In this article, we discuss the 10 cryptocurrencies millennials are buying for retirement.
The past few months have been a breakthrough period for the crypto industry in many respects. Bitcoin, the most popular coin, has hit new all-time highs along with Ethereum, the second most popular coin. There have been equally jaw-dropping declines in the prices of these cryptocurrencies as inflation rages on and batters the growth market. Institutional buying into crypto has also increased as interest in digital currencies as an inflation hedge soars. However, the industry is still very much in the process of evolving.
Governments around the world, including in the United States, are close to introducing regulation to bring cryptocurrencies into the official fold. The recently passed $1.2 trillion infrastructure bill by the US Congress includes crypto tax reporting provisions that make it easier for the tax authorities to track crypto activity. Ben Weiss, the head of cryptocurrency buying platform CoinFlip, has said that “regulation is a good thing for the industry” and that it gives people “more confidence in crypto”.
As regulation around the crypto world improves, investors are also latching onto the possibility of holding cryptocurrencies in their retirement accounts. It is still not possible to hold cryptocurrencies directly in an Individual Retirement Account (IRA) but digital coins can be traded within an IRA. However, not all IRA providers allow the purchasing of cryptocurrencies. As a result, a custodian industry has popped up that offers investments in the crypto space under the “alternative investment” banner.
A key statistic that highlights the popularity of crypto investments is that the year-to-date inflows into digital asset investment products reached close to $9 billion in November last year, per digital asset manager CoinShares, up more than $2 billion from inflows over the same period in 2020. Some of the top stocks in the space included Visa Inc. (NYSE:V), Block, Inc. (NYSE:SQ), and PayPal Holdings, Inc. (NASDAQ:PYPL). Investments in these growth stocks for retirement have also been increasing, specially in the context of Peter Thiel and his $5 billion Roth IRA.
Photo by André François McKenzie on Unsplash
Our Methodology
These were picked from a careful assessment of the cryptoverse. The details of each cryptocurrency are mentioned alongside a discussion around top companies working in the sector to provide readers with some context for their investment decisions.
A database of around 900 elite hedge funds tracked by Insider Monkey was used to calculate the popularity of these firms among hedge funds.
Cryptocurrencies Millennials are Buying for Retirement
10. Chainlink
Chainlink is a blockchain network that acts as a decentralized oracle which uses blockchain technology to enable non-blockchain enterprises to connect to the crypto world. For example, one of the most popular uses of the Chainlink network is to connect smart contracts on the chain with external data. This data comes from the real world, like baseball scores or stock prices. Chainlink is based on the Ethereum platform and is an open-source blockchain. Chainlink tokens are used to pay operators who handle off-chain data and computing.
Chainlink has gained in popularity as companies like Alphabet Inc. (NASDAQ:GOOG), the California-based technology giant, mainstream cryptocurrencies. Among the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. (NASDAQ:GOOG) with 2.9 million shares worth more than $8.5 billion.
Just like Visa Inc. (NYSE:V), Block, Inc. (NYSE:SQ), and PayPal Holdings, Inc. (NASDAQ:PYPL), Alphabet Inc. (NASDAQ:GOOG) is one of the stocks that millennials are flocking to as the crypto mania sweeps the globe.
In its Q4 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“In contrast, we made a different kind of mistake about a decade ago. Google, now Alphabet Inc. (NASDAQ:GOOG), performed very well for us while we owned it. The company kept outperforming our assumptions and we kept lowering them to be conservative. “Trees do not grow to the sky.” The stock kept going up and our value grew but did not keep pace with the stock. It hit our estimate of fair value and we sold it with a nice gain, patting ourselves on the back. We kept following the company and what they actually did over the next several years was roughly double the assumptions we used to value it. Therefore, our value was too conservative, and we sold it too cheaply, missing many years of compounding. Fortunately, we experienced some volatility several years ago that allowed us to purchase Alphabet Inc. (NASDAQ:GOOG) (Google) again with a margin of safety.”
9. Sandbox
Sandbox is the virtual currency of the metaverse platform Sandbox. The platform is built on the Ethereum blockchain and allows people to trade their digital assets in a virtual world. Recent reports suggest that Sandbox is planning to raise $400 million in funding from investors and seeking a valuation of around $4 billion. The Sandbox platform allows users to buy and sell virtual forms of plots of land, cars, art and other properties. These are traded in the form of non-fungible tokens. The native coin of the platform has a market cap of over $3.2 billion.
Sandbox and coins like it have gained recognition in the mainstream finance world through the efforts of firms like CME Group Inc. (NASDAQ: CME), the Illinois-based derivatives exchange. At the end of the fourth quarter of 2021, 55 hedge funds in the database of Insider Monkey held stakes worth $2.7 billion in CME Group Inc. (NASDAQ:CME), compared to 64 the preceding quarter worth $2.6 billion.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and CME Group Inc. (NASDAQ:CME) was one of them. Here is what the fund said:
“CME Group Inc. (NASDAQ:CME), for example, maintains a dominant franchise in electronic commodities and options trading with high incremental margins. Its interest rate trading business had been depressed coming out of the recession, but with a tightening policy environment, it now provides upside optionality that augments robust free cash flow growth and capital return. Willscot Mobile Mini is another compounder that executed well through the pandemic but was not initially recognized for the synergies of its Mobile Mini acquisition. The deal has reduced costs and created greater operating leverage as the company rides the tailwinds of improving industrial production and construction.”
8. Fantom
Fantom is a cryptocurrency launched by developers in Australia in 2019. Since then, the headquarters of the network have been shifted to South Korea. The coin was launched with around 3 billion tokens three years ago. 40% were set aside for investors and 25% were allocated for advisors and founders. The network plans to distribute all the tokens by 2024. The Fantom system handles nearly $12 billion in assets, making it the third largest crypto system after Bitcoin and Ethereum.
Fantom is disrupting the world of crypto like Tesla, Inc. (NASDAQ:TSLA), the EV maker from California, disrupted the auto industry. At the end of the fourth quarter of 2021, 91 hedge funds in the database of Insider Monkey held stakes worth $12.9 billion in Tesla, Inc. (NASDAQ:TSLA), up from 60 in the previous quarter worth $10.6 billion.
Here is what ClearBridge Investments has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q4 2021 investor letter:
“Within the growth universe we target, emerging growth stocks – the category with the highest revenue growth rates – significantly underperformed the overall growth categories in 2021 after leading performance in 2020. The pull-through effect on digitization, online access across industries, and spending to modernize outdated corporate infrastructures accelerated trends in a highly compressed time frame. Much of that trend slackened in 2021 and shares of these companies, while showing good top-line growth, saw slowing appreciation from the blistering pace in the prior year. With that moderating growth, multiples decelerated from 2020 highs. Bucking the headwinds among our emerging growth names was Tesla, Inc. (NASDAQ:TSLA) which saw continued sales momentum from their leadership positions in the key growth areas of electric vehicles.”
7. Tezos
Tezos is a blockchain network that has developed a different governance mechanism compared to other coins. Instead of relying on development teams and mining communities for decisions related to new design choices, the founders have incorporated this system into the networks of users. As part of this plan, the network incentivizes people through different methods for participation in the core development process. The token holders of Tezos are allowed to have a say in the overall development process on the network.
Tezos has gained mainstream recognition through the crypto education efforts of Mastercard Incorporated (NYSE:MA), the New York-based payments processing firm. Among the hedge funds being tracked by Insider Monkey, Virginia-based investment firm Akre Capital Management is a leading shareholder in Mastercard Incorporated (NYSE:MA) with 5.8 million shares worth more than $2.1 billion.
In its Q4 2021 investor letter, Saturna Capital, an asset management firm, highlighted a few stocks and Mastercard Incorporated (NYSE:MA) was one of them. Here is what the fund said:
“Given the likelihood of rising inflation and interest rates ahead, we anticipate adjustments to the portfolio to reduce exposure to highly valued stocks dependent on low interest rates to support terminal year valuations, while seeking investments in companies more correlated with a return to economic normalcy. We sold our position in Mastercard Incorporated (NYSE:MA). Although Mastercard Incorporated (NYSE:MA) does not charge or collect interest, its association with credit activities was problematic.”
6. Theta
Theta is a blockchain network designed specially for peer-to-peer video streaming and delivery. Users on the platform share bandwidth and computing resources. The Theta token is used to perform a number of governance tasks within the Theta ecosystem. Large companies like Google, Binance and Samsung validate these tasks. Some of the advantages of streaming on the Theta blockchain instead of traditional streaming services include rewards for watching, reduced costs, and higher quality streaming.
Theta and other crypto coins make use of the machines developed by NVIDIA Corporation (NASDAQ: NVDA), the microchip maker from California. At the end of the fourth quarter of 2021, 110 hedge funds in the database of Insider Monkey held stakes worth $10.4 billion in NVIDIA Corporation (NASDAQ:NVDA), up from 83 in the previous quarter worth $10 billion.
Along with Visa Inc. (NYSE:V), Block, Inc. (NYSE:SQ), and PayPal Holdings, Inc. (NASDAQ:PYPL), Alphabet Inc. (NASDAQ:GOOG) is one of the stocks that millennials are buying as cryptocurrencies become more mainstream.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and NVIDIA Corporation (NASDAQ:NVDA) was one of them. Here is what the fund said:
“During the fourth quarter, the ClearBridge Global Growth Strategy outperformed its MSCI ACWI benchmark. The Strategy delivered gains across eight of the nine sectors in which it was invested (out of 11 total), with the information technology (IT) and industrials sectors the primary contributors. The communication services sector was the sole detractor. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022. Bucking the headwinds among our emerging growth names was NVIDIA Corporation (NASDAQ:NVDA), which saw continued sales momentum from their leadership positions in the key growth areas of graphics processing units for gaming and data centers.”
5. Filecoin
Filecoin is a blockchain-based digital payment system developed by Protocol Labs. The system is intended to be used for cooperative digital storage and data retrieval. It uses a mix of proof-of-replication and proof-of-spacetime consensus mechanism. The network was launched in 2017. It raised more than $200 million within the first thirty minutes of the launch. The Filecoin network has a close partnership with Internet Archive. In April last year, the Filecoin foundation had donated $10 million to the Archive as the founders of the latter joined the Filecoin board.
Filecoin was founded by Juan Benet, a scientist who studied at Stanford University. Benet also founded the Interplanetary File System. Filecoin is different from other coins because it aims to store data, like a cloud service, through a decentralized mechanism. Most cloud firms today store data in centralized servers, leading to concerns around security and privacy as cloud computing becomes increasingly popular. Filecoin offers users a variety of incentives for mining and storing, encouraging honesty in data storage.
4. Hedera
Hedera is a cryptocurrency network on which anyone can make transactions or deploy applications. However, unlike other crypto networks, the software side of things is managed not by a foundation or a group of individuals, but rather by a group of businesses. There are some design trade-offs that come with this arrangement. For example, the network supports high transaction speeds but transaction history can only be accessed through pre-approved nodes on the network. Timestamping and transaction ordering also have limited access.
Hedera offers businesses the confidence they need with which to access data on the network. Some of the big companies that already use the Hedera network for their business needs include LG, IBM and Boeing. The Hedera network can process transactions quicker and at cheaper rates compared to other networks because it groups transactions through a process called hashgraph. This is a patented algorithm where a number of different nodes are in constant communication with each other to validate data.
3. Klaytn
Klaytn is another crypto network that is geared to serve the specific needs of business clients. The coin was founded by Ground X in 2019 to drive mass crypto adoption. The platform offers decentralized data and distributed governance at low latency and increased scalability. The modular options that the network offers to businesses allows them to build their blockchain according to their own specific needs. These service-based blockchains are connected to the overall network but can function separately as well.
Klaytn uses a combination of the proof-of-work (POW), and proof-of-Stake (POS) consensus mechanisms. This is achieved through an improved arrangement of Instabul Byzantine Fault Tolerance. For businesses who need further guarantees, Klaytn allows the use of the POS mechanism exclusively. The POS mechanism only allows a finite number validators, improving overall security of the system. The network offers faster speeds than other blockchains and can process 4,000 distinctive transactions in just one second.
2. Quant
Quant is a blockchain ecosystem founded in 2015 by Gilbert Verdian with a goal to make global exchange of information easier. The network uses overledger functionality to bridge different blockchains together. Verdian was a government employee in the United Kingdom and Australia and was impressed by the usefulness of distributed ledger technologies. The Quant token is the native coin of the network and offers users access to certain exclusive services and benefits. Developers and enterprises pay consumption fees every month to the network.
Quant uses different layers to improve interoperability between blockchain networks. These layers include a transaction layer, a messaging layer, and a filtering and ordering layer. Since Quant is an Ethereum-based platform, it offers benefits like blockchain games, DeFi applications, and access to a modular architecture. One of the advantages of using the Overledger DLT Gateway of Quant is that it offers businesses the ability to write smart contracts in any programming language.
1. Algorand
Algorand is a blockchain platform that uses the Algorand coin as the local token on the network. The Algorand system is designed to process transactions quickly. The network uses the proof-of-stake (POS) consensus mechanism. Algorand was founded in 2017 by Silvio Micali, a professor at MIT and an expert in cryptography. The total supply of the Algorand coin is capped at 10 billion. 7 billion of these are in circulation. Algorand can process transactions quicker than Ethereum. The latter takes about 14 seconds for one while the former can do it in four seconds.
Algorand is one of the most energy-efficient blockchain networks. This differentiates it from other blockchain networks that have come under increased scrutiny because of the energy it takes to mine their coins. Since April 2021, the Algorand network has been carbon-negative. The efficiency of the network depends on factors such as relay nodes, prohibition of forking, and the continual compression of information on the blockchain. The coin has been accepted as the official digital currency of the Marshall Islands since 2020.
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Disclosure. None. 10 Cryptocurrencies Millennials are Buying for Retirement is originally published on Insider Monkey.
