Time to get back to the basics, friends. Seriously, we think we might have jumped the gun on this site: while we’re out here talking about “Initial Coin Offerings” and “Coin of the Week” and PIVX and XRP and the BRED Portfolio, we’re likely getting quite a few blank stares from y’all.
Fine. We get it. There’s an audience of cryptocurrency devotees out there, and there’s also an audience of “what’s this about bitwhatnot?”
Have you missed the Bitcoin boat?
Short answer: NO.
Longer answer: probably best described with that old proverb about tree planting.
The best time to plant a tree is 20 years ago. The second-best time to plant a tree is right now.
So let’s plant that tree, folks. Here, then, are the basics, along with our case as to why Bitcoin is just getting started, and why you should be prepared to dive in like immediately.
To buy Bitcoin, you’ll need a wallet. Start with someone reputable that has been in this space for awhile. We recommend Coinbase, and, in the interest of disclosure, if you sign up and make a qualifying purchase of Bitcoin, you can get a bonus and we’ll get a bonus.
Coinbase works pretty simply: you can transfer money from a fiat currency like the US Dollar into Coinbase, and (as of this writing) choose from two cryptocurrencies: Bitcoin or Ethereum.
You’ll end up with an account that has something called a “wallet” – which is exactly what it sounds like – and the wallet will have an address attached to it. One that looks like this:
That is the public wallet address, and, as explained rather eloquently in this Reddit thread, you can think of it as the INBOUND address. (YES…IF YOU WANT TO SEND ME BITCOIN, YOU CAN USE THAT ADDRESS.)
The machinations behind the private key are kept by folks like Coinbase, so your Bitcoin is safe.
Other folks might like to use QR codes and put their Coinbase wallet on their mobile phone. This is totally cool, too.
You can get started with a tiny, tiny amount, too. Our first Bitcoin purchase was a whopping $25 worth of BTC, and we were charged all of 37 cents in transaction fees with Coinbase.
If you follow those steps, you now own Bitcoin. Good for you! Now, what do you DO with it? We have two ideas…
Idea 1: Buy and Hold
Some who are really deep into this space will call this “HODL:” “Hold On for Dear Life.” If you were to look at the 2016 chart we produced from Coindesk, you can see what would have happened had you bought Bitcoin on 1/1/2016 and kept it for the entire year (our chart oddly cuts off price on 12/30, not 12/31):
Wonderful, right? All you need is a time machine – which you’d set to bet on the Cubs while you’re at it – and here comes the money rolling in!
Well, not so fast…probably need to understand the economic fundamentals of Bitcoin in order to make your decision. Because, in the case of the Coindesk chart, it’s compared to the US Dollar. And, at a very basic level, if Bitcoin goes up, it’s going up against the value of something that is going down. In this case, USD.
The total value of all Bitcoin being used and transacted in the global economy right now is a bit more than $19 Billion US. But here’s the thing…actually, here are three things:
- This is nothing by comparison. For instance, the total of all assets in the US is around $130 Trillion. So the amount of Bitcoin relative to US assets is about 0.015%. Or it’s like finding a $20 bill in an abandoned $130,000 house.
- Five years ago, roughly 6,600 transactions were made with bitcoin per day. Today, according (again) to Coindesk, that number is around 250,000.
- The number of Bitcoins that will be mined EVER is capped at 21,000,000.
Without getting into the particulars of mining, hashrate, and all that fun stuff, think of it this way: If 21,000,000 pieces of gold were all that were ever going to exist, do you think the value of those pieces would go up – perhaps exponentially – as more people used the gold…and realized how easy it was to use the gold…and found out that there was a finite number of gold pieces in existence?
This is why, when analysts throw out numbers like $500,000 per Bitcoin, those in the know don’t bat an eye. It won’t happen tomorrow. It may not even happen for several years. But…the chances of it happening are pretty darn good.
And this is why some folks just think they’ll HODL their Bitcoins. And who can blame them?
Idea 2: Trade your Bitcoin
This is where you get into the world of speculation. Bitcoin ushered in a host of other coins, tokens, digital currencies. Some of these are also going to change the world in their own little ways. And some of them aren’t worth the paper they’re printed on.
(That was a joke. They’re not printed on paper.)
But there are other coins you can trade your Bitcoin for. To do that, you’ll want to set up an account on one of the exchanges – we use Poloniex – and then you can have at it. Putting it very simply, you’ll take your Bitcoin and trade it for another cryptocurrency that is valued in Bitcoin – platforms like Poloniex have hundreds of trades; a small portion of them are in US dollars – “Tether,” or “USDT” –
And you should also be prepared for violent mood swings, for volatility, and to possibly lose your shirt.
Let’s be honest here: this is closer to gambling unless you know what you’re doing, you’ve studied the charts, and you’ve done some heavy analysis on the underlying fundamentals of the coins.
And even then, it’s likely close to gambling.
If you’re going to trade Bitcoin, we recommend – and again, we’re not investment advisers, past performance does not dictate future results, bet with your head (not over it) and don’t blame us if something goes wrong – the BRED portfolio.
Not too late to start
As of this writing, the Bitcoin price is hovering right around $1200 USDT. So, had you gotten started on January 1 (or so), your stake would be up right around 25%. Which isn’t too shabby, right?
But that growth doesn’t mean the gains are behind us. Prognosticators see nothing but blue skies ahead long-term for the currency. And even if the 21,000,000 Bitcoin only take up 1% of household assets in the USA in ten years, that amounts to market capitalization growth of 65 TIMES where we are now. Meaning a Bitcoin price of $78,000.