As we are at the beginning of a new year, I'd thought I share some advice on cryptocurrencies (aka Bitcoin and the like).
DISCLAIMER: I am not a personal finance advisor. If you have any questions, you should seek professional guidance.
First and foremost, cryptocurrencies are very volatile and a very, very emerging market. You shouldn’t be investing any money that you are not willing to lose. ALL OF IT.
Because of this volatility, cryptocurrencies are very good for day trading. I personally don’t do that because there are tax implications that are very unclear and will be even more unclear in 2018. In addition, a lot of smart people are playing that game and know exactly what they are doing. Do you know more than them? Currently cryptocurrencies are classified as personal property for tax purposes. Keep this in mind if you day trade.
My recommendation is to acquire and hold. The cryptocurrencies will dip and dip significantly. It is a rollercoaster ride. So far to date, they have typically recovered and zoomed right past all time highs. As always past performance is not an indicator of future gains/losses.
I got interested into cryptocurrencies because of the technologies behind it. Not as some get quick rich scheme. The underlying technology called a blockchain is a significant advancement in the industry. This is the printing press, the car, and the Internet type change.
There will be a cryptocurrency used for commerce in the future. I have no doubt of that. I’m not smart enough to know which one it will be (and most likely there will be a handful for different purposes). Maybe it will be bitcoin or litecoin or monero or one yet to be created. It is to this point that I will compare the cryptocurrency market to the early Internet boom. There were lots of Internet companies going public just on the hype of being an Internet company and then the market crashed because most were significantly over valued. However, out of that crash rose companies that weren’t even in the forefront yet in 2000 such as Amazon and Google. It’s quite possible the forefront cryptocurrency of the future isn’t really getting much notice yet. Then again, maybe it will be bitcoin. Nobody really knows.
There are cryptocurrencies being used for commerce today. There are people buying and selling goods and services with it. You might not see it but doesn’t make it not real. This is a global market. This is an international market. It solves problems and makes it very convenient for certain transactions. Correct, for you personally, this is not more convenient than swiping your card at Kroger. That will be one of the last places it impacts. Even though you don’t see a fee, fees are being payed and you end up getting those fees through the overall prices of good and services. When companies can lower fees to reduce their overall costs to be more competitive, you can bet they will eventually move to those type of technologies. Some of the cryptocurrencies are being used today to replace outdated inter banking systems. Why? Because it’s cheaper and more efficient. Some cryptocurrencies are being used as store of wealth where the local country currency is extremely poorly managed and unreliable (e.g. Venezuala). When you shop at Kroger you don’t see those types of changes. It is for this reason, that most of the people I know don’t understand cryptocurrencies and just think it’s a bubble or tulip mania because they don’t understand the technology and why it is game changing.
I do believe there will be a “bubble” popping but its not clear to me which ones will be effected. As of this morning there are at least 1,373 cryptocurrencies. Yep, there is bitcoin and at least 1,372 variants. We are still very early in the technology here. There are advancements that need to be made to make it more mainstream. But those will happen. More and more people shop online today than they did in 2000. Same advancement will happen here as well. Most of these coins will bomb and be worth nothing. Some will thrive and become day to day use across the world.
There is a lot of FUD (Fear, uncertainty and doubt) around cryptocurrencies. All with different agendas. Some are just cryptocurrencies competing with each other for this new emerging market. The stakes here are extremely high. The leaders of this market have the potential to be among the wealthiest if not the wealthiest individuals on earth. They know these stakes and will do everything in their power to make it happen. Because of this it is very easy to get caught up in hype and/or FUD. Be wary out there. Understand the principles behind a coin before you get involved.
Still interested? A couple sites can be handy for acquiring cryptocurrencies. First, you need an exchange where you can purchase a “mainstream” cryptocurrency. Mainstream cryptocurrencies can be used to acquire other not so mainstream cryptocurrencies. The two biggest are currently Bitcoin and Ethereum. I recommend using Gemini as an easy way to get started:
and then if you are interested gettting into even more cryptocurrencies then purchase some Ethereum on Gemini and transfer it to Binance where you can acquire many more cryptocurrencies. I recommend Ethereum at this time as it is cheaper to transfer than Bitcoin.
https://www.binance.com/?ref=11935638
I have purposely tried to keep this post as non-technical as possible. This is the wild west of cryptocurrencies world and a lot can go wrong and a lot can go right. Be wary. Be cautious.
Donations:
Bitcoin (BTC): 1BvBYDwtBvLz4VMtJKidoaxWRWN2XfKxBz
Litecoin (LTC): LSTiJeoKcajXe95RwDkdpxBGrCJS16PQMV
Monero (XMR): 4B2J7tsQrjnA7Ns7sisD6wCkKznGasULDLaVqrnRBvcQNYh5QJNDjqzfj7tvBujcdZ2XuGUPimGFrDhGXpJnTR2rAgbHui6
Garlicoin (GRLC): GeDC4g3BBDgieK8EaKDJxjZzUXBBpg2xpz
