Ryan Fitzwater: Hello, and welcome to Market Wake-Up Call. I'm Ryan Fitzwater, filling in for your regular host, Steve McDonald. Today we're talking with Adam Sharp, co-founder of Early Investing and cryptocurrency expert. Adam, welcome to the show. Adam Sharp: Thanks, Ryan. Ryan Fitzwater: So Adam, what are cryptocurrencies, and what is the attraction as an investment? Adam Sharp: Right. So cryptocurrencies were created - the first one was bitcoin, of course - back in 2009, and they were created to be an alternative to the current monetary system. So instead of dollars, you would use bitcoin to store your savings and even buy things eventually. So what's unique about them is that there's a capped limit on them. As opposed to dollars, where you can just print as many as you want, there are only going to be 21 million bitcoins ever. So there's a very capped supply. You can't counterfeit it. It uses really advanced cryptography to secure the network, and it has some really neat incentive systems built in that reward people who keep the network safe and reward people who buy and hold the currency. Ryan Fitzwater: OK. And cryptocurrencies are up crazy numbers: 30,200% for bitcoin and 98,000% for Litecoin since 2013. But I know many investors - myself included - are worried that this could be a bubble about to pop. And JPMorgan CEO Jamie Dimon - I want to quote him here - has called cryptocurrencies a “fraud” and said he would sack anyone who traded it for being “stupid.” Have investors already missed out here? Adam Sharp: Well, I don't think that we should listen to Jamie Dimon about new technology that could disrupt the industry he's kind of a leader in. You know, Jamie Dimon is the CEO of JPMorgan and also a former Class A director on the board of the Federal Reserve Bank of New York, so that's his regulating agency. It's in charge of a lot of the important bond-buying operations that the Fed does - money printing and other things. So he's definitely talking his book here, right? He's the guy from the status quo. He's the guy from the big banks. So we shouldn't listen to big banks about a technology that has the potential to disrupt them and completely replace them. That's one of the really neat things about cryptocurrencies: You don't need that bank in the middle to transfer money. So if you were in China or Argentina - anywhere - I could transfer bitcoin securely to you without a middleman - without a bank, without that traditional trusted party in the middle that you have to trust to transfer money. So that's the really disruptive thing about it: You don't need these middlemen and these banks to transfer value all around the world. And the other thing that's becoming increasingly valuable about cryptocurrencies is that they're liquid. Bitcoin traded $3 billion in a recent day just on official cryptocurrency exchanges, so you can move cash in and out of these markets all over the world. That's an extremely attractive asset if you're looking to become a disruptive currency in the world. Ryan Fitzwater: And isn't it true that these banks themselves, including JPMorgan, are looking into this technology while also kind of shaming it in a way. Is that correct? Adam Sharp: They like the blockchain technology. The underlying technology that powers bitcoin and most other cryptocurrencies is called a blockchain. It’s a shared record of transactions, so everybody on the network - on the bitcoin network, for example - has a copy of this blockchain. It’s a list of every transaction ever on the entire network. So everybody knows who has what coins and where these coins should be. And if they're not where they should be, everybody will know that because they have a copy of the ledger, and it won't be allowed to happen. So that's the really disruptive thing about. Banks love this because it's more efficient than their current way of transferring money, of paying dividends, of doing a lot of things. So they like the underlying technology. They're kind of in a position where they can't be bullish on the technology itself - on the currency itself - because it goes against everything that they've built. Ryan Fitzwater: Yeah. So it sounds like the banks are really about the technology. As for cryptocurrencies, are they in a bubble? Adam Sharp: I don't think so. I mean, anything like this that's a really disruptive technology that has the potential to change the monetary world - that's what you're betting on when you buy cryptocurrencies. I think it's still really early, so only far less than 1% of the people in the world own any cryptocurrency at all. I think we're certainly still very early. It's just a matter of whether we get there or not. And I think we will, but it's going to be volatile. I've owned bitcoin since 2013. When I bought it, bitcoin had just run from $5 to $85, and I bought at $84. And you know what? It kept running. So these things can seem like they're a bubble because we've never really seen any entity or investment class like this. I mean, this is something that has the potential to be the new way people store money, and it's arguably a lot better than the current way. You know, we keep our money in savings accounts where we get paid 0.25% per year, and they can print as many of these dollars as they want. So if you like something that has the potential to appreciate in value, I think more and more people are starting to understand that that's a really attractive value proposition, especially in this low interest rate world. Ryan Fitzwater: OK. So Adam, you had a great return on your cryptocurrency investments - you got in way before I did. But I've been reading your stuff on Early Investing, and I got interested in becoming a cryptocurrency investor myself. In fact, we recently recorded a video of me opening my own crypto account. It was very easy, and I'm happy to be up 45% on Litecoin and 27% on bitcoin in a month's time. This is much better than any of my individual stocks’ returns right now in that time frame. So is this a similar way our Members would get started? What do you look for in cryptocurrencies? Adam Sharp: Right. So bitcoin, as I said, launched in 2009. Since then, there's been probably more than 1,000 projects that are worthy of at least investigation. And so there are a couple things that we look for. We look for really active developers. So the people who are actually coding this software and constantly improving it - you want a really active community of developers. And you can kind of find out about these things through chatrooms... All the code for most of these cryptocurrencies is posted on this site called GitHub where everybody kind of keeps their open-source code. So you can go in there, and you can actually review how active their GitHub repository is - that's getting a little bit technical - but there are ways that you can measure how active a community is. You know, so there are communities built around each of these cryptocurrencies, and they all have varying levels of engagement - and you also just have to look at the potential of the technology. You know, bitcoin has the potential to be the new way people store value. There are other coins that are built for actually transacting and buying stuff. Bitcoin's a little expensive to do that right now. But there are other coins that are focused on privacy, like Monero. So it's literally - it's the wild, Wild West right now. You know, we'll probably get some government regulation eventually. Hopefully, it'll be reasonable. But that's one of the primary risks, and I tell people about that - I'm upfront about it. There is a risk that the government kind of steps in and does something crazy, but when you have the potential to make another 300X, you know, it's worth taking the risk. Ryan Fitzwater: And especially as a small portion of your portfolio. Adam Sharp: Exactly. Don't put everything you have into these things. You know, start small. Once you get more comfortable with the coin and the community... you know, you can dollar cost average in - that's a really smart way to do this. Because these things are so volatile, maybe you buy $50 every week, and it could be worth real money one day. Ryan Fitzwater: Yes, we've been talking to a lot of Members about cryptocurrencies, and many are worried about government regulations and overall security. I wish we could cover this all today, but we're short on time. Adam is going to tackle this in an upcoming Insight Q&A. For those of you watching today, be on the lookout for that article later this week. And Adam, I know that there are four coins that you're very excited about right now. And Members can get more information about these hot opportunities by clicking the link below. Now, Adam, this is a really exciting early investment. And as an investor myself, I look forward to the big potential opportunity here and the growth in cryptocurrencies. I like the portfolio diversification it really offers. I really appreciate you coming on the show today to share your expertise and insight. Adam Sharp: Thanks a lot, Ryan. Ryan Fitzwater: And thank you all for joining us on Market Wake-Up Call. We'll see you all next time. [End of Audio]