T H E ALTUCHER REPO RT

Altucher’s Crypto Trader

Handbook
 SPECIAL REPORT
Altucher’s Crypto Trader Handbook
Introduction by James Altucher
8 Reasons I’m Excited for Altucher’s
Crypto Trader
This is the most exciting financial product I am working on.
First off, everyone should have a diverse set of financial
strategies. Not just one stock, or one stock-picking strategy.
Or one trading strategy.
That’s a loser’s approach.
But what we are developing with Altucher’s Crypto Trader is
more than an investing strategy. This is the ground floor of
an enormous trend that’s going to change the world.
And you and I are at the very beginning of it.
“Choose Yourself” is about having the internal strength, the
physical, emotional, and creative health to make your own
decisions in life. To pave your own path to success and not
wait around for anyone to “Choose” you.
Bitcoin and other cryptocurrencies are the “Choose Yourself”
version of money. These are currencies with no government
in the middle. No bank in the middle. No organizations in
the middle keeping track of all your payments, or taking
advantage of your spending so they can invade your privacy,
and on and on.
People say “are cryptocurrencies fiat money like the US
dollar?”
No. There’s 1000s and 1000s of man years behind the
development of cryptocurrencies.
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Why do I know this? Because I look through the actual
programming (“the code”) of Bitcoin. I can see it. I can see
the value, the science, the research.
Cryptocurrencies solve trillions of dollars’ worth of problems.
Which is why they will be worth trillions of dollars.
IF, and ONLY IF, you avoid the scams, you get into the
cryptocurrencies that actually solve major problems of prior
currencies. And if you follow closely the people who are
doing the research and have the credibility in this space.
Then, we take this journey together, and we are able to
explore what is going to this huge shift in the evolution/
revolution of money.
This is not just an investment strategy. This is the growth of
money.
1. There is $200 TRILLION in cash, money, precious
metals used as currencies in the world. There’s ONLY
$200 Billion in Cryptocurrencies. Cryptocurrencies is
eventually replacing currencies. So that $200 billion will
EVENTUALLY rise to the level of currencies. And probably
sooner than we can imagine.
2. Money Evolves
First there was barter. Then there was gold. Then there
was paper money / bank money / fiat money. Now there
are cryptocurrencies.
I’ve written about this many times before and many of
you have seen it in my master class or book or articles.
 A LT UCHER’ S CRYPTO TRADER
But essentially, gold solved many of the problems of
barter (reducing 1000s of exchange rates to just a few),
paper money solved many of the problems of gold (e.g.
as a store of wealth that you can travel with, or as a
transaction mechanism for large transactions).
5. Code + Money
And now cryptocurrencies are solving major problems in
fiat money (no centralized control, lack of human error,
no forgery, privacy, etc etc).
3. 95% of Cryptocurrencies are SCAMS
A lot of money will be made. But just like the Internet
boom in the 90s, there will be a lot of scams. Our jobs
in this newsletter is to research, study, use our connec-
tions, to avoid the scams. So you can avoid them. So you
can find the tiny portion of cryptocurrencies that will turn
that $200 BILLION into $200 TRILLION.
I hate to use big numbers like that. But those numbers
are facts.
4. I’ve Been Here Before
I started one of the first Internet companies. Back in
1995. I created the first websites for AmericanExpress.
com, HBO.com, TimeWarner.com, etc etc.
I was there. I did it. I rode the boom. I also rode the bust.
So I’ve been here before and know what to avoid and I
trust my ability to predict.
The next time I was “here” was when Facebook was
getting bigger. Microsoft offered to buy Facebook for
ONE BILLION DOLLARS.
I went on CNBC and said Facebook was worth at least
$100 BILLION. I also wrote it in The Financial Times.
CNBC laughed at me. Nobody took me seriously.
The day Facebook went public they had me on again.
It’s first value after it went public: $101 BILLION. Now it’s
worth well over $400 Billion.
Facebook was private and hard to invest in. So I invested
in every Facebook ad agency I could find. For instance, I
was a seed investor in Buddy Media when it was worth
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just 4 million. It was later sold to salesforce.com for
$900 million.
When it comes to tech and investing, I trust myself.
Work isn’t work if you are doing what you love.
I’ve been a programmer for 30 years. Last night I spent
the night just reading through the code of various
cryptocurrencies.
For instance, Bitcoin supposedly will only have
21,000,000 coins ever minted. Unlike the US dollar where
it’s completely unknown. Unlike almost every currency.
When too many coins are minted, value goes down.
But how can we trust Bitcoin? I wanted to know.
I promise you this newsletter will NEVER be technical.
This is the only time we will ever show you code.
I just give this as an example of how I spend my lonely
evenings.
This is what I was looking at deep in the code of Bitcoin.
This one hidden piece:
CAmount blockReward = nFees + GetBlockSubsidy
(pindex->nHeight, chainparams.GetConsensus());
if (block.vtx[0].GetValueOut() > blockReward)
return state.DoS(100,
error(“ConnectBlock(): coinbase pays too much
(actual=%d vs limit=%d)”,
block.vtx[0].GetValueOut(), blockReward),
REJECT_INVALID, “bad-cb-amount”);”
This is the piece of code that makes sure there won’t be
21,000,000 coins minted. There’s 100,000 lines of code
or more that have to be understood to understand this
piece of code.
So I made sure I did that. I wanted to know. So I did.
And yes, there can’t be more than 21,000,000 coins minted.
 A LT UCHER’ S CRYPTO TRADER
Actually, what I discovered is that number is actually
incorrect but it’s ok to say it. If you’re ever at a cocktail
party and the number comes up you can say,
“Well actually, only 20999999.97690000 can be minted”
and you will be the cool guy at the party for 12 seconds.
This is what I discovered last night.
6. Theism ➔ Humanism ➔ Dataism
I’ve written about this.
But in every industry, we are seeing the above trend.
For instance, in MEDICINE.
If we got sick people would pray to their gods 1000 years
8. Kamal Ravikant
ago. Or assume they had sinned.
And then we had humanism, trained doctors, “take 2 pills
and call me in the morning.”
And now we have dataism: EEGs, fMRIs, X-rays, genetic
tests, AI pattern recognition, robotic surgeries. And yes,
medical care has improved as a result. Diagnosis is
more accurate and solutions are more accurate.
This is the trend in every industry.
Now think about MONEY:
“In God We Trust”, and then humanism: “George Wash-
ington” or the signature of the Secretary of Treasury.
And now…data. The 100,000 lines of code in a crypto-
currency. The cryptography. The 1000s of man years of
computer science and every level of mathematics.
7. Multiple Currencies
In today’s world, why are their multiple currencies?
There’s actually no real reason. The only reason we have
a US dollar and THEN a Canadian dollar is that in 1770
the people in Canada decided not to join the US.
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So an artificial border created two currencies. It’s all
artificial borders.
But in cryptocurrency world, there are what I call “Use
Borders”. Every currency is defined by its use.
For instance, Ethereum is like Bitcoin but it makes “smart
contracts” easier. Contract Law is a multi-trillion dollar
industry so this has a huge use case.
Filecoin makes storage easier. A 100 Billion industry.
And on.
Studying the use cases, and the effectiveness of the coin
to solve those use cases can help us make investment
decisions confidently.
I’m pleased to introduce Kamal Ravikant to this project.
We will be working hand in hand each week to deliver
value to you.
Kamal and I have invested in many projects together
successfully. Including one coin he lists below. We’ve
worked together on companies, books, investments,
and between the two of us I have confidence there is
no better network of contacts and expertise that can be
brought to the table.
Between the two of us we are investors, coders,
entrepreneurs, writers, and effective networkers in the
technology and crypto sector.
I’m going to let Kamal now take over this intro. Explain who
he is. Plus our first four coins that we are recommending.
After that you’ll hear from us every week. And every
month you’ll have new opportunities to invest in,
actionable advice to take that will make you money, and
together, all of us will ride this exciting time in our world’s
history all the way to the top.
James
 A LT UCHER’ S CRYPTO TRADER
Altucher’s Crypto Trader
Handbook
By Kamal Ravikant
When I was in my twenties, the first gold rush of my career
happened the dot com boom. I was living in Upstate New
York, doing clinical research in emergency departments.
One day, my brother called me and told me to get the
Sunday Times.
“Why?” I asked.
“You’ll see.”
Ok. So, come Sunday, I got the Times, flipped through it,
and in the magazine section, saw a two-page writeup about
my little brother. He’d started an internet company that was
taking off. Blew my mind. I called and congratulated him.
“What are you doing freezing and watching people die?” he
said. It was deep winter. The previous week, I’d hacked ice
off my car with a pick axe. “Come out West, we’re creating
the future here.”
I thought about it for a few weeks, then sold everything
I owned, bought a one-way ticket to San Francisco, and
landed in Silicon Valley. The internet was still new back
then. These were the days of Yahoo. Google wasn’t even a
sparkle in Sergei’s eye. Amazon only sold books. Zuck was
probably recently out of diapers.
I joined a startup as a product manager. I was in charge of
dreaming up products for the company, then leading the
engineering and design teams to build, launch, and market
them. I sure wasn’t qualified. But here’s the secret no one
was. The internet was new. We were just dreaming up stuff,
throwing it against the wall, seeing what stuck.
Before I knew it, I got known as the “Can Do Kid” in the
company. Tough problem to solve? Throw it Kamal’s way. It
was fun. We worked insane hours, slept often in the office,
worked through the weekends. I remember driving to work
one Saturday evening and seeing people lined outside a movie
5
theater and wondering why those people weren’t at work.
A little crazy, yes. But the stock market was falling in love
with internet companies. In all honesty, we were driven
by our stock options everyone around us was becoming
multi-millionaires and also, we really believed we were
creating the future.
I lived through the whole height of the boom watching the
market rise and rise and rise — and crash. The best way to
learn be a part of the boom and the bust. And I was.
Those multi-millionaires, many of them weren’t so after the
crash. I learned a lot the hard way. Looking back, outside
of my experience as an infantry soldier in the US Army, this
time-period was the best education I got.
After the crash, I ended up being responsible for figuring out
how to monetize our homepage our most valuable asset
(it got most of the traffic). Once again, was I qualified? No.
But then again, no one was. How do you monetize an asset
that’s never existed in history before? I learned by doing.
After I left the company, I consulted for Fortune 100 exec-
utives. Everyone wanted in on the internet but no one knew
how. So, I’d fly in, take over their teams, figure out what to
build and monetize, get it done, fly out. It was fun, but I’m
a doer. To get something done in big corporate, you spend
more time in meetings with PowerPoint slides than actually
doing the work.
I returned to the world of startups. Over the years, I’ve
advised and consulted with startups that have gone on
to become mega companies and household names. I’ve
learned from them just as much as I’ve taught, if not more.
Then, I built my own successful venture capital firm. I’m
known as a helpful guy in the world of tech, and this way,
not only do I get to help founders, but I invest in them…
and when the company exits (gets bought or IPOs), my
investors and I own a piece of the action.
A very important lesson to know anything truly, you have
to be in it. On the field, not sidelines. No amount of reading
and research beats being in the trenches, making and losing
money. This will apply to what we’ll do with cryptocurrency.
 A LT UCHER’ S CRYPTO TRADER
Because of the venture firm, I get to meet talented founders
daily the ones who’re creating our future. And I get to
interact with other investors who see the same. Because of
this network, I’m fortunate enough to have a pulse on what’s
coming down the road long before the media and public
do. It’s fun. Besides, to know and invest in the future before
most can be very lucrative.
That leads us to cryptocurrency. I started hearing about
bitcoin years ago. Anything new and interesting in tech, it’s
my job to keep an eye on. So, I did. I watched to see who
was getting into it. I watched smarter and smarter peers
allocate portions of their investment portfolios to bitcoin. I
studied and realized that if it worked, bitcoin was just the tip
of the spear. The real value was the complete paradigm shift
it was creating global, decentralized currencies.
This never existed before. Ever. And, even if it only takes a
few points away from the world’s existing currencies, what
is that worth? Forget math here, use common sense a lot.
I told some friends at the time to buy bitcoin. It was early, it
was hard to buy. But those that did still thank me.
Before you stop reading and run out to buy bitcoin, it’s
important to understand that bitcoin is only one cryptocur-
rency. There are many out there, with new ones launching
practically daily. Majority are outright scams. It makes me
mad to see these pump and dump schemes peddled across
the web.
There is real value being created by the legit currencies, and
since it’s my job as a venture capital fund Managing Partner
to find and invest in the best, that is only what I focus on.
This is not easy. It involves backchanneling through my
network, meeting the founders of the currencies, and
sometimes even having my advisors read the code to find
backdoors in the currency (for example, some currencies
have holes in the code that allow the founders to print as
much as they want and reward themselves. Highly unethical,
but this is unregulated, and people are taking advantage of it
to fleece investors).
The opportunity to make high multiples on our investments
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is simple. Find the best currencies, buy, and hold. Rebalance
on market opportunities. Sell to take profit (depending on
your life situation, taxes, etc).
Here is how I approach cryptocurrency investments. It
is, according to my experience, the best way to get high
multiples on capital.
1. Always have an unfair advantage. Otherwise, you’re
the sucker. This is why I never even play a five-cent slot
machine in Las Vegas the house has the unfair advan-
tage, not me. So, in cryptocurrency, my unfair advantage
is my network of insiders, my ability to talk with founders
(having been one, being pitched by and invested in many)
and separate fact from fiction, my experience, and often,
to use my connections to find out about the best ones
and invest in them early before the average investor
knows they even exist.
2. Value invest. I’m a big fan of Benjamin Graham and
Warren Buffett. They find assets of value, buy them below
market price and then hold. With cryptocurrency, the ones
that survive in the long-term will be worth such stupid
levels of money, it will make today look cheap. We’ll have
those in our portfolio.
3. Biggest Markets. An asset that wins 10% of a small
market doesn’t interest me. All these investments are high
risk, so I only focus on the ones with the highest reward
potential. An asset that wins just 1% of a multi-trillion
dollar market, well, sign me up.
4. Discipline. This is my best quality as an investor. Never
sell or buy on emotion. That’s for amateurs and keeps
Wall Street in business. I’m in this for the long term, and
without discipline, you cannot survive investing especially
in a new asset class like cryptocurrencies where every
single day is a roller coaster ride.
This has allowed me to make investments in cryptocurrencies
that gave beautiful returns to my fund.
I’ve worked hard for a long time to have the access and
network I have. I take my job as an investor seriously. It is
my way to build long-term wealth for myself and for those
 A LT UCHER’ S CRYPTO TRADER
who invest in my fund. I will not jeopardize this reputation to
chase something because it’s shiny or try to time markets.
That’s the best way to lose money.
The best way to make real money is to do tons of diligence,
only invest in what you believe in, then let it ride and not
panic. Instead, use market panic to my advantage.
So, hopefully you understand my qualifications and where
I’m coming from. I abhor pump and dumps. I only want to
invest in what will be around long-term. That’s where real
wealth is created.
By the way, remember how I lived through the first Gold
Rush? Turned out fine for the world (think Amazon, Google,
etc.). The level of wealth, and importantly, value created, has
been insane.
This is the next Gold Rush of my career. And here, it’s even
more exciting because it’s not just the internet, cryptocurren-
cy is the internet of money. On top of that, the technology
behind cryptocurrencies the Blockchain has the potential to
change and create entire industries, just like the internet did.
What is that worth? The smartest people in my network
who’ve been through the internet boom all think the same
much more than the first one. I’m excited to be in this early.
Thank you for joining me.
Let’s get started…
Our Commitment to You
Investing in startup companies and cryptocurrencies is my
job as a VC. It’s one I’ve spent a career building and take
incredibly seriously. You will have the benefit of all this.
• Everything I share with you, it will be from experience.
• I will use my network and all the diligence at my disposal
to research deeply any investing recommendations before
sending them to you.
• We will avoid the pump and dump that the crypto and ICO
market is full of. This may mean missing out on some
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short-term gains, but because of this discipline, we will do
much better overall.
• Unlike others, I will also show you how to buy and hold
your cryptocurrencies properly. It’s no use recommending
a coin that appreciates in theory when there is little or no
liquidity for it.
• I will be upfront with you about my thinking, where I’ve
been wrong, where I’ve been right. Every single piece of
learning.
The Massive Opportunity
You’ve already read the materials from James’ newsletter and
his book on Cryptocurrency. If, by some chance you haven’t,
please put this down and go do so first. Watch the videos
from the Masterclass. Cryptocurrency is the future of money,
and while you’re banking on my experience, it’s important that
you understand what you’re getting involved in. Those who
understand the future benefit greatly from it.
Click the links below to watch the videos and download
James’ latest book.
Masterclass on Cryptocurrencies (Videos)
Cryptocurrencies 101: How to Make a Fortune from Digital
Currencies
The world of cryptocurrency is currently a Wild West. But
that’s where the opportunity is. Real money is made when
there are dirt roads. By the time they’re paved and there’s
electricity, the easy opportunities are gone. In this case,
the really easy ones are. But, we’re lucky. This is just the
beginning. Many lucky investors have made fortunes in just
a couple of years. We’re still in the first inning. I watched this
play out in the first dot com boom and intend to use that
hard-earned experience to create fortunes this time around.
When you read your first webpage, did you ever imagine
that someday you’d hold a computer more powerful than
your desktop in your hand — and that you’d be doing all
your banking, shopping, appointments, communication, and
entertainment on this computer?
 A LT UCHER’ S CRYPTO TRADER
In five or ten years you’ll look back at the way money,
property, assets, and identity are handled by cryptocurrency
and the blockchain the same way. Cryptocurrency and
blockchains aren’t just game changing. They’re world-chang-
ing technologies. We are experiencing a once-in-a-lifetime
opportunity to be a part of that change.
When Bitcoin was first created, it only appealed to hard core
Libertarians and techies. You couldn’t give it away. In July
2011, the price was $31, and a few early adopters started
using it. By April 2013, people thought bitcoin had topped
out at $266. By the end of the year it spiked to over $1000.
It steadily declined throughout 2014 into 2015 where it
stayed in the $200s. Many of my friends who’d lived through
the first tech boom and bust had seen that playbook and
kept their coins. The general media thought cryptocurrency
was dead. They were wrong.
Those who kept their bitcoin made about a 2,300% return
in a little over two years. Of course, those who held it from
2011 and sold some this year (and yes, there are those),
made over 16,000% in 6 years. A whole new class of wealthy
crypto investors is being created.
One of the things that made them successful is the ability
to recognize and capitalize on irrational fear in the market-
place.
We will recognize and avoid FOMO (fear of missing out)
and FUD (fear, uncertainty, and doubt) and use them to our
investing advantage. Cryptocurrency, as an asset class,
is vastly outperforming traditional assets by a long shot. I
believe that it will continue to do so over the long-term.
Imagine buying Amazon stock shortly after its IPO and hold-
ing and adding over time with market dips. Cryptocurrencies
have the potential to be far more valuable, and because they
directly affect the monetary system and commerce, the
gains are faster.
Here’s one thing that smart investors have noticed: Institu-
tional capital is just getting interested in cryptocurrencies.
Multiple hedge funds are being formed daily to invest in
this space. All that money coming into cryptocurrencies will
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increase the prices of the coins that are considered the best.
It’s simple. Fixed supply, greater demand and cash inflows,
the price rises.
The cryptocurrency world is fast paced. Some say a day in
cryptocurrency is like a year in traditional markets. That’s
why it’s critical for you keep tuned in for our newsletters and
updates.
I can’t emphasize enough how quickly cryptocurrency
markets move. Even seasoned investors say they’ve never
experienced anything quite like the cryptocurrency markets,
so if this feels surreal, you’re not alone.
Here’s an example:
China recently put a temporary stop to initial coin offering, or
ICOs.
ICOs are a way for companies to fundraise by selling a “coin”
directly to buyers. This allows them to bypass traditional
venture capital. Some say ICOs are like an IPO for a private
company raising money by going public, but they’re really
more like multimillion-dollar crowdfunding campaigns going
directly to the crowd. I’ll explain more about ICOs below. For
now, know this — many are scams.
China then took additional steps to shut down yuan-to-cryp-
tocurrency trading on Chinese exchanges. Investors
panicked. Many sold based on false rumors even before
the official announcements were even made. This included
coins that should have been unaffected by the ban.
Smart investors recognized the unreasonable fear and
added to their portfolios. That’s what we’ll do in Altucher’s
Crypto Trader.
Another example:
Several times recently cryptocurrency markets rose in
response to regional fear over North Korea’s nuclear tests.
People bought bitcoin as a safe haven, and prices rose.
There are multiple examples where seemingly unrelated
policies and political situations cause the price of crypto-
 A LT UCHER’ S CRYPTO TRADER
currency to rise or fall steeply. This is the time to build your
portfolio or profit.
My job with this trading service will be to guide you through
the landmines of cryptocurrency, teach you how I evaluate
and invest in them, guide you on which ones to invest in and,
most importantly, when.
It’s important to know that telling you to buy “Currency X” at
price Y does you no good.
How do you do so? It’s not as simple as it seems.
There are many exchanges out there, and many only
support certain cryptos. To top it off, liquidity matters. Many
coins, while looking appealing with returns, have little trading
volume and are only in shady and unregulated exchanges
which impose limits and restrictions. And, perhaps most
importantly, you have to think about security.
Given the nature of the Wild West, there are lots of hacks,
scams, and outright robberies designed to take your crypto-
currency. I’ll teach you what you buy, where to buy it, how to
secure it.
If you’ve properly applied my recommendations, you won’t
just have made a big profit, you’ll also keep it. You won’t
get hacked and have your cryptocurrencies stolen. Most
importantly, you will have learned the ins and outs of a
technology that will become the future, well ahead of the
general public. Applying that knowledge is how generational
wealth is created.
Is Cryptocurrency a Bubble?
This is a valid question, one I often ask myself, especially
since I lived through the dot com boom and crash. The
answer is nuanced. Yes and No. There is a bubble in ICOs.
There is a bubble in pump and dump coins that have no
business existing and will not last over time. But there are
coins being created that will power entire industries and
become massive stores of value.
Some of those don’t exist yet (our job is to find those as they
become available and get in early to get the insane returns).
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The ones that will survive over time will appreciate so much
that today’s prices will look stupid cheap.
As a corollary, think of Pets.com vs. Amazon. One crashed
hard. The other became one of the most valuable businesses
in the world. Our job is to find, and then get you into the
Amazons of the crypto world early.
Regardless, our job is not to time bubbles or crashes.
Anyone who tells you they can is full of it. Our job is to find
the best cryptocurrencies ones we believe will appreciate
significantly over time to buy and hold them, rebalancing
when the market gives us opportunities, and to sell for profit
as our life situation requires.
“How significantly will they rise over time?” you may ask
Here’s my answer: cryptocurrency and the blockchain are
the future of money, of finance, of raising capital, of invest-
ing, of contracts across vast industries from real estate to
logistics to shipping, and so on.
How much do you think that’s worth? A heck of a lot. That is
why you’re here to be a part of the greatest opportunity I’ve
ever seen in my career.
Initial Coin Offerings (ICOs)
You might have heard the term “ICO” in the media. It stands
for “Initial Coin Offering.” Technically, it’s a way for crypto-
currency creators to sell their new currency to investors. In
reality, 95% of ICOs currently being offered are scams. Most
of them outright ones. Please remember this.
This will change as the market starts to mature, consumers
wise up, and the SEC steps in. I’ve seen this happen with
other online industries, like online ads, affiliates, etc. No
difference here except that the oversight will be greater,
which will be good for us as more legitimate ICOs will come
to market.
But in meantime, if someone offers you an ICO, before
you’ve done serious diligence on it, assume it’s guilty ‘til
proven innocent.
I was at dinner a couple weeks ago, the usual startup and
 A LT UCHER’ S CRYPTO TRADER
VC crowd. One of the CEOs at the table has a successful
financial app with a growing, and importantly, paying
customer base. He mentioned that he would do an ICO for
his company. When we delved into his model, it didn’t make
sense, and I told him so. He leaned back and said, “it’s free
money, why shouldn’t I grab some?”
That, right there, is the most honest reason I’ve heard from
anyone doing an ICO. Granted, he said this over wine and
amongst friends, but it nailed the current ICO market in a
nutshell. And he has a viable company and product. Most
ICOs have neither and couldn’t raise a dime from professional
investors. Yet, they’re raising tens of millions of dollars apiece.
So, as the media froth around ICOs increases, don’t be
surprised to hear more and even see ads online to invest in
them. When in doubt, assume it’s a scam. Don’t get caught
up in fear of missing out. Scammers play on that. If you’re
not an intelligent and informed investor in the space, you’re
the sucker. And unlike IPOs on the stock exchange, there is
no recourse once you’ve sent in your funds. Many of these
scammers are based offshore with dubious teams at best.
But, like most online markets, people will wise up and the
crop of ICOs will get better, and over time, you will see some
amazing wealth-creating opportunities come up.
In the meantime, buyer beware.
Another thing I’ve seen from people pitching ICOs is the
claims of incredible returns. “Get 200% in a week!” Um, sure.
Technically. But the liquidity isn’t there. The only people
selling are the ones behind the ICO and guess who’s left
holding the bag? The average investor.
Having said this all, there are legitimate ICOs with great
teams, governance, and potential to create real value with
their product and for their investors. I’ve been fortunate to
invest in some of them. Any such ICOs that come my way
that meet all my criteria for investing and pass my and my
team’s diligence, I will share with you.
Sometimes, investors in my venture capital fund ask how
many investments I intend to do per month. I tell them I
have no idea. Could be zero. Could be a large number. I
10
only invest when I find amazing deals that passes mine
and my team’s diligence. Same here. Remember, discipline
and patience is the best way to create long-term wealth,
especially in new, frothy markets.
The ABCs of ICOs
ICOs or Initial Coin Offerings, are a new way for companies
to raise money. ICOs are not only on the rise, they’re
exploding. Traditionally, startups build out their model, show
traction in terms of growth, customer acquisition, and team,
and get funded by raising money through angel investors
and/or venture capital firms.
ICOs changed all that. Blockchain and cryptocurrency
companies began to raise money in a Kickstarter-type way
up front by issuing coins or tokens for a product they were
in the process of creating. This allowed the team to raise
without giving up equity pre-build. Many teams raised tens
of millions of dollars on the merits of a “white paper” alone.
Some of these teams have gone on to produce the top
cryptocurrencies. Others have gone to zero. This is why it’s
crucial to understand the mechanics of an ICO and how
to pick solid cryptocurrencies based on good technology
versus companies selling worthless coins based on
cash-grabbing “ideas.”
How to Participate in an ICO
Investors typically send bitcoin or ethereum to a digital
address and receive the new ICO tokens or coins in return.
These tokens/coins can then be traded or used on networks
once the networks are built.
Since ICOs were largely unregulated in the beginning,
anyone could run or participate in one. Some were for
valuable networks like China’s NEO network. Others — not
so potentially world-changing. Burger King in Russia, for
example, recently created a WhopperCoin probably more for
marketing and publicity than any utility, but that can easily
evolve over time.
In 2016, companies raised $102M using ICOs. In 2017, that
number exploded to $1.3B in the first eight months alone.
 A LT UCHER’ S CRYPTO TRADER
ICOs are the new “easy money.” This is both good and bad.
If you’re creating something legitimate and of value, it’s
good. Everyone benefits. But, remember, given how easy the
money is, most are scams.
ICOs were designed to be open to everyone. Simply send
your ethereum or bitcoin to the address on the website or
information, and you get your tokens or coins. Then, you can
trade them, sell them, or use them on certain platforms that
require tokens.
There is a major problem with this. Since ICOs are
unregulated and often open-participation, they became an
extremely easy way for scammers with good marketing
to make a lot of money quickly. Recently, the Wall Street
Journal and Bloomberg gave serious press to an ICO that is
highly likely to be a scam.
If financial reporters can be duped, the average investor
needs to be alert. That’s why it’s so critical to understand the
several things about cryptocurrency and ICO environments
before investing a fraction of a bitcoin in a single ICO.
Recently, many countries have been re-examining the ICO
craze and putting some regulations and and safeguards in
place. Countries like Philippines, Australia, Japan, and others
are issuing regulations ranging from data collection require-
ments to help avoid possible illegal uses of cryptocurrencies.
China and South Korea temporarily halted ICOs altogether
until appropriate regulations can be put into place.
In August, the Securities and Exchange Commission issued
a statement analyzing the June 2016 hack of the DAO. The
DAO was the first securities exchange built on top of the
ethereum network. The problem was, ethereum was new at
the time and wasn’t ready for such a large application.
When bitcoin released, it rolled out slowly. Ethereum
wasn’t ready for a massive untested exchange. Ethereum
developers found problems with The DAO’s code (just like
we would). Despite the risks, The DAO went live. Investors
bought millions of dollars worth of tokens.
The exchange was then hacked, losing over $60M in Ethereum,
11
leaving the community with a big dilemma.
Developers could either roll back the code on the Ethereum
blockchain to the time right before the hack occurred,
restoring the funds. Or, they could leave the situation
alone, since blockchains like Ethereum are supposed to be
unchangeable.
But here’s the rub. If they did that, investors would lose over
$60M.
It was a lose-lose decision. Let hackers get away with theft
and preserve the integrity of Ethereum, or restore the funds,
and let this be a lesson for the future?
If developers rolled back the code, people might not trust
cryptocurrency since there’d be a possibility of changing
the blockchains that held the records. Blockchains aren’t
judges of good versus bad players, they are trusted records
preserved for all time.
Besides, if the developers “fixed” this situation, who’s to say
a government or organization wouldn’t force changes in the
future? Many felt Ethereum couldn’t be rolled back for moral
and philosophical reasons, even if it meant people lost all
their cryptocurrency.
The Ethereum developers made the tough decision to
restore the lost funds. Feeling it was still very early in the
game and would not be a precedent—it would be a learning
experience.
Those who disagreed gave their support to the unchanged
blockchain which became known as “Ethereum Classic”
and still survives today. The restored chain kept the name
“Ethereum.”
Ethereum Classic and Ethereum share a common history
that “forked” off in different directions. We’ll be discussing
forks much more in the future. Many forks provide
opportunities for investors. When they do, we will share that
information.
For now, let’s focus back on the security aspects of the
Ethereum fork.
 A LT UCHER’ S CRYPTO TRADER
Because of the size of theft, its potential for injury to inves-
tors, and the explosion of cryptocurrency investing and ICOs
in 2017, the SEC decided to examine the events surrounding
The DAO hack.
After analyzing the case, the SEC issued an investor alert,
advising that this exchange was a security, and that certain
ICOs might also be declared securities. Companies creating
security-type ICOs must follow the securities trading
regulations. Exchanges trading these coins and tokens have
to be registered as securities exchanges.
This warning sent out strong signals to the cryptocurrency
community that regulatory agencies ranging from the Chica-
go Board Options Exchange which deals with commodities,
to the SEC, and the IRS will be looking to define and regulate
ICOs in the future.
Then, the SEC began going after companies it felt was
engaged in fraud. It will continue. So, investing in legit
crypto’s will be even more important moving forward.
Recently, China banned ICOs altogether, requesting plat-
forms offer refunds to investors. It halted most exchange
trading while it put guidance in place.
With so much fraud out there, regulations can be a good
thing. They could screen out some of the obviously shady
offerings. That’s why it’s important that you know the ICO
landscape. Many scammy ICOs have similar characteristics
to other scams and Ponzi scams throughout history.
At the time of writing this report, the market cap for all
cryptocurrencies is over $160B. Bitcoin itself is over $72B.
Dozens of ICOs pop up every week.
Following a proven system for diligence can help us to
navigate through the landmines and pick out real winners.
How do you pick a great ICO?
This is our diligence checklist:
1. What does the coin do? Does the coin have utility — a
good, solid, useful purpose — or is the value of the coin
speculation?
12
2. Is the team credible? Have they built things before?
3. Does the coin solve a problem that is best solved on the
blockchain or is someone spinning an easy, conventional
business as cutting-edge technology?
4. What will be done with the money from the ICO? Many
ICOs are a way for founders to raise money outside of
the traditional fundraising system. If the money from the
ICO will be going to building a useful infrastructure (see
number 1) then this could be a good coin. If it’s going to
fund a bunch of salaries and not much else, then pass.
5. Is it feature-based or platform-based? If you have one
coin that features something specific, chances are a
platform will come along, incorporate that feature, and
wipe out that coin.
6. Is there a network effect beyond initial speculation? Do
people want to use the coin or platform or are they hoping
to make a quick buck on the ICO and leave?
7. What’s the marketing and news coverage? Is it hype or
solution-based? Is there a FOMO element that may be
without value?
8. How easy is it to manipulate the price of the coin through
press or by malicious means
9. Do you know this space? There are coins for everything.
Consider for a moment this wasn’t a crypto investment —
that it was a regular startup. Would you be smart money
in this space?
10. D
 id this pop up out of nowhere? If the Github (code) is
very recent, social media is still cold, and the community
seemed to appear magically and rally all of a sudden —
these are all signs of a classic pump and dump.
11. B
 ackchannel through your network. Are the smartest
investors in the space involved?
12. G
 et the backstories, meet the founders, check them
against other founders.
13. R
 ead the code. Test it. If there are any built-in hacks or
 A LT UCHER’ S CRYPTO TRADER
backdoors, immediately pass. This is an unethical team
that will only enrich themselves.
This checklist has served me well with my cryptocurrency
investments. It will evolve over time, and I’ll share any new
and proven criteria that I use.
OUR INITIAL PORTFOLIO
Before we dive into the specific coins, I want to share what I tell
anyone investing in my venture capital fund: never invest money
in these industries that you’re not comfortable losing. These are
high reward investments but they come with high risk.
Remember, it is early in the game. Don’t bet the farm. Be
smart, allocate only the speculative portion of your investment
portfolio to cryptocurrencies. There are plenty of opportunities
coming, and we will be in them.
In developing a cryptocurrency portfolio, it’s important to
remember that no one currency will win the game. Each
cryptocurrency solves a specific problem in the market. The
real money will be made with a basket of winners.
Initially, we will start with four cryptocurrencies. There are
others that we will add to the mix. We will do this oppor-
tunistically, take profits when we want, and rebalance our
portfolio whenever we feel it’s wise to do so. I will share with
you exactly how to do so.
Therefore, please read our updates and alerts.
1. BITCOIN
This is the one that started it all. The one you’re most likely
to hear about in the media. Perhaps because it was first, it is
owned by pretty much every smart person who got into the
space. Everything else in cryptocurrency came after.
A lot of wealth is tied up in this coin. And no matter how
many times naysayers predicts its fall and sometimes it
does it bounces back, each time higher. Many have come to
consider it digital gold.
As background, bitcoin was created in 2008 as a form of
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digital payment on an unchangeable database, or “ledger”
by an unknown person (or persons) who called himself
Satoshi Nakamoto. Don’t be surprised if you hear that name
more and more in the media. Satoshi is turning out to be the
biggest mystery of a generation.
What made bitcoin special was that it solved the dou-
ble-spending problem. Currently, if you have a specialty beer
store in California and I am in Kansas and want to buy your
new Lager, how do I pay you? I either send you a check, wire,
or give you my credit card info. Once that clears, you ship
me my beer.
What just happened here? In the middle was a trusted
third-party (the bank or Visa/MasterCard/American Express)
that assured you I had the money. If there was no third party
and I sent you a check for $100, how would you know that I
had that money in my account?
It’s seemed like we’ve always needed a trusted third-party in
the middle. In the traditional system, the bank and govern-
ment are trusted third parties. But banks fail. Governments
print money like it’s going out of style, devaluing your money.
The genius of bitcoin was that it used technology to remove
the need for a trusted third-party. To put it simply, everyone
involved with bitcoin became a trusted third party. Bitcoin
created a blockchain which stores records of every transac-
tion ever done on the Bitcoin network.
We can see the history of every bitcoin and who owns it
(your name is not attached, but there is a trail of bitcoin
addresses that are public). Since every interested person in
the world with a computer can have a copy of this ledger, we
no longer need a third party.
Bitcoin is owned and controlled by you. The records are
kept by everyone. If everyone can have a copy of the entire
ledger, if someone tries to falsify a record, that record will
immediately be kicked out.
In normal accounting, people can commit fraud by changing
entries on the books. This can’t happen with a blockchain, or
“distributed ledger,” because everyone else on the blockchain
will see the entry that’s different and throw it out.
 A LT UCHER’ S CRYPTO TRADER
Imagine not needing Visa or a bank to send money to
someone across the world being able to do it from your
computer or phone without giving a 20% fee to Western
Union or waiting several days for a cross-border payment
to clear. And since it’s a global currency with fixed supply
(the maximum number of bitcoins that can be created is 21
million), governments can’t print away and deflate it. That is
the power of bitcoin.
Here’s an example...
If I give James a bitcoin, it’s recorded, unchangeably, for
everyone on the network to see. If anyone tampers with that
transaction, everyone in the world will see that their records
don’t match up. Their “block” will be kicked out.
Because bitcoin was the first cryptocurrency, it has the early
adopter advantages. It can be used in many places from
Overstock.com to private payment transactions. The fact
that bitcoin can be used as payment, has an unchangeable,
“immutable,” ledger, and early network adoption makes it a
“blue chip” cryptocurrency.
Remember: When we choose coins for our portfolio, we
want coins that have value with teams that can use their
value to build enormous things. That’s what bitcoin can and
is doing.
Countries all over the world are looking at ways to integrate
blockchain technology that unchangeable database to
increase efficiency, improve recordkeeping, collect taxes,
and identify citizens. Many investment firms are starting
to recommend bitcoin as a “safe haven” investment, and
bitcoin has been called “digital gold.”
In August, Overstock.com announced they’d be keeping 50%
of the bitcoin they accept as payments in their investment
portfolio, Goldman Sachs recommended investors look into
bitcoin, more institutional money is flocking to cryptocur-
rency, and USAA Federal Savings Bank has integrated the
Coinbase wallet into their dashboard so their customers can
see or use their bitcoin.
Bitcoin is in demand — and remember that there is a limited
supply of 21 million bitcoins. Once they’ve been mined,
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that’s all there will be — ever. Simple supply and demand will
lead to the value increasing. Bitcoin is spendable — and it’s
an accepted store of wealth. Some say a bitcoin could be
worth as much as $1M USD in in the future. Will it? Beats
me. But it’s a great bet and a percentage of my portfolio is
allocated to it.
One challenge for bitcoin is that the network is slow to
confirm transactions. Because of its popularity, the network
is getting clogged and transactions are getting more
expensive. It took three years for the bitcoin network to
agree on upgrades to address this, and even then, some
people couldn’t agree so the bitcoin blockchain forked — or
split — into two — creating bitcoin and a new coin called
“bitcoin cash.”
You might think this would be an argument against bitcoin,
but it’s just the opposite. Bitcoin made it through this
argument with its value intact, and investors received bitcoin
cash — essentially free money — as a result. This reinforced
bitcoin’s reputation — and value. In the weeks after the “hard
fork,” bitcoin reached record highs to over $5000. That was
followed by a significant selloff and a subsequent rise back
into the $4000 range.
By watching for panic selloffs, we would have seen that
bitcoin wasn’t imploding, and would have bought at a huge
discount.
To return to our internet boom analogy, let’s look at Japan
and South Korea. Merchants in Japan are accepting Bitcoin.
As many as 260,000 merchants may accept it by the end
of this year. As a corollary to tech, in the mid-2000s, Japan
and South Korea were far ahead of the U.S. when it came
to mobile phone technology, especially e-commerce and
payments. The populations in these countries adopt new
technologies into mainstream society faster.
Many of the apps and payment applications we take for
granted on our iPhones and Androids were in existence, in
some form or the other, in those countries. It’s worthwhile
to see what technology Japan and South Korea embrace as
larger markets like the US and Europe will probably follow
over time. And the earlier you are into it, the greater the
returns you stand to make.
 A LT UCHER’ S CRYPTO TRADER
South Korea has already started on-site inspections for
cryptocurrency exchanges. This move shows that they’re
already making moves to mitigate fraud and hacking,
increasing consumer safety. As the crypto markets mature,
this will be norm in many countries, including the U.S. This
will only increase the value of the best cryptocurrencies as
the average investor will feel safer and buy.
We will allocate 35% of our initial portfolio to Bitcoin.
2. ETHERIUM
In tech, the most valuable businesses are platforms and
marketplaces.
A platform is where others build upon your business,
bringing in more customers and making the underlying
platform more valuable. Facebook is a platform. Slack is a
platform. Marketplaces are where you have buyers on one
side, sellers on the other, and you sit in the middle and take
a cut. Sometimes, you are the only seller, like Google is with
its ads. Sometimes, you’re not the seller at all, like eBay early
on, and all you do is take a piece of each transaction.
Remember when Facebook apps launched? It was a brilliant
move. Zuckerberg basically had other companies and
developers creating vast businesses on top of Facebook,
bringing in and retaining new customers for him.
Amazon has become a combination of a platform (Amazon
Web Services, Amazon Merchant Services, Kindle publish-
ing, etc.,) and a marketplace, making it one of the biggest
businesses in the world.
Ethereum took the idea that Bitcoin had unleashed and
created a platform. That’s what makes it special. Yes, there
are other platforms emerging in cryptocurrencies, but
Ethereum was the first and has the greatest adoption. Most
ICOs and coins are built on top of Ethereum.
Ethereum is similar to bitcoin in that it can be spent and
traded, but it has some very interesting properties bitcoin
doesn’t have. It can run code creating something called
“smart contracts.” While bitcoin is an excellent store of
value and payment blockchain, Ethereum can run apps and
15
contracts — picture it as the operating system (Android or
iOS) powering apps on your smartphone.
The potential is limitless.
Here’s an example:
Let’s say I want to sell James my surf shack for $1,000. The
Etherium smart contract could be programmed to verify
the transaction, execute it once James pays me $1,000 in
Etherium, and automatically transfer the title into James’
name, notify banks and registries, and post the sale.
This is all done without the need for accountants, lawyers,
and all the layers of middlemen that currently take a piece of
the pie along the way.
It’s still early for smart contracts. Once companies, govern-
ment agencies, and financial institutions build compatible
infrastructures, the potential for this technology will be
enormous.
Like Bitcoin, Ethereum has had challenges and pulled through.
It recently declined in price over controversies that Russia
might regulate cryptocurrency, then China and South Korea
put a stop to ICOs. Since most developers use the Ethereum
blockchain for their ICOs, the price of ethereum plummeted.
This wasn’t the end of ethereum — it was a good time to
buy. Since we understand the power of platforms over time,
we would have bought at a significant discount.
Because of the potential of smart contracts and an
upcoming upgrade increasing speed, privacy, and developer
features, and the Ethereum networks potential to transform
everything from supply chain management, voting, identity
management, electronic records, real estate, financial
transactions, and on and on, we have it in our portfolio.
We will allocate 30% of our initial portfolio to Etherium.
3. ZCASH
Originally, many people used bitcoin to enact private trans-
actions. As bitcoin usage grew, more advanced technology
 A LT UCHER’ S CRYPTO TRADER
made transactions less private. Since all records are kept
on a public ledger, if you wanted to identify the details of a
transaction, you just had to match up ledger records. This is
easier than ever with today’s computing power.
Imagine that you live in Greece and the economy collapses.
But as you try to get your money out, the government places
an exit tax of 75%. If you put your money into bitcoin, it can
be traced back to you.
You might also be in a situation where you want to pay for
medical services you don’t want revealed, or you need to
pass on information about your creditworthiness to someone
without wishing to give all your personal data. There are plenty
of reasons for wanting privacy in financial and data matters.
Enter ZCash. The technology behind ZCash allows it to be
fully private. It has “zero-knowledge proofs,” which uses
something called “zk-SNARKS” to cryptographically hide
information, revealing only what you want revealed.
You can send money privately. You can mask information
like medical records, telling permissioned doctors only what
they need to know. You can tell a landlord “yes” you have the
funds they require.
You could bypass Equifax with a trustworthy system so
creditors would receive a “yes/no” answer without giving
them ten years of your private data that could be hacked
and exposed by at any time.
Currently, ZCash is a coin and a protocol, but its features
are being built into other protocols, and are starting to be
used by major financial institutions. That makes ZCash’s
technology game changing.
Other coins have tried but none match the technology.
ZCash is also increasingly being used as an exchange of
value in countries like Venezuela and Zimbabwe, where local
currency is all but worthless and people are trying to bypass
turbulent governments.
ZCash solves privacy issues, is an excellent payment
system in volatile locations, and has potential to solve pain
16
points for credit reporting, anonymous voting, financial
transactions, storing and permission-based sharing of
medical records, and much more.
Given the nature and uses of cryptocurrencies, a bet on one
that solves privacy is a good one. That alone gives ZCash
massive potential.
But for me, overall, ZCash has one of the very best
management teams I’ve seen in my career. It is the only
coin designed and built by professional and academic
cryptographers. That is the level of talent you need to build
something like this.
In venture investing, you invest in the best teams with
long-term vision. It’s been one of my favorite investments.
We will allocate 25% of our initial portfolio to ZCash.
4. LITECOIN
Litecoin is pretty much what it sounds — a quicker and
“lighter” coin built on the Bitcoin blockchain. It is an offshoot,
or “fork” of bitcoin created by a former Google and Coinbase
employee with the goal of increasing speed and capacity
when compared to bitcoin.
Litecoin blocks are verified in 2.5 minutes compared to
bitcoin’s 10 minutes. A “block” is a collection of all the
transactions that happened in a certain period of time.
When a block is processed, it is added to the blockchain for
all eternity. That’s what makes this system work.
Until the block is finalized, though, you’re sitting at your
computer waiting for your transaction to “clear.” Most
transactions go through several “confirmations” before the
block is assembled and verified. That can be slow.
Litecoin solves this by making the system four times faster.
There are features in the works that will make it even faster
in the future.
Because of its speed and lower transaction fees, people are
using litecoin as a solid form of payment.
 A LT UCHER’ S CRYPTO TRADER

Many see litecoin as “silver” to bitcoin’s “gold.” Because
of recent upgrades, it’s now compatible with the bitcoin
blockchain. It enacted something called Segregated Witness
and the Lightning Network which allows transactions to be
settled off the blockchain, meaning there are no fees unless
you need to go back and record the transaction on the
blockchain. This will increase usage and demand for Litecoin.
The speed, usability, and team behind litecoin make it one of
the most trusted coins.
We will allocate 10% of our initial portfolio to Litecoin.
CONCLUSION
There you have it. Enough guidance to start your journey
into cryptocurrencies. But it’s just the beginning. This field is
evolving daily. Massive opportunities are coming our way.
You will learn much more in upcoming newsletters and we
will invest in them.
Remember, as part of your subscription you have access
to James’ Masterclass on Cryptocurrencies. I strongly urge
you to watch it as you’ll gain insight how cryptocurrencies
work, why they are here to stay and exactly how to get
started buying and selling them.
Click here to get access.
Welcome to the future of money. Let’s make a lot of it
together.

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