Is Every Damn Blog Obsessed with Bitcoin?

by JDH on December 2, 2017

Yes.  Everyone is obsessed with Bitcoin.  When something goes up 10% in a few hours, we take notice.

What should you do about Bitcoin?

Here’s my advice:

First, and most importantly, learn about it.  Do not put any money into it until you understand what it is, and how it works.  Pretend you are enrolled in a university level course in crypto-currencies; set aside 100 hours, and do your research.

Start with this bitcoin resources page (which I am not associated with in any way).  It will take you more than 100 hours to go through it, but it’s a good starting point.

Next, go buy a friend of yours a coffee, and over coffee, explain to them what “blockchain” is.  To do this, of course, you will first have to understand it yourself, and then put it into words that anyone can understand.

Next, explain to your friend the difference between “blockchain” and “bitcoin” because they are not the same thing.  Shakespeare and books are also not the same thing, so you need to fully understand how one relates to the other.

Once you have a passing understanding, in your mind, design a real-life application for blockchain technology.  I don’t actually mean write the code; I mean find areas where block chain technology could assist in real life.  How could a blockchain be used in your industry?  What industries are using it now?

Investment implications of blockchain

Remember the dot com boom?  That’s where we are now.  There will be a very limited number of companies that will use blockchain technology to make a billion dollars.  There will be a large number of companies that will raise millions of dollars from unsuspecting investors, and go bust.

I’m not saying don’t speculate in companies with the word “Blockchain” in their name.  Amazon started in the dot com bubble, and it’s doing fine.  I’m simply saying that most of them will go bust, so:

  1. Do your research.  If it is a real concept, with real management, it might work.
  2. Ride the wave.  It doesn’t matter if that company is successful 10 years from now.  Buy it now, and take profits quickly during the mania stage.

What about Bitcoin?

Bitcoin is not the only cryto-currency.  It was the first, and it has the highest market cap, but it’s not the only one. Make a list of the top ten, and follow them, and become familiar with the smaller ones as well, since that’s where the huge profits will be.

Be prepared for risk.  Bitcoin was $8,600, then $11,000, then $9,500, and that was all within a 24 hour period this week.  That’s volatility.

If you really want to roll the dice, fine, but I would not have any more than 10% of my portfolio in cryptos, and I would buy during down periods, and sell during up periods, not the other way around.  Don’t get sucked into the hype.

Personally, I do not own any bitcoin.  I have a very small “investment” in Ethereum, but if it goes to zero tomorrow I won’t notice it; that’s how small my investment is today.

Final point: be sure you understand security.

You can buy cryptos on an exchange, like Coinbase or Quadriga.  I am not associated with any exchange, and I receive  no affiliate commissions.  An exchange is like a bank, in that they will hold your cyrptos for you, but banks can be hacked, and can go bust, so it is not safe to hold your cryptos there.

You need a wallet.  You can store them on your computer, but if your computer is hacked, or burns down when your house burns down, you’ve got a problem, unless you understand how to resurrect it.

I good alternative is a wallet, like the ones made by Ledger.  (I am not associated with any wallet company, and I receive no affiliate commissions).  You need to set it up, figure out where to store your “seed” so you can recover data if it is lost, and take other security measures.  It is more complicated than buying a stock.

The complexity is good, because 95% of the population has no idea how to do it.  When they figure it out, prices will go ballistic, so being “early” is good (early was three years ago, but we are still in early days).  With the dawn of CME futures trading and various ETFs and other funds the public will be able to participate, so this is a market you should not ignore.

 

Just be careful, and don’t get sucked into the hype.

 

Normal programming will resume next week, probably, unless Bitcoin is at $20,000, in which case I will have more thoughts.  Thanks for reading.  See you next week.