Originally published in July, thought this one might be worth refreshing giving all that is going on.
HUGE disclaimer – this is by NO means whatsoever financial advice just perspective on how we all think about things and, sometimes, play our cards right.
What is it?
If you’re a person who has ears and two eyes, then you’ve probably been exposed to Bitcoin. The question you may ask yourself now is why should I care about it, and what does it mean for me?
Ok, let me take a step back. If you have no idea what I’m talking about, Bitcoin is a decentralized, digital currency that anyone can use. This means no government controls it, and you can send or receive it directly from another person without using an intermediary, like a bank.
For a nice, quick overview on what Bitcoin is and how it works, check out this video: https://m.youtube.com/watch?v=Gc2en3nHxA4.
If you want a more technical deep dive to really grasp where Bitcoin comes from, why it works and how it’s secured, start here: https://m.youtube.com/watch?v=Lx9zgZCMqXE.
My Bitcoin Backstory
My buddy told me about Bitcoin back in 2013. I think it was about $800 a coin at that point. Just a few months before that it was trading at around let’s say $200. So I bought some. I was delighted to see the price per coin climb immediately to around $1,100, but shortly thereafter, it fell all the way back down to around $180. No big deal, I was in this for the long-haul, so I decided to let it ride and continued to buy a few hundred dollars every now and again along the way. Recently, in 2017, Bitcoin went to $2,400, then $3,400, then $4,500, and I quadrupled my money. Too good to be true? That is what everybody is wondering. In September, Jamie Dimon, JPMorgan’s CEO called Bitcoin crap and it plunged back to $3,700 per coin. Regardless of the fluctuations, people are pouring money into this currency in the hope it’s their ticket to Easystreet. But that’s not the reason I’m buying it.
You can read a ton about crypto-currency: You can read about block chains, how people “mine” Bitcoin, and how Erhereum is the new vehicle to fundamentally change the way we structure and enforce contracts for everything from getting your toilet fixed to negotiating international trade agreements.
If you don’t want to spend your time reading technology magazines and learning about coding and economics, but you’re feeling kind of lucky and have some money to take a risk with, here’s what you would do.
How to get Bitcoin
Go to a company called Coinbase at Coinbase.com. Sign up for an account and link it to your bank. Then transfer some US dollars to your Coinbase wallet. Finally, buy Bitcoin or Litecoin or Eterium, and watch the price of your investment as it moves up and down. You can transfer your currency between US dollars and crypto currency whenever you want. There are fees involved so you want to be aware of what they are.
What’s crazy is if you invested just a few hundred dollars in bitcoin 10 years ago you’d be retired and sitting on the beach right now. Those days are likely gone, but you may still reap rewards from an investment. And here’s why: Money has value because people believe in it. That’s a major thing keeping any currency from collapsing. The second people stop believing in the value of money, it has none. As governments in the world get crazier, and as we extend our bad debt habits in the US, you might start thinking about how much of your assets are tied to the US dollar. I’m going to guess that most if not all of your assets are tied to the US dollar. Therefore, it might be wise to hedge your bets.
High Risk, High Reward
I’m going to tell you that this is a risky proposition; so was buying Apple back in the 80s. That said, Bitcoin isn’t a magic medium driven by sorcery and speculation. It is a monetary system based on some amazing, transparent technology that is openly audited. Furthermore there are billions of dollars of Bitcoin held around the world, and major countries such as Japan and China recognize it as a valid and normal currency.
Even a few hundred dollars spent on Bitcoin today could be useful if, say the US economy takes a huge hit or the dollar collapses. You’ll have an asset you can trade to get you re-established or get you the hell out of dodge. So basically, as I thought about my options to secure alternative assets to trade, I realized I could buy cows in Crandall, stash gold bars under my mattress or buy Bitcoin. In the end I get a little less sleep because of the bulges in my mattress, and feeding cows is hard work, but I rest easy knowing I have a backup digital wallet that weighs 0 pounds and requires minimal feeding.