What’s the best asset to own?
The only toll bridge into a city might be nice.
As long as people continue to work in the city and no one else can afford to build another bridge, you can raise prices to abusive levels.
Or what about holding the patent on the smartphone? Each time Apple or Samsung produced a smartphone they would have to pay you a small fee.
The beauty of assets like these is that they continue to make you money, with almost no ongoing costs. Yes you might have to patch up a pothole on the bridge, and you would probably need some good lawyers to defend your patent protection.
But other than that, you would be minting money.
Right now, it’s the crypto world that’s creating one of the best assets to own.
Let me explain how you could potentially profit…
Are bitcoin profits finished?
From one of the best performing assets to one of the worst, bitcoin has really taken it on the chin this year.
In 2018, the price of a single bitcoin is down more than 38%.
Of course, had you bought the coin in early 2017, you’d still be flying high, up around 724%.
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Bitcoin’s fall didn’t come as too much of a surprise. While most thought 2018 would be more of the same, there were plenty betting on a bitcoin crash.
They reasoned bitcoin was a speculative asset. The price only rose because of how much the other guy was willing to pay.
Towards the end of 2017, that kind of speculative buying did pick up.
However, it’s important to note that this is not the core idea behind bitcoin. It’s not about quick riches or short-term gains. The idea behind bitcoin is to take the power away from the few at the top of the financial system.
But I digress.
Had you bought in when bitcoin popularity was really ramping up, you’d now be down more than 50%. So have the recent declines shaken out the easy money?
For most investors, such losses are too much to bear.
But with so much money in bitcoin (US$139 billion) and other cryptos, it’s hard to imagine they’ll all hit zero anytime soon. There are simply too many die-hard bitcoin fans to let the price drop that low.
But bitcoin isn’t the best asset coming out of the crypto space. Well, not yet anyway. The best assets in the crypto world are the toll bridges all crypto investors have to go through.
A toll bridge to cryptos
The ASX Ltd [ASX:ASX] is a great company.
They are one of the most profitable market operators in the world. They act as a toll bridge between investors and securities like stocks, futures and options.
The best part about ASX is the amount of cash they produce. Each year, they have more cash than they know what to do with. And it costs extremely little to keep their exchange running.
The problem the ASX has, if you can call it a problem, is they don’t have anywhere to reinvest this mountain of cash. They’ve already got the Australian stock exchange.
They can’t build another one and double earnings.
That’s why a majority of earnings are paid out to investors.
Crypto exchanges have the same problem; definitely not the worst problem to have, though.
They generate a ton of cash in fees, most of which goes back to owners.
In India, the 10 biggest exchanges make up to around US$6.25 billion per year. Chinese crypto exchange, Binance made more than US$7.5 million in profits just three months after launch.
The beauty of these exchanges is not that they make lots of cash or that they’ll make owners rich quick. It’s their long-term potential that’s attracting prominent investors from all around the world.
One such investor is Mike Tilley. Now the chairman of Latitude Financial, Tilley is betting on Aussie crypto exchange, Independent Reserve.
The Australian Financial Review writes:
‘In Australia, one of the wise heads of Australian finance, Mike Tilley, is the latest person to throw his considerable influence and personal financial wealth behind a local cryptoexchange, Independent Reserve.
‘“At the end of the day cryptocurrencies are going to fundamentally change the way value is stored and transferred,” Tilley says in an exclusive interview.
‘“That will break the intermediary role of the banks and in turn that will threaten the role of regulators.”
‘Tilley says the banks would no longer be able to charge usurious rents for the transfer of money internationally once cryptocurrencies become mainstream.
‘He predicts large global corporations will eventually issue their own cryptocoins as a way of protecting their intellectual property and bypassing banking systems.’
Individual investors like you don’t have the chance to invest alongside Tilley. Not yet. But there are already talks of some exchanging going public.
Canadian exchange Coinsquare is one. According to Bitcoin.com:
‘Coinsquare announced its plans to launch an initial public offering (IPO) hoping to raise $150 million CAD ($120Mn USD). Coinsquare hopes the funding will help the platform be a direct competitor with cryptocurrency brokerage services like Coinbase and other U.S. based exchanges.’
Of course, this doesn’t mean you should pay an unlimited price for these crypto exchanges, once public. But it could be a great way for you to own one of the hottest toll bridges around.
Editor, Money Morning
PS: Who say’s bitcoin can’t run up again in the next few months or years? A small investment now could turn into a fortune later on. To make sure you don’t miss out on this crypto boom, crypto expert, Sam Volkering has written a book, Crypto Revolution, to help you navigate the turbulent times.
To get your copy for just $4.95 click here.