Fintech is a portmanteau of the terms “finance” and “technology” and refers to any business that uses technology to enhance or automate financial services and processes. The term encompasses a rapidly growing industry that serves the interests of both consumers and businesses in multiple ways. From mobile banking and insurance to cryptocurrency and investment apps, fintech has a seemingly endless array of applications. - Builtin.com
Our largest conviction for the future is that FinTech will upend the financial sector and cryptocurrency will play a huge role in doing so. Getting people to change their behaviors is extremely difficult. Banks have been around for hundreds of years so getting people to move away from banks and towards this new technology is difficult. But we are slowly starting to see the transition unfold. Let's take a look at the technology adoption bell curve:
According to a recent study, 15-17% of American adults (approximately 40-45 million people) now own cryptocurrency in some form. That puts us right in the "chasm", or the transition phase from early market to mainstream market. Banks and their CEOs, ahem Jamie Dimon, who previously scoffed at the idea of cryptocurrency are now beginning to offer access to crypto services. Many large businesses are beginning to accept Bitcoin as payment and even keep Bitcoin on their books.
Adoption is coming and the banks are scared. But in our opinion, it's too late. The world won't need the banks in the future, and behavior is starting to reflect the change. Yes, that seems extreme. But if you read the Bitcoin white paper, the entire idea behind the cryptocurrency was to get rid of the need for a third party like the bank.
While crypto is a major focus of the FinTech world, it goes far beyond that. Companies are developing mobile banks, some of which are digital only banks. And this is a huge market, as half the global adult population does not have access to a bank account. Additionally, FinTech companies are providing access investment accounts, payment platforms, and even giving people the ability to borrow money and take out insurance, without the need for banks. The financial world is changing, and we want to be apart of it. That's why we are invested in Block (formerly Square), Coinbase and a number of Cryptocurrencies directly.
Block (formerly Square)
Our largest position in any individual stock is Block. We first invested in 2017 and have only become more enamored with the company as it has grown. Jack Dorsey, Square's CEO, is doing a fantastic job and we fully support the path he is taking the company down. Currently, the company makes a majority of its revenue from its Square Seller and Cash App businesses.
Both businesses have extremely long growth runways and we believe Square can continue to take advantage of the growing demand in both of these sectors.
More recently, Square announced that it is creating a new business focused on building an open developer platform with the sole goal of making it easy to create non-custodial, permisionless, and decentralized financial services. The main focus is Bitcoin and its name is TBD. The company also announced it will be building a crypto hardware wallet. Current valuations are extremely stretched, but as we've shown, they are doing everything right and we are on board for the ride.
Coinbase
We like Coinbase as a company, but we passed on the IPO as we could not make sense of the valuation. But when the price reached the $218 per share, we pulled the trigger. And we have been averaging in ever since.
What makes us like Coinbase is how much it is doing in the crypto space.
It is the leading cryptocurrency exchange, where you can currently buy and sell 25 cryptocurrencies. It has its own stable coin, USD Coin, which is pegged to the U.S. dollar. It has the Coinbase Card, which is a physical VISA debit card that allows users to spend their cryptocurrency. It provides personal loans to its users, using their cryptocurrency holdings as collateral. It has Coinbase Commerce, which is a tool similar to Stripe and PayPal that allows businesses to accept digital currency payments. And lastly, they have Coinbase Ventures, where they invest in promising early-stage companies in the blockchain and crypto space. There's so much to like and we believe the future is bright.
Not only are we invested in Coinbase, but CMG Venture has partnered with them to bring you a great deal. When you sign up using our link, you will get $10 of free Bitcoin when you purchase $100 worth of Bitcoin. If you are looking to begin investing in crypto, click here:
One thing both of these companies have in common is they mix the existing world with the decentralized world. In the future, we see a fully decentralized world but these companies are bridging that gap and we believe will be the leaders in the space.
Cryptocurrencies
As for cryptocurrencies, we share our full crypto portfolio every month in our Newsletter.
Our top holding is Bitcoin as we believe in everything Bitcoin stands for and the network effect makes it the crypto that will be adopted first. See the adoption curve above.
Our second largest holding is Ethereum. So many decentralized applications are being built on top of the Ethereum blockchain, they are transitioning from proof-of-work to proof-of-stake, and the team working on they crypto are doing amazing things.
From there, we have smaller positions in several other coins. Our favorites of the smaller positions are probably Vechain, Cardano and Chainlink. Vechain has a tremendous use case and has partnered with several big companies. Cardano is similar to Ethereum, but already has smart contracts and the proof-of-stake model. And Chainlink acts as a bridge from the legacy systems to the blockchain. Similar to Vechain, they have an entire ecosystem with huge partnerships.
CMG Venture has also partnered with two additional companies that give you access to crypto.
BlockFi is also a cryptocurrency exchange, but with them you can earn up to 7.5% interest on your crypto holdings. You can make money just by keeping your holdings on their platform. You will not get that type of interest in any bank account. Click here to sign up:
Domain Money is a new investing platform where you can invest stocks, cryptocurrency, NFTs and the Metaverse. The user can choose what they’d like to invest in directly as well as have the option to invest in portfolio strategies managed by experts. Click here to download the app:
There you have it. That's why we are excited about FinTech and exactly how we are investing in the sector. Hope you liked the blog.
Thanks for reading and have a great day!
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Disclosures
I am not a licensed financial advisor or financial professional. This is not investing advice. I am simply sharing my research and opinion based on that research. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.
This blog contains some affiliate links. If you purchase any service through one of these links, I may earn a small commission at no extra cost to you.
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