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The crypto and blockchain sectors are on an upwards trajectory. But how to invest in these emerging assets requires industry know-how and strategic initiative.
Jeffrey Maganis and Ivan Kan are co-founders of Crowdcreate, a digital marketing company that focuses on investor outreach for private equity funds.
Click the play button above to listen to our conversation.
- Decentralized finance (DeFi) and how it works.
- Benefits of investing in cryptocurrencies.
- Different types of cryptocurrencies and their importance.
- Crypto-investing strategies for High Net Worth investors.
- Advantages of bitcoin mining operations.
- The future of crypto and blockchain technology.
Featured On This Episode
Industry Spotlight: Crowdcreate
Founded by Jeffrey Maganis in 2015, Crowdcreate has successfully raised over $133 million across dozens of successful projects and has been featured on Forbes, CNBC, and Huffington Post. Headquartered in Orange County, California, Crowdcreate is a boutique digital marketing firm that helps companies get introduced to investors, influencers, thought leaders, and their ideal customers.
Learn More About Crowdcreate
About The Alternative Investment Podcast
The Alternative Investment Podcast covers new trends in the alternate investment landscape. Hosts Jimmy Atkinson and Andy Hagans discuss diversification opportunities in the alts universe, including direct investments, DSTs, opportunity zones, private equity and more.
Jimmy: Welcome to The Alternative Investment Podcast. I’m your host, Jimmy Atkinson.
Andy: And I’m your co-host, Andy Hagans.
Jimmy: And we’re talking crypto today with two good friends of mine, the co-founders at Crowdcreate, Jeffrey Maganis and Ivan Kan. Jeffrey and Ivan join us today from Southern California. Gentlemen, welcome to the show.
Ivan: Hey, thanks for having us.
Jeffrey: Thanks for having us, Jimmy and Andy. It’s a pleasure.
Jimmy: Yeah. Great to be speaking with you guys once again. You’re no stranger to me or my podcast. This is your first appearance on The Alternative Investment Podcast but I believe you guys have been on OZ Podcast once or twice, and I know you’ve participated in OZ Pitch Day a few times as well, so great to bring you over here to AltsDb and that universe now. So to get us started, we wanna talk about crypto and cryptocurrencies today. That term for a lot of people can mean a lot of different things, and different people have different definitions. How do you define crypto, and how should our listeners today think about crypto?
Jeffrey: In terms of crypto for myself, I see crypto as synonymous as the internet. And I like to use the analogy, when you think about the dot-com boom in the 1990s when people were throwing out the term the internet. Well, the internet is used in every facet of our life today, from the Zoom call that we’re on to making a voiceover IP call that disrupted the old telecom companies. What I would define crypto as today is any technology that uses underlying blockchain. And that could be from tokenized real estate to Dogecoin, Bitcoin, Ethereum, Solana, and just these basket of cryptocurrencies and tokenized assets is how I define crypto nowadays.
Jimmy: Ivan, how about your thoughts on that?
Ivan: So crypto can mean a lot of different things for different people, but I think in like broad strokes, people associate like Bitcoin, Ethereum, these kind of major tokens, this is the…like when I ask my parents what crypto is, they’re probably gonna say it’s just Bitcoin or Ethereum, but there are a lot of underlying technologies here that are wrapped up into that concept. Like, I don’t know if you’ve heard like DeFi, CeFi. There’s also like…basically, there’s technology that puts value…there’s like a value transaction…there’s value exchange for, you can put it on, for example, social interactions, what Jeff was talking about, so there’s social tokens. But altogether, it’s kind of like digitization of your life as you know it, and that’s kind of getting wrapped up into the concept of what crypto is becoming.
Andy: Excellent. So, yeah, and I think most of our listeners, when they think of crypto, they’re gonna think about Bitcoin, the original most successful example. So that’s the first obvious use case for the blockchain technology, right, was Bitcoin, this digital currency. And then right behind it in its wake now we have Ethereum, which I view as the other major success story. They’re kind of the two 800-pound gorillas. A lot of people think of Bitcoin like it’s digital gold in the sense that it doesn’t really earn any yield, but aside from its extreme volatility, which, by the way, its volatility is going downward over time. But aside from that volatility, it’s intended to be a stable store of value and a medium of exchange, right? And as such, it’s a little different, it doesn’t earn a yield kind of like a gold coin doesn’t earn a yield unless you use it as collateral and lend it out. So it can get pretty complicated pretty fast. But to begin with, assuming that our listeners kind of understand what Bitcoin is, right, what about DeFi, decentralized finance? What about stable coins? What about some of these other crypto sort of methods of earning yield with a crypto investment? Could you kind of walk us through what is DeFi, what is a stable coin?
Ivan: So I can take that one. So what a stable coin is, is basically think of a digital currency but pegged to, let’s say, the U.S. dollar. And so it’ll always hold the value of what a U.S. dollar has, but it’s a cryptocurrency. So the reason why this is important is because DeFi, they need this, and the most common ones are USDC Tether, but a lot of DeFi kind of hinges upon using these stable coins. You can loan, you can hold it, you can stake it. And on the back end…so these DeFi stands for decentralized finance. So you may already be familiar with a lot of these like financial mechanisms where they could loan out the assets that you put in there for whatever they wanna do. It’s kind of the same thing but now in the digital world, and you just put it on a platform. And a lot of times they use AI to handle what they do with that money. In return, they’ll give you an interest. So I think I’m putting it a very plain Jane version of it, but like you put in a bank account, and the bank does whatever it wants with that money, and it promises you a return. So DeFi is kind of the similar thing, except it’s living in the crypto world.
Andy: Yeah. And it’s a game-changer, I think, just in the sense that not only does it earn yield, but comparing it to the bond market right now, we’re like junk bonds aren’t even yielding the inflation rate. So, we’re in a period of serious financial repression, and our government is implicitly taxing everyone’s savings. And so the idea to have, you know, a crypto where you can put money in and actually earn yield that exceeds the inflation rate, even that, to me, is a little bit of a game-changer. And sure, you can say, well, there’s gotta be risk, right? And I actually, I always tell people there’s no free lunch, right? So if you’re looking at some platform, and they’re advertising a 10% yield, I’m like, well, there’s no free lunch. It doesn’t mean that you shouldn’t do it, you shouldn’t invest in that, but you need to understand that any investment paying a yield, there’s going to be some kind of risk inherent in that, right? But I still think it’s very, very interesting that as our bond yields are just staying so, so low, that there are these other new types of financial options available for investors.
But I wanted to shift a little bit speaking of the bond market. So our audience at The Alternative Investment Podcast is mainly High Net Worth accredited investors. And so these are folks that usually they’ve maxed out, you know, their IRA or 401(k)s or that tax advantage space, and they’re managing a seven or eight-figure portfolio. So I wanted to talk about…and I know if you’re an accredited investor, you have different investment options than a non-accredited investor, right? So I wanted to talk about what kind of options an accredited investor has to invest in this whole, let’s just call it the whole crypto world, you know, whether we’re talking about the currencies or DeFi or the stable coins. Would you recommend that investors, accredited investors think about investing in the underlying cryptocurrencies, or would you point them more towards some of these startups, some of these venture capital funds, essentially investing in the companies that are involved in this ecosystem?
Jeffrey: Yeah. I can share some insight on that. And just to give you background so you understand my thinking behind this, I was previously on Wall Street, did a lot with collaterallized debt in 2008 during the mortgage crisis, and then moved on to PIMCO where we managed a lot of short-term treasuries and also the bond markets, so to say. So in terms of your question, should people invest in the gold or the underlying picks and shovels, and we can focus on Bitcoin. And so for accredited investors, High Net Worth, or even Ultra High Net Worth, the very basics is to buy Bitcoin itself, which is the gold. You can buy that through Coinbase, but the goal is to custody your own Bitcoin. And they say is not your keys, not your coins. And so, ideally, you would hold that in your own wallet, not on Coinbase. So that would be the easiest way to get exposure. And then there’s another level where you can actually invest in Bitcoin mining operations, where they’re solving mathematical problems where you can earn Bitcoin.
You can access these through publicly traded stocks on the market. And you can also do private placements in some of these Bitcoin mining operations. And some of these Bitcoin mining operations, they have different advantages to them being that they have cheaper source of power, and that’s if you want to get more elaborate and go deeper down into the industry. And then if you wanna buy the picks and shovels, you can actually invest in the wallet companies that are allowing people to transact with Bitcoin, which is a bit riskier. You can also invest in the crypto exchanges itself, and these are typically offered to qualified purchasers or large investment groups via VC funds or larger institutions. And so that would be the range of accessing Bitcoin as an investment.
Andy: I think that’s a great overview, and I actually love that you started with Bitcoin. And for me, this year has been an inflection point with this asset class in the sense that we had the first ETF approved in the United States tracks Bitcoin futures, not the spot price of Bitcoin. But to me, that is such a sign or just like a milestone, this is here to stay, right? And then if you look at the assets that that ETF amassed in its first 24 hours, it’s like, “Wow, okay, this is definitely here to stay.” And so there’s more and more institutional adoption. And I actually think that’s what makes like a lot of people, including myself, who like four years ago if you asked me about crypto, I would to rolled my eyes, right? So I’m not an early adopter at all. So I’m a late adopter, right?
But I personally feel like I saw that inflection point and kind of realized, like, this is definitely not going away. And I think there’s a lot of people kind of in that similar frame of mind who are not necessarily early adopters, not necessarily who wanna have, like, you know, half their net worth in crypto, but who maybe wanna allocate, you know, just dip their toes in the water. You know, maybe you’re an accredited investor and you say you wanna allocate, let’s say, 1% of your overall portfolio total to crypto. So I just wanted to talk about that, how an accredited investor could dip their toe in from the perspective of asset allocation. And so what I normally tell people is like, look, this is a volatile asset class, even with Bitcoin, which is like the least volatile crypto, you know, outside of the stable coins, you have to be ready for extreme volatility. So if you can’t stomach that, you shouldn’t invest at all. And even if you can stomach it, you might wanna look at dollar-cost averaging into half a percent of your total portfolio or something like that.
But then even within that small slice that you’re investing into crypto, I look at it like you wanna have Bitcoin be the anchor or maybe Bitcoin and Ethereum be the anchor. And I mean, shoot, I think you could even make an argument for a 60/40 portfolio or 50/50 that’s just those two majors. And then maybe if you’re interested in some of these smaller cap coins, you know, put in a little bit, just a tiny bit in some of these other altcoins. But I wanted to ask you all, do you have like a portfolio model, like within that crypto portfolio that you would advise people, especially if they’re newer, and especially with the viewpoint that I like to steer people away from the scams, for sure, because I think if people start off with one of these altcoins and get burned, and it turns out to be a scam, it’s gonna turn them off from that asset class probably forever, right?
Jeffrey: I could share some insights on…one would be, when it comes to investing, it’s always what are your goals? And on one side of the spectrum is wealth preservation, and the other side is just being on appreciating assets. And so, on the wealth preservation side, if you think about Bitcoin, and as Ivan mentioned, a stable coin, or let’s just use tether because it’s well known out there. But if you were to purchase tether, and you would put that in an interest-bearing crypto account, you are not subject to the volatility of Bitcoin, and you could earn anywhere from 10% to 30% APY on your money. And if Bitcoin goes down to half of what it is today, you’re still earning fixed income, which would be anywhere from 15% to 30%. So that’s one way that you can have crypto. And the other side is if you invest in Bitcoin, and you’re looking for that to appreciate, to double or triple, that’s another way. But you can also earn yields on your Bitcoin while holding it because there is an interest component to that, which I could dive deeper, but hopefully, that gives like two sides of the spectrum.
Ivan: To add to that point. So Jeff’s earlier point about holding it in, let’s say, a tether, and you can get 15% to 30% APY, keep in mind that those funds, you can take it out at any time depending on the platform. But let’s just say like Anchor Protocol, you can put it in there, and you can collect those interests, but you can also withdraw it at any time. That’s really a game-changer because, I don’t know…let’s say the average Joe puts it in a savings account, and he’s earning very, very small percentage points on that U.S. dollar. In fact, you’re probably losing money because of inflation. But here you park it in a U.S. tether, it’s still the value of USD, but you get access to these interests that the traditional financial system…I mean, it’s possible in some ways, but this just makes it so easy, and you can pull that out at any time.
Jimmy: Yeah. That’s really powerful stuff. A lot for our listeners to think about today. So it’s not just digital golds because it actually does yield as it turns out with some of these types of programs that you’re talking about. I do wanna wrap things up here in the next few minutes. I’d love to talk more crypto. Andy, I think we should do some more crypto episodes in the future here. I think we’ve just only scratched the surface with today’s episode. But Jeffrey, to kind of close us out here today, where do you see the future heading for crypto?
Jeffrey: I see the future heading in infrastructure for crypto, and that is for the Zoom or recording that we’re on for storing money, for everything from the next Facebook, the next messaging app that you’re using to becoming decentralized. And I see crypto as just decentralization. I am focusing personally on the infrastructure that will build the future internet. And that is just how I see crypto. It’s very disruptive from finance, to tokenization of assets, to social media, music, entertainments.
Jimmy: So tell me more about that. What do you mean by like a crypto version of Zoom? How would that work exactly?
Jeffrey: Yeah. So when you think about Zoom itself, the value of Zoom is held in the equity, right? You can buy it through your brokerage, ZM. So what I see the future of crypto is that the future Zoom will be decentralized, and you will have an economic incentive to use the next Zoom platform, and they will reward you through tokens, which are considered crypto, basically. And you’re providing value to the network. And that’s essentially how Bitcoin works. You have Bitcoin miners that are solving these math problems, and you’re rewarded in Bitcoin. So I see in a couple years, the next Zoom is going to follow this blockchain and crypto model, and we will be rewarded here through tokens for using their platform, and it will accrue value through these decentralized products.
Jimmy: And not just Zoom, that was an example, but Twitter and all the other platforms we use, a whole new web essentially is what you’re envisioning.
Jeffrey: All of them. Ivan mentioned DeFi, but the reason why they’re paying you such high APYs is because they’re incentivizing you to use the platform. And that’s where the yield comes from is just incentivizing users.
Jimmy: Yeah. Really interesting stuff. Well, I do wanna thank both of you, Jeffrey and Ivan, for joining us on the podcast today. Thank you for all of your insights you’ve provided. You’ve given our listeners, as well as the hosts, Andy and me, a lot to think about, a lot to chew on. Before we go, where can our listeners go to learn more about you and Crowdcreate?
Ivan: So they can follow us, we have our website, www.crowdcreate.us. And we also have a YouTube channel where we post, you know, our episodes. We regularly interview thought leaders in the space, and we hold conferences in the crypto world. You can find us on YouTube at Crowdcreate.
Jimmy: Fantastic. Crowdcreate, that was crowdcreate.us. And we’ll be sure to link to your website and your YouTube channel in our show notes for today’s episode. And our listeners can find those show notes on the AltsDB website at altsdb.com/podcast. And there you’ll find links to all of the resources that we discussed today with our guests, Jeffrey Maganis and Ivan Kan. Gentlemen, thanks for joining today. Appreciate it.
Jeffrey: Thank you.
Ivan: Thank you.