It was in 2011 that I first picked up on something like Bitcoin as a digital currency. In 2013 my brother and I decided to buy some of this digital currency via a US based startup: Coinbase. I finally did not buy any, because ultimately I decided it was all a load of hot air, a bubble. My brother decided to try his luck and bought bitcoins worth of 50 USD. He made a backup of his wallet and than forgot about it. Then some exchanges got hacked and wallets were stolen. Many people just lost all their money. And I was thinking, I was right to call this a scam.
The internet of value
Fast forward to today and I can say how wrong I was to think this. Today I understand that block chain technology and crypto currencies are not (always) a scam. In fact, I believe the underlying technology will change the way we run our economies, the same way the internet and mobile devices changed the way we communicate. I believe that block chain technology will facilitate the internet of value. My brother still has his encrypted backup of his wallet, but he has forgotten the password needed to decrypt the wallet. So at the current rate of the Bitcoin he is missing out of 4000 to 5000 USD that the wallet is worth today.
With great power comes great responsibility
And this is the thing with the internet of value. We, the people, are given the power to control our own money. The flip side is that we really need to be in control our selves or we will potentially lose all our stored value, kinda like my brother did. There is no counter party, like a bank to pick up the pieces, when we lose our pin codes, etc.. On the other hand, if we learn to control our own money and stores of value, we will need less banks and we will have to spent less money on such institutions. All this takes is knowledge, education and specifically a basic understanding of how the internet, computers and computer programs work. This is why I am such an advocate for everyone to learn how to code. Not the coding it self, but the understanding it gives on how technology works is essential to being a in control of the internet of value.
It is still early
We are still at the beginning of a very disruptive revolution. Bitcoin is just the beginning, like Altavista was just the first search engine and failed before Google came along and Myspace was there before Facebook started dominating the social media space. So Bitcoin has been doing great, but it is not the only game in town and it may well not be the end game. There are alternative crypto currencies developing rapidly. And the use of block chain technology is not limited to currencies only, but can be used for any exchange of value. It can potentially change the way we handle property exchange (of houses, stocks, cars, etc.), insurance, or anything else that would normally require some sort of contract.
It’s not a bubble, it’s volatile
At first in 2011, I thought Bitcoin was a scam. Now I believe it is something good. Many people say it is to good to be true and that a bubble is forming and that you should short anything crypto. Although I was skeptical and I am still cautious towards investing in crypto, I do not agree with the view that there is a bubble forming. However the market is very young and therefore very volatile. Trader Francis Hunt explains nicely the difference between a bubble like the Tulip Mania in 17th century Holland, the Dotcom Bubble and the current developments in the crypto space.
Three easy ways I participate in the crypto space
Buying some bitcoins, like my brother did, is not the only way to participate in the crypto space, but it certainly is a good start. I currently participate in the crypto space in the following three ways: I mine, I invest and I trade.
By mining crypto currencies I am helping to build and maintain the crypto’s infrastructure and in return I am rewarded some of the coins mined, or I will receive some of the fees paid for the transactions. Mining can be done on your own hardware using a mining pool such as Minergate, which makes it easy to get started.
I buy and hold a portfolio of Bitcoins and Alternative coins (altcoins). Not on an exchange, but in my own wallet. You can buy your first bitcoins easily at Bitpanda, Binanace, or CoinBase and then move them to a multi currency wallet like Coinomi.com. In the future I will be looking out for opportunities to invest in companies that facilitate the use of crypto, like software and hardware companies offering for instance crypto wallets. Also many new coins / tokens are developed regularly and are offered in Initial Coin Offerings or ICOs. This allows you to get in on a new coin at almost the ground level. This is kind of investing in a startup. This involves high risk, but also possibly huge returns. For the moment this does not fit my risk appetite.
I am bullish on the whole crypto currencies space. But of course not all projects, companies and currencies perform the same. Even more so, some coins will fail and disappear in favor of others. In order to optimize my long position on the crypto space I actively trade altcoins. This basically means I shift my portfolio from some coins to some other coins. This can be easily done using a service like Changelly. I also trade forex and CFDs at different brokers. Most of them now also offer a CFD on Bitcoin. I will possibly use this to hedge against a temporary down turns or to get in a move up quickly.
Still, my main focus will be to build a diversified portfolio of crypto currencies and to optimize the performance by trading in and out of different altcoins. If you wanna follow me along in this journey then please subscribe to any of my social media channels or old-fashioned RSS (still works). You will then receive updates from this blog. If you are more into the technical side of trading then I suggest you also follow me on Tradingview, where I share my trading ideas.