Seattle-based Capricorn wants to make crypto more accessible and less confusing for new investors. Capricorn is the first-ever SEC-registered robo-investor for crypto, and they provide automated services for investors who seek passive exposure to cryptocurrencies through thematic baskets.
I recently had the chance to chat with Sadie Rane, co-founder of Makra. Rane shares what millennial investors need to know about crypto, concerns about the environmental impact, the potential of bitcoin, crypto security, and more.
Hi Sadie, welcome! Can you start with your background in crypto?
I first bought crypto in 2015 at a former company (Blue Box). It was for a marketing giveaway at a convention. We bought 2 BTC and gave one every day. The winners never claimed them despite several attempts to contact them. I’ve always wondered if they’ve been kicking themselves ever since.
I decided to move to crypto full time at the end of 2017. Jesse and I launched our first crypto investment company, Strix Leviathan, in January of 2018. In these markets it has been 100 mph every day. I’ve been working full time in crypto for 4 years now, and as many would say, it feels like 40.
Oops, I can’t even imagine how those winners would feel now. So after Strix Leviathan, what was the reason for Capricorn?
The main catalyst for me was the lack of investment options for everyday investors. There are hundreds of places to buy, sell and trade crypto right now, but very few investment options.
Buying and holding some large crypto is certainly a good idea, but it is an incomplete investment portfolio. We identified this gap in the market, determined we had the software to make Makra a reality, and we built it.
Investing apps and robo-advisors are breaking down many of the barriers we’ve seen with investing, especially for millennials, from a lack of knowledge to a perceived lack of funding. What kinds of barriers do you see with crypto, and how are you actively working to break them?
Crypto is confusing. We have many wonderful friends who are doctors, lawyers, etc., and they always tell us that they find cryptocurrency confusing. No one likes that feeling.
Researching where and how to buy crypto takes a lot of time, and busy professionals simply don’t have that time. We are working really hard to help people understand crypto by creating blogs and other educational materials that put crypto into everyday language. We are also very focused on making Makra a user friendly tool for all users.
How do you see millennials and younger investors fitting crypto with traditional retirement planning?
For the younger generation, it is an important part of retirement planning.
Young workers need to think about their retirement goals and needs, and a diversified investment portfolio is important. The pension and retirement plans of generations of our parents and grandparents are gone. Social Security is confident that there is a funding crunch in 2034, which will result in workers being paid less than they’re entitled to.
As some retirement options from previous generations seem less reliable, investors need to look to new investment options coming to replace them. Proper allocation to digital assets can lead to long-term gains that will strengthen retirement portfolios.
In addition to figuring out how to save for retirement, young investors are also grappling with student loan debt, inflation, record-high housing prices – which means they already have a lot – crypto investments are more than all their others. How does liability fit in?
Young investors are juggling a lot today, and they are in an economy that has too many to worry about. The cryptocurrency markets are wildly confusing and overwhelming and these young investors have no time to keep up with them.
However, diversification of crypto investments is extremely important for young investors. This is why we created Makra to give investors a comprehensive exposure to digital assets without having to spend five hours a day with the market.
As I mentioned earlier, by the time this generation wants to retire, pension plans and Social Security will be obsolete or void. Cryptocurrencies are in their infancy. I truly believe that a young investor can allocate a portion of their income to a variety of digital assets right now and reap the benefits down the road.
Even with just a small investment, most young investors will benefit from the miracle of compound interest and will make a habit of saving money now.
There have been many predictions that bitcoin will reach $100,000 at some point soon. How should new investors take that news? I mean, it sounds exciting and there is still room for profit for new investors, but is this prediction just noise or a sign of real potential?
Bitcoin at $100k is a very real possibility.
Its value is likely to continue to rise, but more importantly, it does not have a deflationary mechanism, so as the US Dollar continues to lose value, relatively, the hypothetical value of BTC will increase.
There is a lot of narrative and predictions about when the price will reach a certain “exciting” level, but as we have seen in the past, it is almost impossible to accurately predict the price of a cryptocurrency. This market is still very volatile, so any predictions on bitcoin being $X are pretty much predictable. I strongly believe in the growth of this industry; However, I do not believe that anyone has a solid understanding of the time frame of that increase as it relates to prices.
Speaking of industry growth, more and more brokerages are enhancing their socially responsible offerings to serve the interests of young investors. How does crypto fit into an SRI approach?
The potential social benefits of blockchain are one of the reasons I absolutely love this industry. From cross-border payment systems to supply chain visibility to food security, dozens Interesting Projects in Blockchain,
There are even blockchain projects dedicated to climate change, charitable charities, and donors to see where every penny of their donation is going. I am not saying that all cryptocurrencies have a charitable purpose; However, the development of the overall industry is critical to allow these other projects to grow and survive.
You mention climate change, but I read that a single bitcoin transaction uses roughly the same amount of electricity consumed by the average American household in two months. How should environmentally conscious investors proceed?
While large amounts of energy are consumed, some are Other Factors to Consider, such as the fact that miners can easily move to take advantage of cheaper energy. Miners also look for energy that would otherwise have been wasted. I believe that over time crypto protocols and mining equipment will become more and more efficient and the energy burden will be reduced.
Part of this discussion that I find difficult at times is that we often present statistics in a way that does not accurately compare crypto to traditional finance.
Each time the bitcoin network mines a new block, it processes multiple transactions at the same time to create a new bitcoin. I think I read that there are over 2,700 transactions in an average block. And it’s a complete cycle from start to finish to create a new bitcoin, with more or less simultaneous transaction processing.
Compare this to the traditional monetary system, but be sure to compare it from beginning to end – from machinery pulling or harvesting natural resources from the planet, through the printing/mining process, and then used to process them. from the vast global banking system. Daily transactions (how much energy do hundreds of thousands of banking locations around the world use?) are really impossible to compare because there are so many factors.
At least with bitcoin, energy cost is a factor all miners have to consider, so optimizing it is tops. Many other cryptocurrencies do not require large amounts of energy, and if bitcoin does not solve its energy problem, it will likely lose them.
Security is another concern for wary investors, and with the recent massive hacks ($600 million at PolyNetworks and $196 million at Bitmart’s loss), here’s what you have to say to investors worried about security. ?
I would agree with him. Security is an absolute concern for any financial institution. Thieves are not a new phenomenon. We chose to partner with Gemini because they are a qualified custodian and we value the measures they take to protect customers’ assets. Safety is of utmost importance to us and it is a must have for any investor.
There are new and interesting platforms for adventurous investors in this industry, and more every day. However, it takes a lot of research and time to understand how they work, how to protect your assets, and best practices with each.
Identifying vulnerabilities is often complex and beyond the scope of a casual investor. Hence a knowledgeable investor should be careful in terms of security, and they should check the security practices of the platform they wish to use.
Besides not doing your research, what is another big pitfall new cryptocurrency investors should avoid?
there are a few.
Emotional Investing – These markets can move very quickly, causing wild excitement and gut-wrenching downturns. My advice is to step back and think about “why” you are buying or selling. If the answer is because you’re afraid of missing out or there’s a lot of buzz in the news about price, you’re making an emotional decision. Step back and do some research to make sure the facts support the sentiment.