Learning the Crypto Lingo | National Association of Plan Advisors


In the spring of last year, I finally learned. The cryptocurrency had been on my radar for a while, but I hadn’t taken the time to learn how it worked or why it was attractive.

That changed after meeting the Bored Ape Yacht Club (BAYC). Like almost all startup entities, they had a business plan, but it basically consisted of a statement rather than a series of PowerPoint slides. In short, a lot of “monkeys” (people who are engaged in something) are so bored of their extreme wealth that they settle in a swamp. BAYC has sold images of cartoon monkeys as a member of this club. These cartoons are non-fungible chips (NFTs), unique digital elements with a proven property in a blockchain.

Sounds ridiculous, right? Not even a year after its launch, its business is valued at about $ 5 billion. BAYC has clearly played a chord, and NFT has been named Word of the Year for 2021 by the Collins Dictionary. Celebrities (Steph Curry, Jimmy Fallon, Paris Hilton, Justin Bieber, and dozens more) have bought a Bored Ape NFT to prove that they are in fashion with culture. Joining BAYC will cost you a minimum of $ 200,000.

Okay, let’s go back a bit. Before someone buys an NFT, they usually own some form of cryptocurrency. Motivations to buy cryptography vary, and this column — distilled after spending thousands of hours in this space over the past year — will show you how to understand why your customers may own cryptography and how to speak their language to find out their motivations. . If cryptocurrency or other digital assets find their way into retirement plans, internalizing the next language will put you well ahead of the curve.

Here’s a fictitious conversation that might benefit you, along with the underlying definitions of the verbiage used and the motives.

For example, simply asking a customer, “What do you think about cryptocurrency?” Could lead to the following conversation:

Customer: I’m stuck and have a bit of Bitcoin for a while.

Ti: Interesting! Are you keeping your cryptography in an exchange or are you opting for self-custody?

This tells us how your client stores your encryption. An exchange, such as BlockFi, Coinbase, Crypto.com, Kraken or others, is how you can initially buy Bitcoin, Ethereum or dozens of different cryptocurrencies. If your client is guarding their assets, this is analogous to going to the bank and withdrawing a bag of cash; if you lose your purse, you lose your money. A situation of self-custody places much more responsibility on the owner of the cryptocurrency than the assets held in an exchange.


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If the client is in their own custody:

Ti: Do you think a hardware portfolio is important for most cryptocurrency investors like you?

Customer: I do. Once you have enough money invested in cryptography, it is important for security to do so.

A hardware wallet is an additional layer of security chosen by many cryptographic investors. It is sometimes called “cold storage”. This is a bit like two-factor authentication, where a second method is required to approve transactions. A hardware wallet will allow a user to sign requests to withdraw money digitally, so if a computer is compromised (through hacking or malware), the hardware wallet will prevent a hacker from stealing the assets they hold.

Ti: What is that number, you would say, for most people? How much do they need in cryptography to really take security seriously?

Customer: $ 5,000.

This gives you an indicator of how your customer thinks about their cryptographic holdings in relation to other people. Some cryptocurrency investors think that everything should be stored with a level of security of hardware portfolio, while others think that there is a minimum for the cost and inconvenience involved in the process.

Ti: It makes sense. In your case, is it something you include in your investment portfolio? Or is it just more gambling money, so to speak?

Customer: Include it in my portfolio.

This gives an indication of how your customer thinks about their cryptographic holdings in relation to their own net worth. A principle that is often repeated in cryptography is, “Don’t invest what you can’t afford to lose.” In other words, this material could literally go to zero. Depending on when your client started investing in crypto, you could include a large portion of your wealth, and if you include it in the value of your portfolio, it shows that you have probably become accustomed to volatility and hold on for a long time. term.

Ti: What percentage do you think is appropriate for most investors?

Customer: 5%.

This is an important approach. If your client says something other than “zero,” you’re probably considering their encryption as an alternative asset case that’s appropriate for both them and others. This is indicative of its belief in the global cryptographic ecosystem and its viability. Going further, if your retirement plan finally contains a cryptographic option, it could be something they would consider. If your client is a sponsor of the plan, this could be an important value proposition for your services if you can talk about this possibility.

No matter how you feel about cryptocurrencies or NFTs, understanding why others may be interested in these topics will help your business. As the world becomes more digital and as we break geographical boundaries with a means of exchange not tied to a government entity, I predict that these technologies will become more commonplace.

Have you talked to your customers about cryptocurrencies? Otherwise, it might make sense to introduce a conversation as shown above to better understand them and their financial goals.

Spencer X Smith is the founder of AmpliPhi Social Media Strategies. He is a former 401 (k) wholesaler and now teaches financial services professionals how to use social media for business development. This column originally appeared in the spring issue of NAPA Net the Magazine.



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