Managing Cryptocurrency Risk And Reward


Dan Young is an entrepreneur, Ugly Unicorn Crypto hedge fund founder, mentor, and real estate developer. He has been on the INC 500 list multiple times as well as being an Intel Board of Advisors member and AMD Gaming Advisory Council member. He has been involved with Crypto since 2014 and built the largest bitcoin mining facility in Utah. Dan has done over $600 million dollars in deals which have included PC Laptops, XIDAX.COM, and many insane tech projects.


Russ Alan Prince: How do you make money in crypto when markets fluctuate?


Dan Young: As everyone knows, cryptocurrencies can go down as well as up. But, that doesn’t mean there aren’t amazing opportunities to profit. What’s required is deep market research, a thorough extensive team of analysts vigorously monitoring staking news and development.  Staking risk and yield can vary massively. It’s critical to have solid positions that balance risk and yield 


The most important part of managing our portfolio is diligence. We dig into three main things. One is the team. Are they doxed and do they have a successful history in business and crypto? Two is there a road map. Is it viable? What’s the timeline and execution plan. Lastly, three is functional utility. Does it actually offer virtual or physical utility? But even that’s not enough. We’ve been successful because of all that plus the fact we carefully monitor the developments on private and closed communication channels and tap into the expertise of a vast community of highly experienced crypto savants. 


We see the answer as taking unique positions. When I say unique positions, I’m not talking about highly speculative coins. Instead, I’m talking about positioning funds into DeFi projects and staking 


Staking can be compared to real estate. One would buy real estate in hope of appreciation but one would be very wise to collect rents while holding. Buying crypto is similar. Earning yield while holding tokens is a massive part of our strategy. We capitalize on liquidity pairs and crypto and blockchain opportunities that are not well known to the majority of investors in the field.


Additionally, we select and structure many of our investments to generate consistent income. By comparison, when buying income-producing real estate, it wouldn’t be prudent to not collect rent on the real estate. The same holds for crypto investments. Most investors don’t collect rents off of their crypto investments. We do. For perspective, low-yield crypto investments provide liquidity for exchanges with whom they have relationships. The exchanges pay relay interest for the liquidity.


Prince: How do you manage risk?


Young: Managing risk is a big factor when it comes to any investment and it’s proving to be extremely important when investing in crypto. There are several steps we take to mitigate risk including eliminating basic mistakes. We require multi-party validation. This way, no single manager can facilitate a trade by themselves. Just like two keys are required to launch a submarine missile, it takes multiple approvals within our fund to do any transactions. This applies not only to authorized where it is going but also amounts and anytime anything is sent or removed. In our case, there are a minimum of three approvals and four approvals on larger and more expensive transactions. 


To address the matter of risk, it’s also essential to have high security which includes token approval and revocation. Whenever anyone—whether it’s an individual or institutional investor—deploys crypto, you give the other party approval access to your wallet. However, the default settings in almost all wallets allow for the other party infinite access to your wallet. This is a major mistake. It’s analogous to giving your user name and password to a website and not changing the password.


Of the dozen crypto funds we’ve audited, all of their investors’ monies were exposed because the default setting allowed for infinite access and amounts. The reason why these funds operate this way is that they do not understand how the process works and the repercussions so they don’t take steps to better protect themselves. We limit the amount being transferred and more importantly revoke the access after every transaction.


Prince: What do you see as the future of cryptocurrency investing?


Young: Jerome Powell of the Federal Reserve and the Biden administration is working on regulating crypto. Recently executing an executive order directing federal agencies to better understand and structure the possible future integration of a US Federal digital currency. Powell recently stated that the push for regulations of crypto and digital currency will give more power to keep the US dollar strong internationally.


This means that…Most of the major Wall Street institutions are exploring or creating a crypto framework to allow their investors to purchase crypto and for the firms to recommend crypto-related investments. For example, Fidelity, Citadel, Goldman Sachs, and Blackrock have built significant crypto frameworks.


This means that…if the US Federal digital currency is deployed possible massive institutional deployment could occur. This would result in skyrocketing the market cap and adoption.


RUSS ALAN PRINCE is the Executive Director of Private Wealth magazine (pw-mag.com) and Chief Content Officer for High-Net-Worth Genius (hnwgenius.com). He consults with family offices, the wealthy, fast-tracking entrepreneurs, and select professionals.

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