Bitcoin has gone from a hobby project to a multi-billion dollar asset class in just over a decade, initial coin offerings have been used to raise millions in capital and stablecoins are poised to go mainstream over the coming years. Despite these massive gains, there has been no shortage of hiccups along the way that have cost investors millions of dollars.
If you're interested in investing in the crypto space, it's important to look beyond the hype and understand how crypto assets work under the hood as well as the role crypto plays in a portfolio. The good news is that there are plenty of high-quality resources out there to help you understand various investment options and avoid any problems.
Let's take a look at some of the most influential articles, videos and other content in the crypto space that you may want to check out to improve your understanding.
Learning the Basics
There are many different types of cryptocurrencies and blockchain projects. While some are designed for electronic transactions, others are built to support ecosystems that address specific markets. There are also subtle differences in how the underlying mechanics work between projects, such as the proof-of-work versus proof-of-stake differences.
Michael Nielsen, a quantum physicist, science writer and computer programmer in San Francisco wrote a comprehensive overview of how Bitcoin works in his December 2013 blog post, How the Bitcoin Protocol Actually Works, that's still worth reading to understand the basics. The same concepts that apply to Bitcoin are used across different cryptocurrencies.
More recently, Linda Xie, Product Manager for Coinbase, put together a series of beginner guides to various crypto assets. These guides are designed for people that are familiar with Bitcoin, but want to learn about the differences between that project and different alt coins that have arisen. Most of these guides were written in 2017 but remain relevant today.
Governance, Privacy & Security
Governance is an essential component of any well-functioning market. Without checks and balances in place, it's easy for individuals to commit fraud on a large scale. There are plenty of examples of these issues within the crypto space, from million dollar ICO scams to avoidable security vulnerabilities. Proper governance is essential to control these risk factors.
Odysseas Sclavounis and Nic Carter provide a great introduction to blockchain governance in their slide presentation, An Overview of Governance in Blockchains, that provides a clear definition for blockchain governance and explores some of the similarities and difference with governance structures that are in place for other assets and systems.
When it comes to privacy and security, Ethereum's Vitalik Buterin wrote one of the most comprehensive overviews in his 2016 blog post, Privacy on the Blockchain, where he looks at both high-tech and low-tech approaches to ensuring privacy and security, as well as some of the drawbacks and shortfalls facing different crypto projects.
Investing & Taxes
Crypto assets have gone mainstream with Bitcoin reaching a multi-billion dollar market capitalization and an entire futures market springing up around the cryptocurrency. At the same time, there are a growing number of exchange-traded products around the world that are designed to make it easier for everyday investors to participate in the market.
Chris Burniske's blog post, Cryptoasset Valuations, provides some valuable insights into how to value crypto assets from a quantitative analysis standpoint. On the other hand, John Pfeffer looks at crypto assets from a fundamental standpoint in his paper, An (Institutional) Investor's Take on Cryptoassets. Both of these articles are worth reading for investors.
Crypto Taxes and Accounting are another complex topic for traders, investors and even consumers. With the IRS' constantly evolving regulations, it can be tough to keep up with how you should be treating crypto assets from a tax standpoint. ZenLedger is designed to simplify the process by aggregating transactions and automatically making the calculations you need.
How to Keep Up-to-Date
There are many good newsletters designed to help keep crypto investors and enthusiasts up-to-date with the latest industry developments. Token Daily and The Defiant are two of the most popular newsletters that provide weekly updates covering everything from blockchain finance to new product launches to deep dives with experts in specific areas.
Investors may also want to look at Off The Chain by Anthony Pompliano, founder and partner at Morgan Creek Digital, a management fund focused on digital assets. Those new to the space may want to subscribe to Unbankd, a daily newsletter focused on educating enthusiasts and investors in simple terms without overwhelming them with jargon.
Finally, there are several podcasts that investors may want to consider listening to on a regular basis. Flippening for Crypto Investors is a weekly podcast for investors that discusses everything from economics to strategies. Crypto Bobby is another podcast that's worth listening to for those that are new to the cryptocurrency space.
The Bottom Line
There are many resources available for crypto investors to learn more about both the technical aspects of cryptocurrencies as well as how they fit into a well rounded portfolio. In addition to an education, investors should ensure that they're using the right tools to support their investment decisions, from trading platforms to tax software.
If you trade or invest in cryptocurrencies, ZenLedger can help simplify your taxes by automatically aggregating transactional data and autocompleting popular IRS forms, including Form 1040 Schedule D and Form 8949. You don’t have to pay an accountant hundreds of dollars to do the work manually or worry about mistakes during an audit.