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Going Green: An Investor’s Guide to Cannabis Stocks

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The war on marijuana is slowly coming to an end, and don’t investors know it. Very few industries have captured the imagination of Wall Street and Main Street quite like cannabis. With legalization sweeping the continent, many investors believe they are on the cusp of a generational opportunity that cuts across the medical, consumer goods and lifestyle industries.

The past 18 months have featured several watershed moments for the cannabis industry. The most profound moment came on election day, when seven U.S. states legalized recreational marijuana. North of the border, the Canadian government recently announced it will fully legalize recreational weed on July 1, 2018, some 17 years after it sanctioned medical marijuana.

These seismic shifts in public policy have left marijuana stocks seeing green, leading to an outpour of support in the mainstream investment community. But before investors get high off marijuana stocks, it’s critical to get educated about the industry. This will help separate fact from fiction in a sector brimming with more confidence than its fundamentals say it should support at the moment.

Legalization: Where We Stand

Seven states legalized marijuana in some form during the November 8 election. California, Maine, Massachusetts and Nevada voted in favor of recreational weed, while Arkansas, Florida and North Dakota backed legalizing medical marijuana.

From an investment perspective, much of the excitement emanates from the four states that legalized recreational cannabis. California is widely regarded as the proxy for the marijuana industry. If cannabis can succeed here, it can succeed anywhere. 

Colorado has also given investors a good indication of how cannabis reform can generate growth. The sale of recreational marijuana topped $1.6 billion in 2016. That translates into $200 million in tax revenue for the state.[1] 

Though legalization has been a resounding success in Colorado, the outcome is only a fraction of what California can achieve. For starters, California is eight times bigger, and if it were its own country, it would be the world’s sixth largest economy. California’s path from legalization to business generation will have a direct impact on the pot debate across the country.

The state has already vowed to fight a recent federal crackdown on recreational use, with an unusual alliance of government officials and the cannabis industry quickly taking shape. That’s because state lawmakers realize that marijuana is big business and a potential boon to the local economy. The November referendum also convinced state lawmakers that a huge swathe of the population was in full support of legalization.

Other States to Watch

Investors concerned about the federal ban on cannabis should take solace in the fact that the legalization debate is heating up across the country. In addition to the eight states that have fully legalized recreational cannabis, seven others are debating its future. The legalization debate is germinating in Delaware, Rhode Island, New Jersey, Vermont, Missouri, New Mexico, Kentucky and Texas, a sign they could be next headed to the polls.

Legalization was barely struck down in Arizona last November, with 51.3% of state residents voting against Proposition 205, a statute that would have permitted recreational use.

Source: Business Insider. States Where Marijuana Is Legalized.

Canada

There’s just as much excitement about marijuana in Canada, which is expected to fully legalize recreational use of the plant in the not-too-distant future. In early April, the federal government filed an Act to Amend the Controlled Drugs and Substances Act with the legislation officially introduced two days later. Justin Trudeau’s government is expected to implement the legislation by July 2018.[2]

Although Canada became one of the first countries to legalize medicinal marijuana back in 2001, the nation’s marijuana industry is only worth about $100 million (keep in mind, Canada is one-tenth the size of the U.S. in terms of population and GDP).

Industry players are now awaiting provincial legislation on who will be allowed to sell recreational cannabis. To date, 40 marijuana licenses to grow the plan have been granted by Health Canada. Most of these companies are already sanctioned to sell marijuana to patients via mail-order system.  

Marijuana Industry Growth and Future Potential

Perhaps no other industry has languished from pent-up demand more than marijuana. In the United States, the plant has been outlawed at the federal level since 1937. That’s 80 years of pent-up demand being met by the black market. During this period, there were few investment opportunities up until the recent growth of medical marijuana companies.

In just one year, marijuana has gone from an obscure and esoteric industry to a multi-billion-dollar enterprise that has resulted in the very first exchange-traded fund (ETF) being issued. The Horizons Medical Marijuana Life Sciences ETF (HMMJ) began trading on the Toronto Stock Exchange in April, ushering a new era for marijuana investments.

According to Arcview Market Research, revenues from legal marijuana sales reached $6.7 billion in 2016, an increase of 30% from 2015. Sales should rise at a CAGR of 25% through 2021 to reach $20.2 billion.[3] All this, and only around half of U.S. states have legalized marijuana to some degree. Analysts say that only broadband internet and cable television had a bigger growth trajectory than cannabis. 

In Canada, legalized recreational weed could ignite a nearly $9 billion industry, eclipsing the combined sale of beer, wine and spirits, according to Deloitte. An estimated 600,000 kilograms (more than 1.3 million pounds) of weed will need to be produced to meet the expected demand. That’s far more than the country’s existing licensed producers are capable of growing for medicinal uses.

Clearly, there’s plenty of reason to be bullish on marijuana. The industry is already drawing parallels to the dot-com era, which provided value investors with a rare opportunity to generate enormous wealth in an extremely short period.

How to Invest in Marijuana

In terms of growth, very few industries can compare to cannabis. Like other industries, the leading marijuana companies can be bought and sold as stocks on the open market. In North America, these stocks can be found on the Nasdaq, Toronto Stock Exchange, TSX Venture Exchange and U.S. Over-the-Counter (OTC) market. Marijuana stocks traded Over-The-Counter contain the following symbol: OTCMKTS.

OTC is a decentralized market where investors can trade with one another through email, telephone and other electronic means. In an OTC environment, the dealer acts as the market maker by quoting prices at which they are willing to buy or sell a particular stock. An OTC trade can be carried out without others being aware of the price at which the transaction was made.[4]

Investors who wish to access OTC securities must open an account with a broker that allows Over-The-Counter trading. Since OTC securities are unlisted, there is no central exchange governing the market. This essentially means that all OTC trades must be placed through market makers, a type of broker-dealer firm that competes for customer orders. Typically, OTC securities can be traded on either a discount brokerage or full-service brokerage, including online trading accounts.

Just about any type of pharmaceutical or marijuana stock can trade on the OTC market. OTC provides access to companies ranging from large-cap conglomerates to small and micro-cap growth companies. Since most marijuana stocks are still in the early-stage or developmental phase, they typically do not qualify for the OTCQX Venture Market, which is the home of OTC stocks that are generally considered to be higher quality investments.

Companies listed in the OTCQB exchange are current in their reporting to a major regulator and have greater information availability to investors. Companies that are listed under the Venture Exchange have a green checkmark on the official OTC website indicating their information is verified. “Verified” securities are those whose profile has been confirmed by a representative of the OTCQB within the last six months. A growing number of marijuana companies have already made their way to the OTCQB.

It should also be noted that although investing in OTC stocks is more accessible than ever before, this avenue is considered riskier than conventional exchanges. That’s because many of the companies on the unlisted exchanges are very small, making them prone to wild fluctuations and added volatility. These characteristics define most marijuana stocks regardless of the exchange in which they are listed.

Investors trading marijuana stocks Over-The-Counter or through a conventional exchange should generally avoid companies with very little information. These companies may be extremely illiquid, thereby adding unnecessary risk to your portfolio.[5]

The Marijuana Index

The Marijuana Index is one of the easiest ways for investors to keep track of North America’s most prominent cannabis companies. The index and its subcomponents track the leading stocks operating in the legal cannabis industry in the United States and Canada. Naturally, the index is divided into two country sub-indexes: the U.S. Marijuana Index and the Canadian Marijuana Index. Each company tracked is assigned to either index, depending on the location of their primary business operations.

All three indexes began trading January 2, 2015, and were given an inception value of 100.00 points. The Marijuana Index is equal-weighted, which means each stock is granted the same importance as others in the basket. This is also the case for the U.S. and Canadian sub-indexes. The indexes are rebalanced on a quarterly basis on the last day of March, June, September and December.

As of Oct. 25, 2017, there were 311 companies listed in the Marijuana Stock Universe.

The U.S. Marijuana Index is an equal-weighted benchmark of the country’s top-20 cannabis companies. These companies, and their associated symbol, are presented below:

Name Symbol Market Cap
Terra Tech Corp TRTC 120.96m
Surna Inc SRNA 19.53m
Solis Tek Inc SLTK 42.03m
MariMed Inc MRMD 60.43m
Marapharm Ventures Inc MDM:CNX 85.39m
MCIG Inc MCIG 55.76m
Kush Bottles Inc KSHB 108.87m
Innovative Industrial Properties Inc. IIPR 68.40m
GW Pharmaceuticals Plc GWPH 2.62b
GrowGeneration Corp GRWG 25.83m
Golden Leaf Holdings Ltd GLH:CNX 62.82m
CV Sciences Inc. CVSI 19.31m
CannaRoyalty Corp CRZ:CNX 123.75m
Cannabics Pharmaceuticals Inc CNBX 79.01m
Cannabis Sativa Inc CBDS 55.60m
The Canadian Bioceutical Corporation BCC:CNX 111.98m
Axim Biotechnologies Inc AXIM 323.83m

The Canadian Marijuana Index is a gauge of ten of the top-twelve marijuana stocks traded in Canada. This list includes:

Name Symbol Market Cap
Canopy Growth Corporation WEED:CA 2.23b
CannTrust Holdings Inc. TRST:CNX 393.49m
The Hydropothecary Corporation THCX:CA 158.72m
Tetra Bio-Pharma Inc. TBP:CA 77.01m
OrganiGram Holdings Inc OGI:CA 306.57m
Namaste Technologies Inc N:CNX 40.65m
Cronos Group Inc. MJN:CA 445.70m
Maricann Group Inc. MARI:CNX 101.31m
MedReleaf Corp. LEAF:CA 1.04b
Newstrike Resources Ltd. HIP:CA 128.55m
Supreme Pharmaceuticals Inc. FIRE:CA 271.94m
Emerald Health Therapeutics Inc. EMH:CA 137.03m
Emblem Corp EMC:CA 118.86m
CanniMed Therapeutics Inc. CMED:CA 262.08m
Cannabis Wheaton Income Corp. CBW:CA 205.06m
Aphria Inc. APH:CA 958.33m
Aurora Cannabis Inc. ACB:CA 1.09b
Abcann Global Corporation ABCN:CA 110.59m

An Introduction to Marijuana Industries

The marijuana industry is more diverse than it appears at the surface. Although weed growers continue to receive most of the headlines, the industry features a large cross-section of businesses that span nearly a dozen sectors. In the following, we introduce investors to 11 industries operating within the broader marijuana sector (source: The Marijuana Index).

Agricultural Technology: The Agricultural Technology industry includes companies that contribute to the production and cultivation of marijuana by providing technologies, equipment and supplies to grower operations. Companies: Scotts Miracle-Gro Company (SMG), Zerez Holdings (ZRZH), Solis Tek Inc. (SLTK)

Pharmaceutical/Biotechnology: The Pharmaceutical/Biotechnology industry accounts for businesses focused on the research and development of pharmaceutical drugs and products involving cannabinoids. This industry represents the largest share of the U.S. marijuana market. Companies: GW Pharmaceuticals Plc (GHPH), Insys Therapeutics Inc. (INSY), Axim Biotechnologies Inc. (AXIM).

Consumption Devices: The Consumption Devices industry includes companies involved in developing and selling personal consumption devices, such as inhalers, for consumers of cannabis. Companies: Namaste Technologies Inc. (N:CNX), Wildflower Marijuana Inc. (SUN:CNX), Wildflower Marijuana Inc. (WLDFF).

Cultivation and Retail: Cultivation and Retail includes companies that grow and sell marijuana plants and related products. In Canada, this industry is dominated by licensed producers. Companies: Canopy Growth Corporation (WEED:CA), Aurora Cannabis Inc. (ACB:CA), Cronos Group Inc. (APHQF).

Hemp Products: The Hemp Products industry is primarily concerned with the production and sale of hemp and related products. Hemp is a member of the same plant species as cannabis, but has a lower concentration of THG and a higher concentration of non-psychoactive compounds. This makes it suitable for various products, such as paper, textiles and clothing. Companies: Medical Marijuana Inc. (MJNA), Earth Sciences Tech Inc. (ETST), Lexaria Bioscience Corp (LXX:CNX).

Investing and Finance: Companies involved in the investment and finance of cannabis, such as holding companies and asset managers, are also part of the dynamic marijuana sector. Companies: CannaRoyalty Corp (CRZ:CNX), First Harvest Corp (HVST), Amfil Technologies Inc. (AMFE).

Marijuana Products: The Marijuana Products industry is comprised of companies that are involved in the development and sale of marijuana-infused products, such as drinks, oils and lotions. Companies: Cannabis Sativa Inc. (CBDS), Radient Technologies Inc. (RTI:CA), Lifestyle Delivery Systems Inc. (LDS:CNX).

Other Ancillary: This industry consists of companies that contribute to the broader cannabis industry and that do not fit any of the other categories. Examples include companies that produce breathalyzers and testing kits, cannabis clinics and marijuana vending machine developers. Companies: Canada House Wellness Group Inc. (CHV:CNX), Cannabix Technologies Inc. (BLO:CNX), Lifeloc Technologies Inc. (LCTC).

Real Estate: Companies that develop, own or lease commercial property for the purpose of cannabis business are part of the marijuana Real Estate industry. Companies: Praetorian Property Inc. (PRRE), Innovative Industrial Properties Inc. (IIPR), Grow Condos Inc. (GRWC).

Secondary Services: The Secondary Services industry consists of businesses that provide general consulting and business services to marijuana growers and retailers. Consulting services include market research, business development, branding and logistics. Companies: Cannagrow Holdings Inc. (CGRW), Novus Acquisition and Development Corp (NDEV), Americann Inc. (ACAN).

Technology and Media: The Technology and Media industry includes companies that provide software and media solutions to cannabis businesses and consumers. These services include enterprise software, e-commerce services and trading platforms for cannabis companies. Companies: Helix TCS Inc. (HLIX), Eco Science Solutions Inc. (ESSI), Bang Holdings Corp (BXNG).

Despite all the promise of recreational weed, most viable marijuana investments are concentrated in the medical biotechnology/pharmaceutical industry – at least for now. Investors looking for an immediate impact on their portfolio are more likely to succeed with a medical grower.

However, recreational weed is expected to be a huge money maker in the not-too-distant future. Favorable government policies, steadily growing public support and a burgeoning grower industry make recreational marijuana a promising enterprise across North America.

How to Build a Green Portfolio

Many of the same strategies involved in building a traditional stock portfolio also apply to the marijuana sector. Things like asset allocation, long-term strategy and deep fundamental analysis are critical for long-term success. At the same time, however, the marijuana industry has several unique features that investors need to grasp.

For starters, the marijuana industry is inundated with speculative investments and overhyped stocks that don’t actually have a viable business model. This isn’t always apparent when one looks at the relative success of marijuana stocks. This means many marijuana investments are overvalued.

Marijuana stocks are also highly volatile. After surging to record highs following legalization, many leading stocks found themselves in the doldrums in the first quarter as political uncertainty undermined confidence in the industry.

Against this backdrop, the following strategy is likely to yield the best outcome for investing in this rapidly growing sector.

1. Diversification is key

Diversification is the cornerstone of investing. For a sector like marijuana, where picking winners and losers isn’t easy, diversification carries even greater significance. Right now, there are over 250 stocks in the marijuana sector. Among them are future billion-dollar companies as well as duds that will eventually file for bankruptcy. A diversified portfolio of marijuana securities is therefore necessary to survive what could be a volatile few years for the sector.

2. Gain indirect exposure

There are both direct and indirect ways to gain exposure to a sector. Although most marijuana enthusiasts are rushing to growers and retailers, they should also consider other companies in the value chain that make the business possible in the first place. These companies are certainly benefiting from marijuana, but are not tied to it and thus won’t go bust if the sector hits a snag.

A company like Scotts Miracle-Gro (SMG) provides the type of indirect exposure our portfolio needs to survive volatile turns in the market cycle. SMG is not a marijuana stock, but provides specialty fertilizer and supplies to the pot industry. In other words, it is benefiting from the sector’s growth without being completely tied to it.

3. Conduct fundamental analysis

There are a lot of cool sounding marijuana stocks at play right now, but that shouldn’t be your criteria for investing. Nor should you rely on a hunch for picking a winner in a sector prone to wild price fluctuations. Remember: you are not picking from the S&P 500, but from a batch of companies that have an extremely limited track record in the market.

You should therefore come to terms with the stock’s intrinsic value (i.e., what it’s really worth). This means reviewing its business model, profitability, revenue, return on equity and overall growth strategy. In other words, read the stock’s financial statement carefully.  

4. Don’t wait for a pullback to enter the market

Cannabis stocks may be volatile, but that doesn’t mean you should wait for a pullback before you invest. Although this is a common strategy investors employ, it rarely pays off. It may be painful to buy a share at 52-week highs, but it’s even worse to watch that company defy your expectations of a pullback.[6] The good news is marijuana investments are still new, so the good ones still have a long way to go before they reach their ceiling.  

5. Develop a long-term plan

It’s perfectly acceptable to allocate a certain portion of your portfolio to speculation (i.e., choosing stocks you believe can be bought now and sold at a substantial gain later on). However, your overall portfolio strategy should be based on long-term objectives. This is the only true way to maximize investment success.

As a nascent industry, marijuana offers plenty of long-term growth. There’s lots of reasons to be bullish over its long-term prospects. This alone should deter investors from being too short-sighted with their cannabis portfolio strategy.

6. Know that you’re investing in an industry with top notch growth

The reason many people enter the cannabis market is the realization they may be investing in a once-in-a-lifetime opportunity. Legalization is long overdue, and pent-up demand is not like anything we’ve ever seen. This has been clearly reflected in the industry’s rapid acceleration in such a short period. The growth and widespread adoption of legal cannabis in all its forms should serve as a motivator for investors looking to tap into this sector.

Legalization and the Future of Marijuana Investments  

Marijuana legalization across much of North America is a paradigm shift both in terms of public consciousness and public policy. Although the path forward will be riddled with uncertainty, the general trend is leaning toward looser regulation of recreational cannabis and increased support for medical research.

The marijuana sector is booming right now, but is trading at only a fraction of its full potential. The huge sales numbers we saw in 2016 are likely a sign of things to come, as the sector benefits from surging demand and growing mainstream acceptance of cannabis use. These factors could drive the next bull market in the marijuana industry – one that could rival the the dot-com boom.

From an investment perspective, cannabis stocks can still be had for relatively cheap. Like any breakout industry, there are a lot of duds out there trying to capitalize on the momentum. But there’s plenty of solid picks with fantastic growth prospects for investors with a little courage and a lot of patience.

Sources

[1] Trey Williams (February 12, 2017). “Marijuana tax revenue hits $200 million in Colorado as sales pass $1 billion.” MarketWatch.

[2] Debra Borchardt (April 13, 2017). “Canada Take Big Steps Towards Creating $8 Billion Legal Marijuana Industry.” Forbes.

[3] Debra Borchardt (January 3, 2017). “Marijuana Sales Totaled $6.7 Billion In 2016.” Forbes.

[4] Investopedia. Over-The-Counter Market.

[5] Kesavan Balasubramaniam. “How do I buy an over-the-counter stock?” Investopedia.

[6] Jeremy Lutz (March 2, 2017). “7 Essential Tips To Succeed With Cannabis Stocks.” Ino.com.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 773 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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  1. nptraveller

    October 27, 2017 at 7:15 pm

    Excellent text, thank you.

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Analysis

How You Could Profit From The Fairfax County Investment In Morgan Creek Digital

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Morgan Creek Digital recently scored what it says is probably the first investment in the known crypto asset universe from a U.S. pension fund.

Two pension plans in Fairfax County, Virginia are anchor investors in a new $40 million venture-capital fund, according to a statement from the company. Other investors include an insurance company, a university endowment and a private foundation, said Morgan Creek Digital founder Anthony Pompliano, who declined to provide further details.

Fairfax County Retirement Systems manages three separate defined benefit plans, two of which invested in the Morgan Creek Digital fund, said Pompliano. Katherine Molnar, chief investment officer of one of the funds said in a statement that blockchain technology is an “emerging opportunity” that offers an “attractive asymmetric return profile.’’

Morgan Creek Digital, which is an affiliate of the investment manager Morgan Creek Capital Management LLC, exceeded its original target of $25 million for the fund. Its pitch: all traditional assets will eventually be represented by digital tokens, while the influx of intellectual capital into digital assets will create positive returns. It also argues that cryptocurrencies are not correlated to traditional assets, giving investors unique exposures.

The fund created by Morgan Creek Digital in New York is investing in cryptocurrency giant Coinbase, which was recently valued at $8 billion, and several lesser-known startups, including Blockfi, RealBlocks, TrustToken, Harbor, Open Finance Network, CityBlock Capital, Namebase, Good Money and Digital Assets Data.
As much as $4 million of the investment could eventually be used to purchase cryptocurrency directly, though that has not happened yet.

This sort of development is crucial for the digital asset markets to evolve. Let’s take a closer look at Morgan Creek Digital’s other blockchain companies, and see if there might be equity or token opportunities.

CityBlock Capital

CityBlock Capital offered a digital security token sale on the SharesPost platform, representing perhaps the lowest-barrier investment opportunity for someone looking to tag onto the Fairfax County investment in Morgan Creek Digital.

CityBlock’s NYCQ Blockchain Infrastructure Fund invests in companies building blockchain-based capital markets infrastructure. From the instantaneous settlement of trades, elimination of intermediaries, and the reduction of fraud, the fund’s portfolio companies include clearing houses, exchanges, depositories, makers of market aggregation tools, securities services firms, data analytics, smart contract auditors, and issuance platforms. Its focus is early-stage firms, with ten percent of its funds going to late-stage companies.

CityBlock’s digital tokens are designed to represent ownership interests in the fund. Investors will be able to buy and sell these assets on SharesPost’s Alternative Trading System (ATS), which is registered with the U.S. Securities and Exchange Commission.

TrustToken

If you’re looking for a stablecoin, this Morgan Creek Digital-backed option might be a nice tool to escape crypto-volatility. TrustToken’s first token is TrueUSD, a stablecoin redeemable one-to-one for U.S. dollars. Over its initial four months of trading, the coin’s market increased to $85 million as investors look for stability in the unstable world of crypto. The token has a $61 million hard cap on the token allocated over three tranches of $0.12, $0.14 and $0.16 per trust token.

In the TrueUSD system, dollars are kept in the escrow accounts of multiple trust companies, not a bank account. Those accounts verified by an independent third party that issues monthly reports on the funds held in collateral.

Blockfi

In need of liquidity and have a lot of crypto you could put up as collateral? Blockfi is now operating in the US, and could be the business solution you need. BlockFi is a New York-based secured non-bank lender of  USD loans to cryptoasset owners who collateralize the loan with cryptoassets. Blockfi iquidity is available to both individuals and institutions. Client Bitcoin and Ether is held with a registered custodian. Loans are issued in USD to their bank account.

BlockFi currently operates in 35 US States, lending to retail investors and companies. It raised approximately $1.5 million in seed funding earlier this year from ConsenSys Ventures, SoFI and Kenetic Capital, followed by Galaxy Digital Ventures investment of $52.5 million. $50 million, the lion’s share of the capital, will be used to loan to BlockFi’s customers. The remaining $2.5 million represents an equity investment in the company from Galaxy and earlier backers.

Namebase

Namebase offers probably the most unique idea in which Morgan Creek Digital invests. This platform enables the registration of top-level domains on the Handshake blockchain. As a fork of Bitcoin, Handshake allows users to register domain names. Registration records are maintained by a decentralized network of nodes. Handshake is compatible with the existing domain name system. It is easily integrated with mainstream browsers.

Handshake uses the Bitcoin software with some extra transaction types allowing users to bid on names on-chain. Handshake forked everything about the Bitcoin node software while not forking the UTXO set, like in the case of Zcash. The Handshake project plans to distribute 70% of the coin supply to open source developers, projects, and non-profits without any contractual expectation of work.

Bakkt

The Bakkt Bitcoin Daily Future is a physically delivered daily futures contract on Bitcoin traded in BTC/USD. It’s still subject to regulatory approval, but ICE plans for them to be traded on its electronic trading platform which is regulated by the CFTC. ICE Clearing US, the main counterparty for all ICE cleared forex futures trades, will clear and guarantee all trades, to be settled in physically delivered Bitcoin “in the regulated Bakkt Warehouse.”

Bakkt raised $18.2 million to develop a global digital assets platform and a bitcoin futures product. Owned by Intercontinental Exchange (ICE), which in turn is owned by the New York Stock Exchange (NYSE), Bakkt’s investors include Boston Consulting Group, Galaxy Digital, Goldfinch Partners, ICE, M12 (Microsoft’s VC fund), Pantera Capital and Protocol Ventures.

Digital Assets Data

This financial technology and data company build enterprise-grade software and data feeds for crypto hedge funds and other market participants. The companies data, information and transparency tools will be applied to crypto assets, including currencies, platforms, applications, side chains, security tokens, and initial coin offers (ICOs) through subscription services offered to hedge funds and other institutional investors.

Harbor

While companies like Polymath stole much of security token show in early 2018, Harbor’s blockchain-based platform and compliance protocol has also been built to transform private securities like commercial real estate offerings an investment funds into more liquid forms of private investment.

This institutional-grade onramp for issuers and investors is an end-to-end service. Investor on-boarding to the platform encompasses KYC, AML, accreditation and tax forms, signing of documents, funding, and other tasks. The Harbor compliance protocol manages complex rules and regulations governing securities on issuance and secondary transfers.

Open Finance Network

Created in 2014, The OpenFinance Network (OFN) uses blockchain technology to create an U.S. regulated security token platform. “We wanted to give users the control over their funds. Since with security tokens, there is a lot of overhead holding tokens on a centralized platform. So to put capital to better use, we went with self-custody. We are not entirely decentralized though, and we think this is attractive to all types of users.”

Open Finance Network is comprised of the ledger, the token and the adaptors. Open Finance’s a global registry of assets that are represented by security tokens as well as entities such as broker-dealers, transfer agents, custodians or escrow agents that can be used on different security token processes.

Good Money

Good Money is a new type of banking platform founded by Gunnar Lovelace. When a new customer signs up with Good Money, they receive an equity share – in other words, they become co-owners. Lovelace says customers could hold as much as 70% one day.

Good Money operates similar to a credit union, which are non-profits, and offers members no ATM or overdraft fees. 50% of its profits are invested into green projects and charitable donations. The platform’s customers vote on where profits should be invested, but the options will only include sustainable investments, like clean energy and reforestation efforts.

RealBlocks

RealBlocks is creating a real estate capital markets platform designed to connect users globally so they can more easily raise capital for real estate. Built on the Ethereum blockchain, the platform allows organizations to raise capital through the issuance of tokenized securities.

On the platform, investors can directly purchase ownership interest in real estate with digital and fiat currencies. The platform also claims to provide a mechanism for peer-to-peer liqudity. According to RealBlocks, “anyone in the world is now able to directly invest, raise capital, and obtain liquidity for investments in real estate.” The platform also provides a mechanism for peer-to-peer liquidity. By using RealBlocks, anyone in the world is now able to directly invest, raise capital, and obtain liquidity for investments in real estate.

Conclusion

“There’s a belief in the institutional world that if the industry will be around for a long time, it will be very valuable,’’ Pompliano said in a phone interview. “The smart money is not distracted by price but looks at the long-term trends, and believes they’re betting on innovation as a great way to deliver risk-mitigated returns.’’

Today, even police officers and other state employees in Virginia’s Fairfax County are now looking forward to retirement with potential dividends from bitcoin. Two separate pension funds that collectively manage $5.1 billion in assets for the state’s police force and other employees have joined a $40 million investment in the Morgan Creek Blockchain Opportunities Fund.

If you look at the startups in which Morgan Creek Digital is invested, there are few token options. Using TrueUSD to hedge your crypto-investments offers one opportunity to augment your investment strategy. More interestingly, the CityBlock Capital security token represents an alternative to other VC-backed securities tokens, such as Blockchain Capital’s BCAP.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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5 stars on average, based on 2 rated postsJustin O'Connell is the founder of financial technology focused CryptographicAsset.com. Justin organized the launch of the largest Bitcoin ATM hardware and software provider in the world at the historical Hotel del Coronado in southern California. His works appear in the U.S.'s third largest weekly, the San Diego Reader, VICE and elsewhere.




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Investor Watch: Holochain Provides Solid Returns Despite Bear Market

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Holochain is a distributed network project with autonomous capabilities for users embedded directly into its architecture and protocols. The creators of Holochain claim that the distribution of their proposed type of storage and data processing can change the order of coordination and interaction. Thanks to digital integration, under the control of the user, Holo can free users’ online life from corporate control.

Key team members:

  • Eric Harris-Brown: The project’s co-founder is an executive engineer who received a bachelor’s degree in computer science from Yale University. He’s the co-founder of the peer-to-peer network application provider Glass Bead Software and independent software development store Harris-Braun Enterprises. He is also the author of sophisticated health data collection websites, Android-based application for monitoring catches for the fishing industry and other successful projects.
  • Arthur Brock: The other co-founder is the chief architect who has extensive experience in the field of artificial intelligence technology, which initially applied to GM, Chrysler and Hughes. He later turned his attention to creating social architectures and at Holochain is responsible for developing target currencies that form social the dynamics of the emerging post-industrial economy.

Main features

Unlike many crypto projects, platforms such as EoS, BitLattice and Holochain represent the evolution of block technology. They do not even use blocks as such and avoid linear arrangement of transactions (progression of “blocks”). They provide cryptographic control of information, but none of these projects require the same amount of consumed energy and resources, like Bitcoin and Ethereum.

At its core, Holochain is not a chain at all. It is more like “git-archives” that can be distributed, shared, synchronized or combined using BitTorrent-like DHT technology (distributed hash table). Each application has its own Holochain, and each operator has its own chain.

Holochain is a system book and application platform, similar to a blockchain, which, according to developers, is not affected by issues such as scalability and energy efficiency. Each device in the network receives its own register (Holochain) and can function independently, simultaneously interacting with all other devices in the network for decentralized problem-solving.

Another name that is often referred to at the same time as Holochain is Ceptr. This parent project uses Holochain infrastructure. It represents a new paradigm, which in some way resembles the Internet. It uses blockchain-like technology, which is characterized by a lack of consensus dependence.

Currently, the project authors are working on two initiatives: Holochain and Holo (Holo-Host). Holochain itself is a peer-to-peer infrastructure that serves as the necessary foundation for Ceptr.

Token

The community will receive tokens called Holo Fuel. According to the technical documentation, they are intended for the implementation of large volumes of microtransactions. Holo Fuel is not a cryptocurrency or token, but a kind of crypto credit that is created to link transactions between system participants.

Stability Holo Fuel will be provided by the computing power of each device in the network. Nevertheless, the authors of the project claim that the cost of crypto credits will depend on the number of hosts on the network and the computing power used. With each new user, the value of the ecosystem will grow, which will also increase the value of the tokens.

There are several essential characteristics of Holo Fuel, including asset support, non-use of tokens and signature of transactions by both parties to the transaction.

At the moment, the main coin of the Holochain network is the HOT token of the ERC-20 standard, which will be replaced by Holo Fuel after the launch of the final platform version.

TPs

The developers claim that the transaction processing ability of their network is limitless. The thing is, every second transaction is almost meaningless because of the Holochain architecture. Instead of supporting a single consensus, the Holochain distributed hash table contains a report on the main type and legitimacy of the information provided by the individual block chains. This eliminates the need to track every action on the network and the need for global consensus.

In simple terms, Holochain, as a framework for applications and has no limit on the number of transactions per second because the ecosystem where they should be implemented does not initially exist. This parameter is floating and increases as the number of network users increases.

Holochain Target Applications

First of all, the project is suitable for frameworks that require multiple individual inputs with some limited copy available to all. The most straightforward example is online networking platforms. Holochain also additionally offers technologies for administering the manufacturing network, cooperatives, public platforms, reputational platforms or digital forms of money.

Roadmap

The project’s roadmap is provided below. Here, you can see new developments coming through the pipeline in Q1 2019.

Price

We see that Holo receives positive sentiment from investors.

Its current market cap is around $75 million with an average turnover of $2 million over 24 hours. It still holds a good standing in the bear market, with returns of around 3.5x in U.S. dollar terms, 20.68x in ETH, and 7.8x in BTC. At the time of writing, it is currently traded at $0.0005 USD.

One could expect a conservative x2 in USD if the crypto market cap would remain the same and x4 if the market cap increases twice.

I usually invest with a stop loss to ensure a risk reward of at least 1:4 and buy assets weekly.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.9 stars on average, based on 43 rated postsVladislav Semjonov has a legal and financial background. He has been involved in crypto space since early 2017 in both ICO advising positions in several ICO consultancy firms, and as an ICO analyst for VC. He began contributing for Hacked.com in April 2017.




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Cryptocurrencies

How to Make Passive Income with VeChain

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The cryptocurrency market is in a recession, and investments via ICO and trading have not generated profit for a long time. Nevertheless, this market still allows you to earn money, and now is the right time to look at it in terms of the possibility of obtaining passive income. I will consider the most promising projects in terms of passive income. One of these projects, which will be discussed in this review, is VeChain.

Project: VeChain

  • Purpose: DApps, smart contracts, supply chain management
  • Website: vechain.com
  • Geography: Offices in different countries of the world; 111 nodes in the UK, Germany, Japan, China, and South Korea
  • Company: Managed by the non-profit organization VeChain Foundation. The founder and CEO of the project is Sunny Lou
  • Current development stage: Mainnet v1.0.2 (released on September 3)

Project Features

The idea of VeChain was first introduced in 2015. It was developed as a blockchain platform for digitizing information from the real world to create a registry system for goods in supply chains and a mechanism for managing them. The system is based on two key elements – product labeling with smart chips and the formation of a blockchain base with information on each product.

The system will allow companies to simplify the supply chain, and for consumers to receive high-quality original products. The goal of the project is to create a self-managing and scalable ecosystem for business, which will ensure the transparency of information flows and increase the efficiency of cooperation of all parties involved. The developed platform has great potential in the real world and can be used in many areas, such as agriculture, automotive, retail, etc.

Benefits

VeChain benefits from many partnerships, including with large companies and via Chinese government support. This year, the project team decided to expand the scope of activities and begin to develop its platform for decentralized applications and smart contracts, which can be applied in a huge number of industries, such as supply chain management, finance, automotive, tobacco, Internet of Things and more. At this stage, investors have an opportunity to earn passive income by storing tokens.

Tokens

After switching to their blockchain, two types of tokens were released as part of the project – VET and THOR (VTHO). VET is the internal currency and the basis of the platform, necessary for the settlement of contracts. The presence of tokens in the amount of more than 1 million VET gives holders the right to participate in voting on the development of the network and the choice of nodes (1 VET = $ 0.01 THOR). Tokens are needed to complete transactions in the network, launch applications and smart contracts (similar to GAS in the NEO network). 1 VTHO = $ 0.001

How to Generate Passive Income

So now we will look at how we can make money on this project and what needs to be done to accomplish this. The main condition for obtaining income is the availability of VET tokens, which can be purchased at various cryptocurrency exchanges, such as Binance. Depending on the amount you are willing to invest in these tokens, there are two options for generating income.

Option 1: Purchase VET tokens and store them in your wallet. The advantage of this method is that there are no restrictions on the amount or period of storage of tokens. All holders of VET tokens that store them in their wallet receive THOR tokens upon storage. Therefore, it is enough to purchase them in any quantity and put them on the wallet.

Calculation example:

  • Investment amount: $1,000
  • Number of VET tokens: ~166,666 (at the rate as of 21/11/18)
  • Profit per day: 70 THOR (~$0.03)
  • Profit per year: 25,549 THOR (~$15)
  • ROI: 1.5%

Calculator – https://thorcalculator.com/

Option 2: Become a node on the network

The network is supported by nodes, divided into four levels, and the minimum amount to buy tokens to become a node in the VeChain network at the current rate is about $10,000. Payments to the nodes are taken from the pool of tokens created by the VET.

The number of tokens on the planned launch date of the main network (December 31, 2018) is 15 billion; in the future this number is reduced by 2.5 billion every six months.

Strength Nodes: 1,000,000 VET (~$ 6,000), 10 days.

Thunder Nodes: 5,000,000 VET (~$30,000), 20 days.

Mjolnir Masternodes: 15,000,000 VET (~$90,000), 30 days.

Thrudheim Masternodes: 25,000,000 VET (~$150,000), permanent master node.

Calculation example:

  • Investment amount: $ 6,000
  • Number of VET tokens: 1,000,000 (Strength Nodes)
  • Profit per day: 570 THOR
  • Profit per year: 208,050 THOR (~ $ 208)
  • ROI: 3.4%

Node statistics : https://vechainstats.com/vtho-calculator/

Summary

As you probably noticed, these figures are not very impressive. Therefore, it is time to answer the main question – what makes this project attractive for investment in the current environment? Consider these factors below:

  1. The project has high potential, as evidenced by many factors, including several large partnerships, the current stage of development, Chinese government support, etc.
  2. THOR tokens have growth potential, in which case ROI can grow significantly. For example, when the THOR price reaches the initial level (at the end of July and the beginning of August of the current year, the price reached $0.04), an investment of $ 1,000 will bring 61% per annum.
  3. The cryptocurrency market is in the red zone, and it is not yet clear at what point it will reach the bottom, however, it’s probably the best time for this kind of investment right now.

Although one should invest when there is a maximum fear, this article should not be construed as investment advice. Do you own research before committing.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.9 stars on average, based on 43 rated postsVladislav Semjonov has a legal and financial background. He has been involved in crypto space since early 2017 in both ICO advising positions in several ICO consultancy firms, and as an ICO analyst for VC. He began contributing for Hacked.com in April 2017.




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