Cameron Chell here again.

As angel investors looking to dive into the crypto market, let’s talk about the question of the year: is Bitcoin going to $100,000?

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My answer to that question is: it doesn’t matter. Whether Bitcoin goes to $100,000, $500,000 or even beyond that, it doesn’t really matter.

As an angel investor, you should instead be asking what purpose Bitcoin is going to serve for startups. What is Bitcoin’s actual function other than speculation?

If you can develop an investment thesis around this question, then you can form a strategy to play and profit from the Bitcoin fintech phenomenon, and not worry about where the price is going to go.

The adoption phase for Bitcoin appears to be over. It took a long time, but now Bitcoin has proven its utility and function, including making payments, storing value, and hedging against inflation, as opposed to just being a speculative instrument.

Here’s the thing: treating Bitcoin like it’s just a speculative market is a zero-sum game. If you’re going to play Bitcoin the same way everybody does, then you are going to get the same results, not better. Some are going to win in the speculative market, and some are going to lose.

This is not the type of game angel investors play. Angels do best where tangible value is being created and where they, in particular, add value of their own.

In short, just like with startups, what you need to be thinking about is the problem Bitcoin solves. If Bitcoin solves a problem, there is opportunity for you as an angel investor.

Ask yourself: what companies are using Bitcoin or other cryptocurrencies to solve problems for their customers? Look for and research companies where the most acute problems exist today – especially those that are unique to that company.

Remember that specificity is key. The more specifically you can define what the problem is and how Bitcoin, for example, can solve that problem, then the greater the need and the higher the margin will be.

To help you get a head start, these are the five main use cases for Bitcoin:

  • Digital cash: A peer-to-peer electronic cash system, allowing individuals to make transactions on the blockchain
  • Programmable money: Think “smart contracts” that are programmed to automatically pay out an agreed-upon sum once the contract’s terms have been met
  • Collateral: The ability to take out a loan or other debt by letting the loaner “lock up” a certain amount of crypto (instead of using your home, car or other assets)
  • Governance: Using the blockchain to hold digital elections with extra security
  • Collectibles: Non-fungible tokens (NFTs), like digital art, which are purchased with cryptocurrency
It’s important to understand these five use cases and decide which of them specifically holds the keenest interest for you. Then you can start looking at startup investment opportunities that address problems within your chosen area.

Again, the more specifically you can dive into these areas to even their sub-sections and find the companies that solve specific problems within these areas, the easier and faster it becomes for you to do your due diligence. Remember that with specificity comes clarity.

As an angel investor, it doesn’t matter where the price of Bitcoin is going to go. What matters is your investment thesis. Moving from the “why” of that thesis to the “how” will help you navigate the crypto world and make better decisions as a result.

Happy digging!

Talk soon,

Cameron Chell