In this article I’ll talk about why you should get started investing in bitcoin.
I started investing in bitcoin in early August 2017 when the price of a bitcoin was around $4,000.
I ended up buying about one and a half bitcoins for $6,500 which are now worth $19,000. Apart from investing in my business, this is hands down the best investment I ever made.
I wish I could rewind time and get started investing in bitcoin earlier. Without question, bitcoin could be the fastest and the biggest transfer of wealth we’re ever going to see in our whole lifetime. There is no other investment that’s creating multi-millionaires out of thin air.
But I don’t have to tell you that.
You’ve seen the hype.
This is part one of a series of articles about how to get started investing in bitcoin. In this article I’ll debunk some of the most common bitcoin myths and explain what bitcoin actually is.
So let me start by addressing some common questions.
Is It Too Late To Invest In Bitcoin?
Definitively not.
Some experts expect the price of a single bitcoin to hit $500,000 and even $1,000,000 within the next five years. The current price of a bitcoin is slightly over $12,000 and it looks like it will keep climbing. Security expert John McAfee even has a bet going on to prove his point:
“I’ll eat my dick on national TV if bitcoin doesn’t surpass $500,000 in three years”
After bitcoin passed $10,000 before the end of 2017 he increased the amount to $1,000,000 and said he will still eat his dick if bitcoin doesn’t surpass one million by 2020.
But McAfee is not the only one predicting bitcoin will reach $500,000-$5,000,000.
The bottom line is:
It’s not too late to get started investing in bitcoin.
Back in August when I started investing in bitcoin, I encouraged some of my friends to do the same. They never invested because they thought it was too late. Half a year later the price of a bitcoin tripled, and again, they don’t invest because they believe it’s too late. Back when bitcoin was worth a few dollars, people thought it was too late. Don’t fall into the “it’s too late” trap. People have been saying it’s too late to get into bitcoin for years and they’ve always been wrong.
How to get started investing in bitcoin?
Here’s the first tip for you.
Don’t wait any longer if you’re thinking of investing in bitcoin. Stop procrastinating and start investing right now. It’s not too late to get started and you’ll see why in just a minute.
Is Bitcoin a Bubble?
Maybe.
But people have been saying it’s a bubble since 2008.
If you had bought 500 bitcoins back then (for a few cents per bitcoin), you would now be a multi-millionaire. All you’d have to do is sell half of your bitcoins and you’d have $3,000,000 dollars.
Would you care if it’s a bubble?
Even if it is a bubble, millions are being made and you could profit from it, too.
If bitcoin is a bubble or not has a lot to do with its adoption as a currency in the next few years. I am a firm believer that cryptocurrencies are the future. We just don’t know yet which currency it’s going to be. But there are a few reasons to believe it’ll be bitcoin.
Bitcoin has the first mover advantage.
It’s the first cryptocurrency that was ever created and thus it’s like the mother of all other cryptocurrencies, which will always make it valuable in one way or another.
Everybody has heard of bitcoin.
So if cryptocurrencies are the future, which I believe they are, it’s likely that bitcoin will be the first choice. People already know it, there are bitcoin payment gateways for online retailers and a growing number of online and offline shops are now accepting bitcoins. If any cryptocurrency reaches mainstream adoption, it’ll most likely be bitcoin, since it’s already known.
Bitcoin has the best name.
I don’t believe “Ether”, “Litecoin” or “Ripple” (all popular altcoins = alterations of bitcoin with improved or distinctive features) will be used as our main cryptocurrency. BItcoin has a certain sound to it, it flows, it sounds right, and this is important for mainstream adoption.
So why does the bitcoin price keep rising?
The price of bitcoin keeps rising with its adoption. So the more people use bitcoin, the higher the price will rise. The price of a bitcoin will reach a ceiling once bitcoin gets adopted widely.
This is due to supply and demand.
There is a limited supply of bitcoin. Unlike traditional currency, you can’t just print more of it and cause the currency to lose its value. There will never be more than 21 million bitcoins in circulation. This limited supply along with increasing demand causes bitcoin’s price hike. That’s another reason why it’s probably not a bubble. Bitcoin’s price just follows the rules of supply and demand like everything else. That’s where the $1,000,000 predictions come from.
The only way bitcoin prices could drop is if the demand suddenly drops.
This could be the case if a better cryptocurrency comes a long. However, because of bitcoin’s first mover advantage, name and adoption, I don’t believe this will happen.
If tons of people suddenly stop using bitcoin, sell all their bitcoins, or move on to another currency, the price of bitcoin will drop. In this case, one could argue that the “bubble burst”.
As long as people use bitcoin, either because it becomes adopted as a cryptocurrency, or because it’s the “mother” of all cryptocurrencies, the value of bitcoin will stay high or even rise.
Don’t let the fear of bitcoin being a bubble hold you back.
Get started investing in bitcoin.
Why Is Bitcoin So Volatile?
Right now bitcoin is volatile.
That’s mainly because it hasn’t been adopted by the mainstream yet.
As bitcoin gets adopted more widely the price of bitcoin will stabilize. Think of it like this: A tiny boat in the ocean will rock. A large cruise ship will barely rock because it’s so damn big.
Bitcoin is the equivalent of a tiny boat.
If a celebrity tweets that bitcoin is a bubble, the price of bitcoin noticeably drops. If another celebrity says that bitcoin is awesome, people buy more of it, and the price increases. This type of volatility will go away once bitcoin gets widely adopted by the mainstream.
In order for bitcoin to be an effective store of value, its price needs to be relatively stable.
What if the price increases even after bitcoin gets widely adopted?
That wouldn’t seem like such a bad thing actually.
The crazy price hikes that we’re currently seeing will eventually reach a ceiling. Once bitcoin is mainstream, its value won’t keep rising so much. The volatility will subside, the price will stabilize and any increase or decrease in value will happen in small increments.
Right now, most governments aim for a 2% inflation rate. That means, every year your dollars lose two percent of their value. In ten or twenty years your savings will only be worth a third or half of what they’re worth today. Inflation and hyperinflation are caused by printing money.
I’d rather have a relatively stable cryptocurrency like Bitcoin that increases slightly every year.
Another worry people have when they get started investing in bitcoin is that it’s a scam currency that is only being used by criminals to launder money, sell drugs and evade taxes.
Will Bitcoin Only Be Used for Criminal Activities Such as Laundering Money, Selling Drugs or Evading Taxes?
That’s a common myth.
Although bitcoin can be used for all these things, this argument is stupid.
In fact, most people believe that bitcoin is anonymous. But that’s not the case. Bitcoin is actually very traceable because every transaction is visible on the open ledger. Your identity isn’t visible, but every transaction is. If someone really wanted to, they could trace you down. It’s not that easy. But bitcoin is a lot less anonymous than what we’ve been using for decades: Cash.
Most criminals don’t use bitcoin.
They use cash.
That’s because cash is almost completely anonymous.
As long as you leave no paper trace, cash is much more anonymous than bitcoin and most other cryptocurrencies. That’s why criminals mostly use cash for criminal activities, to launder money or to evade taxes. Although doing these things is possible with bitcoin to some extent, dismissing bitcoin as a currency for this reason is a nonsensical argument.
If that were the case, we’d have to make cash illegal.
We’d have to ban dollar bills and coins.
The truth is, money is being used right now for criminal activities of all sorts and that will always be the case. And it will be used for that in the future, no matter what currency is adopted.
If anything, bitcoin and most other cryptocurrencies create more transparency.
Bitcoin Has No Intrinsic Value?
That’s absolutely correct.
Neither do dollars, numbers in your bank account or precious metals.
Money and currency are cultural concepts and social systems to manage debt. At its core, money is an accounting system. And cryptocurrencies do a better job at that.
But doesn’t gold have intrinsic value?
Nope.
Gold has little practical value. Although it can be used for tooth fillings, jewellery and some other things, that’s not its main use. Also, the value of gold is not determined by scarcity. There are other things that are a lot more scarce that have little value in our eyes.
And that’s really the cue word.
Something has value only in the eyes of the beholder.
It’s not the practicality, features or scarcity that make gold valuable. It’s us as a culture that give gold its value. We’ve accepted it as an effective accounting system to track and repay debt. It’s ingrained in our culture and in our history. But gold, as an actual metal, has no intrinsic value. Just like bitcoin, or paper money, gold and other precious metals have no intrinsic value.
These things only have value because we collectively agree that they do.
Money is an accounting system.
And cryptocurrency is a more transparent, secure and trustworthy accounting system.
Here’s why cryptocurrencies are better than other currencies:
- Payments clear faster, almost instantly
- Extremely low transaction fees
- Removes the need to carry a wallet with coins and bills
- You control your money, making traditional banks obsolete
- Billions of unbanked people can access the global economy
- Remittances become cheap and more effective
- Transparent and yet protects your identity
- Solves the problem of counterfeit money
- Trust is built into the currency and mathematically guaranteed
Why would you pay with credit card or PayPal, or dollar bills, if there were a more effective form of money? You wouldn’t unless you’re stupid or like to lose money. You send emails every day because it’s more effective than bringing a stack of letters to the mail office. And you use the Internet for research because it’s easier than going to the local library every single time.
Nobody would think twice about these benefits over the old way of doing things.
And with cryptocurrencies it will be the same.
We are at the very early stages right now. In fact, we are reliving what the 1990s were for the Internet. Back then nobody believed the Internet would become mainstream. It was new, not user-friendly and very technical. C’mon, you had to hook up your phone to your computer.
These days the whole world uses email and the Internet without second thought. I believe that’s what’s going to happen with cryptocurrencies. We’re in the 1990s. A revolution is ahead of us.
That’s why I believe you should get started investing in bitcoin.
The opportunity to become wealthy is huge.
In the next article in our how to get started investing in bitcoin series, I’ll talk about what bitcoin and blockchain technology actually is. Initially, I wanted to include this in part one, but it’s enough to fill an entire article. So instead of cramming it all into one article, I decided to split it up. This way I can talk in more detail about each aspect of bitcoin and cryptocurrency.
If you want to get started investing in bitcoin right away, go to Bitstamp or any other bitcoin exchange and buy some. It’s not that hard and you don’t need to get your own bitcoin wallet.
Every exchange provides its own online wallet.
With Bitstamp you can also buy bitcoins with credit card.
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