Should You Invest In Bitcoin [2019]

To start this post off, it is important to know that nothing in this post can or should be considered financial advice or consulting. Simply one person’s opinion on Bitcoin and the future of digital assets. With that being said, let’s dive into it.

Is Bitcoin a Good Investment

Most people these days have at least heard of, if not looked into, Bitcoin one way or another. Assuming most people at least know what it is, we are going to skip that part. If you do not know what Bitcoin is, then please check out this article.

Why is Bitcoin a good investment? For starters, it has a history of bull runs every 3 to 4 years. This means that every 3 to 4 years it has grown more than 10x its value. Currently, it is on the second year after the last bull run of 2017. We can assume with this information that this is likely to happen again before the market reaches trillion dollar levels and starts to cap off. This is not that large of a feat considering Amazon, one single company, has a market cap of a trillion dollars. The entire cryptocurrency market is still under $200 billion as of May 4, 2019. You can keep up with the growth here at coinmarketcap.

Where is the Market Headed

Saying the cryptocurrency market will grow into the trillions over the next 5 to 10 years is a relatively safe assumption. Here are some reasons why:

  • The Nasdaq, one of the largest markets in the world, has reportedly been gaining crypto and blockchain based start-ups to launch their own digital asset trading platform for multiple financial instruments.
  • The largest companies in the world like IBM, Facebook, Fidelity, Marsh, UPS, Fedex, DHL and a long list of others are all not only considering blockchain technology, but heavily starting to invest in research and development.
  • The top blockchain projects are constantly being developed on and for the future of IOT, the internet, quantum, scalability and data storage and protection.
  • The industry as a whole has seen exponential growth in recent years as developer jobs open up, ICOs are launched, hedge funds grow and investor knowledge increases. Every day, more data is obtained to better solidify the market as a whole in the traditional scene enabling new options, derivatives and potential

These are just a few of the highlights over the past year or so. Overall the industry is thriving and starting to impact multiple industries. Easily, the entire market cap of cryptocurrency as a whole could reach to several trillion if things continue to progress as they have been.

Back to Bitcoin

Using historical data as a metric for Bitcoin, we can project that Bitcoin will maintain between 25% – 50% of the entire market cap. up through the first $1 to $2 trillion levels. We saw in December 2017, Bitcoin spiked along with the rest of the market. At the peak of the bullrun in early January, altcoins surged pushing the entire market cap through the $800 billion levels. Even at this level, Bitcoin maintained a 30% – 35% market cap share.

Numbers Do Not Lie

Assuming we agree that the crypto market will reach trillion dollar levels with the next 5 to 10 years and nothing will oust Bitcoin as the grandfather of the new industry, then we have a nice conclusion. On the low end between 25% – 30% of market share, Bitcoin should still reach a marketcap value of over $550 billion dollars. The price of Bitcoin would easily reach levels of $30,000 a Bitcoin.

Market Cycles

There is another secret to the madness that must be considered. Traditionally, Bitcoin spikes before the altcoins do. For instance on December 17, 2017 right before the January pop, Bitcoin surged to a market cap of $330 billion whereas the entire crypto marketcap hovered around only $587 billion. This means Bitcoin held around 56% of the entire cryptocurrency market share.

Assuming this trend of Bitcoin spiking and then altcoins following continues, a $2 trillion dollar market cap could spell a different story. Essentially, Bitcoin could spike first maintaining around a 50% marketcap share and reaching a price of over $60,000 before the investors short sell into altcoins for the following market spike on the next bullrun. Essentially, if you invested into Bitcoin on this last market dip in December 2018, you could potentially be looking at nearly 20x gains over the next 5 years on Bitcoin alone if you sell at the potential top.

Merely Speculation

This is all entirely speculation, but we must remember Bitcoin is also the least volatile asset in the crypto market at this point besides stable coins. This is due to the increase of exposure and liquidity. Take for example Cardano that reached a market low this year of around $.03 cents a coin. If it were to maintain a top 10 spot in the crypto market on this next bull run and you bought in around the $.03 cent level lows, you could potentially be looking at 100x gains. This is of course assuming the project stays relevant in the coming years and maintains a top market position.

Concerns and Questions

There are obviously numerous concerns and questions about this line of thinking. For one, nobody knows or can predict the future. It is safe to say that governments will probably not attempt to “stop” the growth of the crypto market, but they may continue to slow it down as they have historically. Additionally, no one knows what technology, development or market phase will come next.

Currently, scalability and use-cases seem to reign supreme throughout the industry. Things like Proof of stake announcements (Cardano and Ethereum), anonymous transactions (Litecoin) and media hype still seem to manipulate investors or sway the market. Over time we should start to see new trends emerging like the initial exchange offerings (Atom on Binance) and Security token offerings take the spot lights.

What About.. you know…. Bitcoin

Bitcoin has the least possibility out of all of the cryptocurrencys in the market of going anywhere. For one it has the highest running uptime with the largest node network in the world. It has the widest adoption and exposure base and obviously has investors bias behind it to always keep it relevant. If you are risk-adverse and simply want to play in the crypto market, then Bitcoin is as safe of a bet that you can make as any. Open up a Coinbase account and start buying.

Bitcoin is a Good Investment

In conclusion, we can safely say that Bitcoin is a good investment. This is based off of historical trends, media exposure, underlying technology, investor sentiment and risk wise. It checks off all of the boxes that an investor should look for and then some if you are looking to enter the crypto market.

As always do you own research and learn about Bitcoin, Ethereum, ripple and some of the other top assets. Then make a choice for yourself which digital asset suits you, if any. At the end of the day if you can’t explain what Bitcoin is to your mom then you probably should not invest. Knowledge is power.

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Problem With Blockchain Regulation [Regulation 101]

The Blockchain industry is growing rapidly across the globe. Since 2008, there has been a surge in cryptocurrencies, developers, exchanges and crypto based communities. The world is slowly beginning to adopt the new age of digital assets.

Blockchain Regulation

One thing that seems to always lag behind is regulation. Stunted by some of the world super powers, regulation seems to be years behind the current market. Countries like the U.S., China, India and the EU in general are struggling to put forward relevant criteria on the regulatory Stand off. Most recently in 2019 a few things have happened that will hopefully start to change the scene:

  • The Security and Exchange Commission (SEC) released guidelines on how they will classify digital assets (Securities or not)
  • FedEx, UPS and DHL join forces with over 500 other companies to demand governments to adopt a standardized position on blockchain in supply chain management
  • The ETF’s were denied once again and will be up for vote to hopefully enable the first Bitcoin ETF in the summer
  • Wyoming announces bills to become the first state of the U.S. to properly classify digital assets and provide regulatory clarity
  • The U.S. announces their position on Tether and the Bitfinex scandal

What Needs to Happen Now

With all of the good news surmounting blockchain regulation, there is still a ways to go. A few things need to happen for the market to move forward. First, the SEC needs to start to properly classify the top 50 – 100 digital assets as securities or not. This will provide investor confidence and confidence in the market for larger institutions. Second, the SEC needs to approve the Bitcoin ETFs and futures platforms that are being put forth. Additionally, the Bakkt platform from ICE needs to be approved and pushed into the market to provide more liquidity and investment options.

Afterward, the market will organically start to weed out the bad actors from the good ones through exchange priority and market markers. We have already seen Binance, Kraken and other exchanges remove the infamous Bitcoin Satoshi’s Vision coin that Craig Wright (Fake Satoshi) leads. In our view, this is the best thing for the market. Bad actors need to removed from the crypto scene as fast as possible to not spoil the whole pot.

What Governments Need to Do

Following regulatory approval and classification of digital assets, it is the government’s turn to provide stability to the industry. There needs to be global standardization of General Data Protection Regulation (GDPR). If countries want users to have complete privacy and ownership of individual data, then corporations need to utilize projects like HyperLedger or construct private, premissioned blockchains to protect customers. If this is to become an industry standard, then projects like Ethereum will have to adapt or offer off-chain solutions to cater to these new rules.

Where Is the Market Headed Next

With the market recovering from the past bear trend, what’s next? We had the First generation of cryptos like Bitcoin and Mastercoin. Then we moved to the Second Gen with projects enabling dapps like Ethereum and NEO. The last bullrun concluded on the third generation of projects that offer scalability and enterprise ready applications like Cardano, XRP, Iota and EOS. This leaves us wondering, What is next? We think we have an idea, clustering. There will not per say be a “fourth generation”, but there will be a period of projects grouping together to form super chains. These super chains will be enables through interoperable coding that enables cross-chain transactions and data storage. This will be extremely useful as we approach ideas like smart cities and autonomous cars. We would venture that before long, larger projects will start to form alliances and try to leverage connections and partnerships to seek new exciting endeavors.

Crypto to Crypto

This is entirely speculation, but it would make sense. We have seen the first ever merger as well with 2 crypto projects just this month in April. The projects DOMO and HEPTA have decided to Merge. This means that Projects like DOMO are reaching out to dying or stagnant projects like HEPTA and offering a deal. DOMO provides HEPTA holders with an exchange rate and trades DOMO tokens for the HEPTA ones. In the process, DOMO gains most of the HEPTA community, developers and following. This is a win win for dying projects and bag holders of tokens that are stuck. Maybe they can not get on a good exchange, maybe there is not enough liquidity or something similar. Either way, with the prolonged bear market more and more projects will start to seize this opportunity.

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First Experience With Cryptocurrency [What Is Bitcoin]

When I was 20 years old, I did not have any interest in markets, stocks, bonds or really any financial instruments. I did not have a lot of money to play with either, so why would I? Although, one thing I have always been interested in was making money through alternative means or passive income. So here is my story on, my first experience with cryptocurrency.

Why Bitcoin?

Around 20, I heard about a digital currency that had crashed after multiplying up to $1,000 from mere cents. What was this strange digital asset that people were freaking out about I thought? After some researching and a few long nights of Youtube videos, I had discovered Bitcoin for the first time in March 2014 and it hooked me.

Even after youtube videos, studying and talking to a few friends, I still had no idea what Bitcoin really was.

I kept thinking to myself, “What is Bitcoin?”

Why are people freaking out about it? Why are people investing in a fake currency that will probably disappear after a few years anyways?

To answer these questions, I learned more. The next year and a half consisted of studying and recording the market prices of this allusive asset.

I used a journal every morning to record a few things:

  • The time I woke up (Usually around 7am)
  • What I ate for breakfast (2 eggs + protein shake)
  • If I made my bed (First part of a successful day is making your bed)
  • If I worked out (Got to stay in shape to stay healthy)
  • And of course the price of Bitcoin. (Between $500 and $800 during this time period)

I like to keep a record of my days and hold myself accountable. Discipline works best for me, so I made a point to invest a part of everyday. This was the only was I would start to understand this new asset class. That’s what I did for the next couple of years.

Eventually, I finally started to realize what Bitcoin really was. What is Bitcoin?

It is not just a digital currency like I thought, it was so much more. It had an underlying code base called the blockchain. This Blockchain structure was used to store data including the transactions and authenticate itself through a process called consensus. Consensus was achieved through a system called Proof of Work (POW). Proof of work simply means that people around the world run their computers on the bitcoin protocol (software or network) and are randomly chosen to confirm transactions through algorithms. These algorithms get harder and harder as the network grows (more computers join) and as time progresses, the amount of Bitcoin awarded for complementing these algorithms decreases. These decreases happen over 4 year intervals until 2140 and all 21 million Bitcoins are released. What happens after that? Well.. we are unsure but the good news is that is a ways away.

Why Is Bitcoin Important?

Before I could convince myself to invest, I had to answer all of my questions that were burning in my head. The next question I solved was, why is this important?

Bitcoin became important because it was the only decentralized currency on the market back in 2008 and for the next couple of years following. Bitcoin promotes anonymity to the users and a veritably provable ledger that can not be tampered with or altered due to the blockchain. This solved a well known “double spend” problem where people sent money to one place, and before the ledger is updated, they spent the same money else where. With Bitcoin, that is impossible. Also, no country or independent source controls Bitcoin or can control it.

This gives it immense intrinsic valuable as almost a hedge against the world market as a commodity. Additionally, it is very liquid-able as grows and gains adoption. Slowly as Bitcoin is adopted, the decoupling from the world will grow less and less until it is the very pinnacle of how the world predicts and assesses the digital market place.

Time to Invest In Bitcoin

Once I realized the potential of this asset and started to research others, I knew I had to have some. A simple college student with knowledge of supply and demand could reason that as it gains adoptions, less and less Bitcoin will be produced. Gather that information with the knowledge that Satoshi, the original creator has 1 million locked up and people are constantly losing Bitcoin or getting is hacked and frozen, that does not leave a large supply long-term for the late comers. I gathered some money and decided to sign up for Gemini and Coinbase. Two of the exchanges I had heard about from friends. Free to sign up and yet to have a hack? Sign me up.

Little did I know that 2 years into my crypto journey, I would stop short of investing. Both Coinbase and Gemini were relatively new and had horrible procedures for new members. In order to establish my new account I had to:

  • Sign up my email and phone number
  • Authenticate both sources
  • Prove my identity with a video call and state my name and purpose for the account
  • Link my bank information and enable deposits and withdraws (this was terrifying)
  • Complete a KYC with my drivers license and my personal information
  • Communicate and figure out the process with a service representative

On top of this process, it took over 4 weeks for any response or information about my new account or when I could start to purchase Bitcoin. After waiting 4 weeks, I had decided maybe I was just being silly.

Get an account early was hard

It took over 4 weeks to even get a decent response or update on my account. It took 8 weeks in total for my account to be able to purchase Bitcoin. By that time, I was sure I had been scammed out of my information or simply this was all a joke. Maybe, I am not supposed to invest I thought? Maybe this was a sign. I spoke with my grandfather who was a stockbroker and financial planner for years. He convinced me that it was not worth the risk.

“There’s no way to tell if it will go up or down.” He said. “Either way, always expect the market to take up to 3 years to recover. It can always take more, but it will usually be less.”

He was a wise man and passed away from lung cancer before he could see Bitcoin reach its full potential. He always encouraged me on my dreams and passions.

It was Time to Invest

Additionally for the next couple of years, I kept up with the market. I would track the price of Bitcoin in my journal daily, attend meetups in my local community once a month and I even tried to launch a startup in the space in early 2018. Most importantly, I decided to invest into the ever exciting world of cryptocurrency in 2017. I did not time it perfectly, but I was close enough. Today my assets are not worth what they were in that time. Although, not many are.

Finally after all of that waiting, all of that preparation, and all of that patience, I was investing into the market I had grown to know so well. Some of the things I purchased, I still have today:

  • Bitcoin (grandfather Bitcoin)
  • Ethereum (I heard there was free kittens)
  • XRP (My first accurate prediction of this market for an asset)
  • Cardano (In Charles we trust)
  • IOTA (I got tangled up in it)
  • NANO (Formally Raiblocks)
  • QTUM (Because.. space duh)
  • Bluzelle (Data storage token with a bright group)
  • Sharder (Another data storage token out of China that is alittle less known.)

What I Have Learned

Today the market is recovering from a prolonged bear market. Instead of shorting, I took the strategy to dollar cost average in (DCA) and ride out the wave. My portfolio is quite nice and if the market returns to highs, then I should be able to comfortably purchase a house with my investments. There is no rush, I understand good things take time, and I am willing to wait.

From being in the market this long, I have learned that you are almost never right. The market is a wild beast dictated by whales, media and of course fud. Regardless, the market is at a steady increasing trend since 2008. It is clear that the path is up, there may just been some hills and valleys along the way. From listening to people argue about BCH vs BTC vs BCHSV to ETH getting hacked for the 12th time, there is always something to laugh at and enjoy. I have learned not to take life too seriously or the market for that matter. You win some and you lose some.

Finally just remember, we are all going to the same place. To the moon.

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