room to connect up with other participants and create new communities and organizations of your own.
Looking forward, NFTs are set to initiate positive disruption as they open up space for artists, collectors and developers to carve out something new on their own terms.
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Trending Coins This Week by Rebecca
Here are my key takeaways from the trends this week and the crypto market rally has seen altcoins come alive.
1 – Aptos is a Layer-1 blockchain created by ex-Meta employees that’s seen its highest price since 8 November, climbing over 87% from its lowest point in December. This is due to PancakeSwap accounting for more than 50% of the total value locked (TVL) on the network.
2 – Taboo is the playboy of crypto, an adult NFT and streaming media project that’s teasing its second supermodel mansion party. The first-ever mansion party took place in Thailand in August 2022.
3 – AllianceBlock is a protocol to bridge DeFi and TradFi that’s recently launched its Nexera ID self-custodial wallet with advanced recovery features. The AllianceBlock CEO and Founder has been taking to social media to help explain the product to users.
4 – Robo Inu Finance is the fintech arm of Robo Global Investment that’s launched a token drop for its RBIF token. Users had 5 days to connect their wallets and claim the free token.
5 – Fetch.ai is a blockchain-based AI platform that’s seen perpetual futures listed on Binance for trading. Fetch.ai has also launched Jenesis, a Rust contract development tool.
6 – Bonk is a Solana-based meme token that’s launched a 15,000-piece NFT collection on Magic Eden called Bonkz, which sold out in a matter of hours. The NFTs are trading on the secondary market for 10x the mint price.
7 – Serum is the Solana-based utility token for the DEX co-founded by Alameda Research. The SRM token has been one of the altcoin rally leaders with a 28% gain in one day.
8 – SingularityNET is a decentralized AI marketplace that’s seen its token price skyrocket 245% so far in January. Microsoft may be investing $10B in ChatGPT’s parent company, Open AI, which has seen AI-related tokens continue to pump.
9 – Dejitaru Tsuka is an Ethereum-based meme coin that’s coming into the final days of its social media giveaway. There are 450,000 TSUKA and 4 NFTs up for grabs. One of those NFTs will be a Mutant Ape.
10 – Bridge Oracle is an Oracle on the BNB chain that’s announced a partnership with the United States of Mars Metaverse. A Bridge Oracle HQ will be built in this Metaverse. Bridge Oracle has also released a bridge swap on HotBit to swap TRON-based tokens to BNB.
11 – Smooth Love Potion is an ERC-20 token earned in Axie Infinity that’s seen 2023 begin with a renewed interest in blockchain gaming. Daily unique active wallets on Axie Infinity has since gone up by 59% as Axie leads the metaverse rally.
12 – Solana is an L1 blockchain that’s seen its token surge over 70% after the market reacted positively to the US inflation data for December. It’s not all good news as a Mailchimp security breach meant an unauthorized actor accessed and exported user data.
13 – Gala is a play-to-earn (P2E) gaming ecosystem that’s deleted its tweet announcing its partnership with The Rock and Mark Wahlberg to make two movies—the token fell 13%.
14 – Bitcoin has surged above $21K as US inflation continues to trend down, reigniting hope that a bull market is getting closer. This has retraced the entire leg down from the FTX collapse in November.
15 – Optimism is an Ethereum L2 scaling solution that’s overtaken Arbitrum for daily active addresses and transactions per day. Optimism has also launched a podcast called OP Radio and the Optimism Goerli testnet was successfully upgraded to Bedrock.
Thank you so much for your support, and I truly hope that today’s issue will give you insights needed to help you master your wealth.
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Lark and the Wealth Mastery Team
TCL Publishing ltd (director Lark Davis, owner of Wealth Mastery) is not providing you individually tailored investment advice. Nor is TCL Publishing registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. TCL Publishing is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.
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