This is not the kind of ad I love to cover, mostly because it takes me out of my comfort zone into an area where my knowledge is very limited, but we’re getting tons of questions about the Crypto Capital pitch from Stansberry and the huge 1,000% gains promoted because of this September 12 event… so I thought I should at least try to ID the cryptocurrency for you.
We’ll start at the ending… this is the P.S. from Eric Wade’s ad letter for Crypto Capital ($2,250/yr., no refunds):
“This is an exceptionally rare opportunity. We have a genuine ‘no name’ crypto… trading for next to nothing… on the verge of a breakthrough that addresses a major liquidity issue. That’s a combination we’ve never seen before, in the entire history of cryptocurrencies. Which is why my model—fully grounded in historical data—forecasts you could get the chance to make 1,237% in just 24 hours… and up to 5,224% in the first three months.”
Yes, it seems laughable to say that a model is “fully grounded in historical data-forecasts” when you’re dealing with cryptocurrencies… most of which didn’t exist five years ago. But I’m trying to be open-minded here, so we’ll let that go.
Wade is enthusiastic about a bunch of cryptos, and he says he has developed a network of “insider contacts” to help him identify new cryptos before they become well-known and rise in price. He claims credit for a bunch of massive gains, and I have no way to check that or reason to doubt it (though no one, of course, posts their losses in their marketing materials), and I really have no idea what his history is — his LinkedIn page says he’s been working on Crypto Capital since May of 2018, when it was technically part of Stansberry Pacific Research, and has been leading the letter since June of this year (I think Stansberry Pacific was absorbed into the parent company, not sure of the details). Before that he spent a couple years as an “explorer” of cryptocurrencies after a long career in investment management and sales, which sounds like it included doing some crypto mining. I’ve not written about him before, but he probably knows much more about cryptocurrencies than I do.
And here’s what he’s talking up today….
“Investors with the foresight to buy “unknown” cryptos in the days before a big announcement takes place have the potential to create a legacy of wealth for themselves and their families.
“But it’s important to realize that the money will be made before this major event takes place and before most investors even make the connection between this influx of money and this hidden crypto. In other words, you have to get in when it’s still not a popular trade.”
Pretty much every newsletter ad includes language very much like that — yes, cryptocurrencies often move quickly, but the primary reason to include this kind of language is that it gets people to subscribe… buyers need a deadline that lights a little fire under their greed receptors, particularly if they’re thinking of doing something crazy like subscribing to a newsletter they’ve never heard of before for $2,250 with no chance of a refund (whenever you’re thinking of buying a newsletter, try to think of the subscription price as an “investing fee” — are you investing enough in this sector to make a fee that large reasonable?).
“Fear of missing out” (FOMO) is one of the strongest motivators for purchases, and that’s what newsletter copywriters hit on over and over… this time it’s worded thusly…
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“A major event is about to shake the crypto world.
“In fact, September 12 could be the biggest date in crypto history—ever.
“Bigger than when Laszlo Hanyecz made the first real-world transaction with Bitcoin by buying two pizzas in Jacksonville, Florida, in 2010. Bitcoin has since risen 113,539,900%…
“Bigger than when Bitcoin took parity with the U.S. dollar for the first time… where it went from $1 in February 2011 to $11,354 today. Bitcoin has since shot up 1,135,300%…
“Even bigger than when the popular crypto exchange, Mt. Gox, was shut down and Bitcoin’s price recovered to the $700 range… making Bitcoin even more rare—thus spiking 1,522%…”
So what is this big event? Essentially it’s that Binance, a major cryptocurrency exchange, is kicking US users off of their platform. Here’s how the ad words it:
“… on September 12 at midnight, Binance.com (think of it as the Nasdaq of the crypto world) will force tens, if not hundreds, of thousands of its customers into Bitcoin.
“I’ll tell you more about this event later… but it has to do with an updated Terms of Service from the world’s largest crypto exchange….
“We’re talking about an estimate of nearly $1 billion that will be moved into Bitcoin.
“This move alone could cause Bitcoin to double or maybe even triple, virtually overnight.
“But it could also cause nearly just as many people to flood into one other tiny crypto… a move that could send this one soaring 5x… 10x… even as much as 50x—over the long run.”
And, of course, he promises that you can make buckets of money with just 10 minutes, an internet connection, and $200. So what’s this secret coin that people will flood into when they’re kicked off of Binance?
Let’s see what other clues he drops…
“This tiny crypto is trading under $0.18 today and could easily spike 1,000% or more in a matter of days.”
And apparently Ethereum founder Vitalik Buterin is involved with this little crypto…
“Vitalik sits on the board of advisors of the tiny crypto that I believe will skyrocket on September 12.”
So that’s it… some kind of cryptocurrency that is designed to improve liquidity in the marketplace, with Buterin as an advisor, that has some connection to Binance and might become more heavily used once US customers are pushed off of Binance. Who is it?
Thinkolator sez Wade is likely hinting at… Kyber Network Crystal (KNC). No, I’m not 100% sure on this one, but no other token I’ve looked at comes close to matching those few clues, so I’m pretty sure.
And you may well know more about Kyber than I do, but here’s how they describe themselves:
“Kyber is an on-chain liquidity protocol that aggregates liquidity from a wide range of reserves, powering instant and secure token exchange in any decentralized application.”
So the Kyber Network itself is sort of like an exchange — Wade’s allusion to NASDAQ is a good metaphor, since NASDAQ was an early innovator in order matching and computer-controlled liquidity (as opposed to the floor traders who used to dominate NYSE stock trading), though Kyber seems to be far more decentralized. The actual cryptocurrency token (Kyber Network Crystal, KNC) is not the network, but it apparently somehow facilitates the operation of the network — you can see their explanation of how it works, in fairly clear language, here on their website.
And yes, the KNC “token” is trading at about 18 cents right now. It’s pretty small, with a “market cap” of about $30 million and trading volume of about $2 million (it’s not quite in the list of the 100 largest cryptos, but it’s close — I usually use coinmarketcap.com for basic crypto info and prices, their KNC page is here). It also does boast Vitalik Buterin as one of its Advisors, and he owns some of the tokens as a result of that relationship (disclosed to some fanfare on Reddit back in February).
What should it be worth? I have no idea. The network sounds interesting and like it could further democratize cryptocurrency trading by taking it out of the hands of the major exchanges and going direct, presumably at lower cost, but, as I said, I am nowhere near knowledgeable enough about this to tell you whether this network will become huge and popular… or even whether it’s unique or has a competitive advantage. You’ll have to think that through yourself.
The value of a token like this should, one would think, be based on the utility it provides… since you can earn KNC for facilitating the swap network (providing liquidity, referring users to Kyber), and a portion of those fees in KNC are then funneled back to the network and taken out of circulation, I guess they build some sort of value based on the utility that users get from the network and the scarcity created by “burning” a portion of the tokens with each trade fee.
That’s not what will happen in the short term, however — like all cryptocurrencies I’ve ever looked at, in the short term the value will be determined by how popular it is with cryptocurrency traders… and how much money rushes into the trade, which can sometimes snowball since rising token prices attract more attention. And, frankly, the fact that I’m talking to a few thousand of my closest friends about it here probably doesn’t help.
And yes, the Kyber Network protocol is one way that users can get their money out of Binance when it closes to US customers, which might, if that movement is enough to generate a lot of transactions on the network, increase demand for the token, at least temporarily. There are lots of other ways that people can withdraw or move their money, of course, but Binance and its Trust Wallet business apparently support decentralized exchanges (DEX’s) like Kyber, and Kyber Network itself tweeted about how valuable decentralized exchanges are back when Binance announced a loss following a security breach in May, so I don’t know if there will be a huge surge of volume on the decentralized Kyber Network on Thursday or not.
And that’s pretty much where I should leave it — just for background on me, I do hold some cryptocurrencies, but just a “token” amount (get it?), and I am probably the most boring vanilla crypto speculator around — I use Coinbase, like a noob, and pretty much just hold a little Ethereum and Bitcoin because, well, I speculated on them years ago because I was curious, and made some money, and they seem to be gaining global popularity still as a currency alternative… and popularity and acceptance are all that support a currency, so I do think there’s a chance that they will continue to become more widely used, even though physical gold makes me feel a lot more secure than my little bitcoin wallet (I can never take a “store of value” asset all that seriously when it rises several hundred percent or falls 50% in a few months). If you want to try out this training wheels version of cryptocurrencies, you can use my Coinbase referral link and get a little free bitcoin ($10, I think, if you deposit $100) to play with (I get the same bonus, whatever it is — yippee!)
If you want to transfer your bitcoin out of Coinbase (or whatever you use) to a private wallet, or to another exchange that offers more of the little fellas (like KNC), there are plenty of places (here’s one) where you can research which exchanges support which networks… or you can move your bitcoin (or ethereum, or one of the other biggies) to a private wallet and use Kyber Network itself to exchange it for KNC or any of the other tokens that decentralized exchange supports. Kyber also offers the KyberSwap app that can apparently help you create a secure wallet and buy or sell tokens, I haven’t tried that yet but I’ll probably tinker around a little bit with it and see how it works (it is easy to send ethereum or bitcoin from Coinbase to a secure wallet on that app, at least, not sure how it works beyond that). And no, I don’t own any KNC tokens and won’t buy them in the next three days (we’ve got trading rules here at Stock Gumshoe, designed to make sure I don’t profit from driving attention, good or bad, to little investments).
I don’t think of my little crypto holdings as an investment, frankly — an investment implies some kind of ownership (a building, a piece of a company) or guarantee (a bond or loan), and most cryptocurrencies obviously offer no guarantee, but, more troubling for me, offer no ownership of the technology or the network. They’re really just bets that people will grow to trust the machines more than the central bankers… maybe that’s right, maybe it’s wrong, I don’t know and that’s why I don’t dig deeply or bet bigger.
And I don’t really want to commit the time to become an expert at little cryptocurrencies, because the odds of success even with expertise are so very limited — there is so much fraud and focus on technical trading of these volatile coins, and so little focus on what economic utility a token provides and how that will generate value for token holders, that I think I’m just philosophically ill-suited for the sector, probably because of my focus on what token-holders actually own (there are some real companies that have sold ownership stakes using security tokens that actually constitute legal ownership of something, including Frank Curzio who sold a bit of his Curzio Research business that way, but that’s different and it’s still a tiny part of the cryptocurrency world). That may change, and your mindset may well be different, of course, and I wouldn’t object to folks speculating on a few little tokens that seem particularly interesting — but I don’t have a problem with casino gambling, either, as long as you’re not gambling the rent money or your retirement savings. Kyber Network looks like an interesting project, but I need to remind myself that pretty much all of the top 200 cryptocurrencies look, at least for those first few moments of research, like interesting projects.
And that’s all I’ve got for you, friends… feeling inclined to jump on some little cryptocurrencies? See something to like in Kyber’s token, or a better match that you’ve identified for Wade’s tease? Let us know with a comment below. Thanks for reading!
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