This type of cryptocurrency is on the rise. In this model, a cryptocurrency represents the value of an underlying asset such as gold, art, fiat currencies, etc. It represents a new, more accessible way to invest in assets other than cryptocurrencies, through cryptocurrencies. Stable coins provide an excellent way to take shelter from a corrective storm. I’m only interested in projects leveraging blockchain technology to create completely new business models and disrupting existing ones, but these cryptos are very interesting nonetheless.
There is also the Bitcoin Investment Trust from Grayscale Investments. We’re mentioning it for the sake of comprehensiveness, but it’s a bit of a different animal. The fund is invested in bitcoin, but keep in mind, you’re actually buying the fund, not bitcoin. You’re a step removed from owning actual bitcoin, even though you are still exposed to its volatility. The pluses, Grayscale says on its site, are that you get the structure and tax benefits you wouldn’t get trading bitcoin directly; on the other hand, fees will eat up a chunk of anything you earn, negating the reason many people are drawn to cryptocurrencies in the first place. All of which is to say, you should really, really know what you’re doing as an investor if you’re going to dive into this pool.
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If you’re aware of the risks and still willing to take the plunge, this is what you need to know about investing in bitcoin: Cryptocurrencies exist in an unregulated, decentralized digital sphere without involvement by (or protection via) a central bank. This is part of bitcoin’s appeal. People or entities can buy and sell cryptocurrency anonymously, and there are fewer middlemen taking a cut of transactions. But it also means you can’t just buy bitcoin via mainstream investing tools like a brokerage account.
This is especially true given the number of new cryptocurrencies that have entered the market. There is no industry that is targeted by only one cryptocurrency, and even if you manage to find such an industry, new players will likely surface. IOTA was the crypto that didn’t use blockchain; now there’s Nano, Circle, and Hashgraph. Ripple was the crypto for banks; now there’s Stellar slowly eating away at Ripple’s first mover advantage.
Investments, under this distinction, would be clarified as things that could generally be safely assured not to suffer from dramatic, catastrophic losses in the absence of dramatic, catastrophic situations. Coca-Cola and Walmart might be considered investments. They’ve been around for well over a century and a half century respectively, are massive, mature companies with a healthy track record of stable, non-volatile growth, and show no general signs of turmoil that might portend a sudden collapse in value.
At Total Crypto, we think that investing 20% of our Total Net Wealth in cryptocurrencies is actually a high allocation. No matter how high our conviction was in a cryptocurrency, we would never finance a purchase with debt. Again, this can lead to very stressful and financially damaging situations. When looking at things through the lens of Total Net Wealth, we think it’s easier to determine what we can actually afford to lose in cryptocurrency investing.
Any cryptocurrency other than bitcoin is referred to as an altcoin. Remember, you should treat cryptocurrencies as if you were a VC looking to invest in a startup. You’d invest in the startup that would have the greatest chance of succeeding because it provides a unique benefit to the world that will continue to be useful in the long run. The main wallet i’m using to invest in altcoins is CoinSpot because it gives me the option of purchasing a plethora of cryptocurrencies from just one account.
Great to get an update on this new asset class. I think any of us who ignore or dismiss cryptos are potentially missing a huge opportunity. As Dan says the risk reward is assymetric so why would anybody with a pragmatic attitude to investment not have at least a minimal exposure? Unfortunately too many people are happy to buy the negative propoganda of yesterday's winners like Jamie Dimon and Charlie Munger for whom the answer to the question of will bitcoin go to zero or a million will never matter! For most of the rest of us, we want to listen to the pros and cons of the narrative. Thanks RVTV for giving this important new asset class airtime. I would welcome more informative videos like this on cryptos.
Before going all in on ICOs, investors must understand that investing in Cryptocurrencies is an extremely high-risk endeavour. ICOs have a particularly higher risk profile as most of them are only at the conceptualization stage; they often do not have a working protocol/product and hence, there’s minimal indication that it is going to be a success or even viable in the long-term. Therefore, it is vital that thorough due diligence is undertaken.
It is when the next financial crisis happens and people are locked out of their bank accounts that they will see the power of crypto and bitcoin (think Greece and Cyprus). Outside of precious metals there is no other escape from the corrupt debt based fractional reserve monetary system the world is trapped in -- Also, there are like 3 billion people in the world that are unbanked -- that alone should get someone to take 1 percent of their net worth into crypto -- the risk reward is insane. As far as the criminal activity in bitcoin LOL!!! OMG banks have committed more fraud and crimes and nothing happens to them. Under federal and state laws known as civil forfeiture, police can seize cash or property if they suspect it's tied to an illegal activity even if the property owner isn't charged with a crime -- Supreme Court has upheld this. I am sorry I do not trust governments (who in their right mind would) and am glad there is a place I can hold some of my wealth outside of their reach.
The same growth trajectory is how I see bitcoin, cryptocurrency, and blockchain technology at large playing out. If all goes well — and there’s no guarantee it might, everything indeed might fail and all our hopes and dreams might gang aft agley — there’s no reason at all that bitcoin can’t one day surpass even our wildest imaginations today, just like the internet did before it, and fundamentally rewrite the script for how we interact with money and the world as a whole.
The above summary is not a complete list of the risks and other important factors relevant to an investment in any Vehicle, and is subject to the more complete disclosures contained its private placement memorandum and other Offering Documents, copies of which may be obtained from Grayscale. For the Bitcoin Investment Trust, additional information is available in its annual and quarterly reports on the OTC Markets website, www.otcmarkets.com. Such reports are not prepared in accordance with SEC requirements and may not contain all information that is useful for an informed investment decision. Past performance is not indicative of future results.
Right now, I can use my bitcoin holdings to pay for purchases at Overstock (OSTBP), or book a hotel on Expedia (EXPE). But if I use bitcoin to buy $25 worth of socks on Overstock today, and the price of bitcoin quadruples next week, I'll feel like those socks actually cost me $100. Then again, if bitcoin crashes, at least I'll always have the socks.
Less immediately obvious examples include things like Litecoin. Litecoin, too, offers fundamentally no truly great innovations over bitcoin — in short, nothing that bitcoin itself couldn’t adopt over time. It uses a different hashing algorithm and just adopted Segregated Witness, the same update that bitcoin is debating adopting that would allow the implementation of layer two protocols such as the lightning network, but beyond this, doesn’t have much in the way of unique differentiation going for it. This said, Charlie Lee, the creator of Litecoin and previously the Director of Engineering at Coinbase, one of the most well respected and successful bitcoin exchanges, just announced his departure from Coinbase to focus solely on improving Litecoin. It remains to be seen what will come from this endeavor, as Charlie certainly is without question one of the most accomplished and formidable players in the cryptocurrency sphere, but largely litecoin appears to be a small hedge in the slight off chance that bitcoin doesn’t actually manage to resolve its scaling issues, and begins to catastrophically lose market adoption and faith and crumble into the ground. In a case like that, the notion is that litecoin would be able to quickly take over the ground lost by bitcoin, and become the dominant cryptocurrency.
First, there's a clear lack of differentiation. There are, as noted, over 1,600 investable cryptocurrencies for folks to choose from. That's simply too many. You could probably get rid of 1,500 of them, and virtual currency investors would still struggle to keep track of the partnerships, projects, and missions of each of the remaining digital currencies. It's just impossible to weed out which virtual currencies have staying potential and which don't.
Bitcoin and other cryptocurrencies are continuing to rise in popularity, drawing both first-time and experienced investors. While the process to buy and sell Bitcoin has been simplified over the past few years, many people still find it confusing. With banks, credit card issuers, and governments worldwide getting involved with rules and regulations on how the currency can be bought and used, it’s no wonder some people are wary to invest in cryptocurrencies.
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