Updated: Jan 8, 2019
In addition to helping my readers make money by selling put options in our Smart Option Seller newsletter, we also discuss alternative investing ideas.
If you're involved with the markets, then there's no way you haven't heard of Bitcoin by now. There's no escaping it.
I'm still new to the cryptocurrency craze myself, but I've been doing as much reading as I can and have even accumulated a small stake. I've never seen anything like it in my twenty six years of being in the markets.
Here's what I wrote in my most recent newsletter Q&A alert to my subscribers:
Q: Lee, what are your thoughts with regard to BITCOIN and Cryptocurrency?
A: No doubt, cryptocurrencies are getting LOTS of press these days. And I mean lots!
Why shouldn't they? The value of Bitcoin has skyrocketed some 735% in the last year.
The current value of bitcoin is roughly $5,730 per coin. Last October it was $686 per coin.
When an investment starts moving like that, it starts to get everyone's attention. And then it just spreads like wildfire.
For those of you who are not familiar with bitcoin and cryptocurrencies, these are "digital coins" that are quickly becoming what some believe to be a new form of money and a new form of asset.
There will never be actual physical coins for you to have and hold. These are true digital products and will only live online. The good thing is that you can always convert them into dollars if needed.
As far as it becoming another form of currency - yes it is happening. There are retailers that now accept payment in bitcoin.
I don't necessarily believe bitcoin will replace the U.S. dollar, or any other country's currency for that matter. I believe it will exist side by side with other forms of fiat money.
In addition, bitcoin is also seen as being a store of value that you traditionally get with other assets like gold, silver, stamps, comic books, art, old record LPs, etc.
As long as enough people believe that bitcoin has value, it will have value.
Who made us all believe that stamps and comic books have value? I don't really know. But I do know that they have value because everyone believes they have value. Why not bitcoin?
I've read enough I need to know that there are lots of smart and wealthy people getting behind cryptocurrencies, that it won't be stopped.
The wild card is whether the governments around the world will do all they can to shut it down. I'm not sure they can. They may be able to slow it, but they will have to get onboard with it.
Yes, there have been influential people who have spoken out against it - JP Morgan's CEO Jamie Dimon has, as well as Warren Buffett.
China has effectively shut down bitcoin trading by certain exchanges in that country. But guess what happened? The price has kept going up.
Is it in a bubble? Who knows. But I don't think it is. You could've said it was in a bubble when it hit $1,000 per coin, and then at $2,000 and then at $3,000. It just hit $6,000 per coin the other day. What's stopping it from going to $50,000? I believe it has a shot.
All I know is, is that I'm onboard because I honestly believe it has true value to it.
The underlying principles of cryptocurrencies, and what makes it so appealing, is the "blockchain" technology behind these coins.
Blockchain is what has everyone so gung-ho about cryptocurrencies.
Blockchain allows you to make transactions anonymously and without using a middleman. It completely cuts out the banks and government and nobody knows who's on either end of the trade.
It sounds weird I know, but there are hundreds of thousands of computer users around the world that verify each transaction and that transaction becomes a block within the chain of every other transaction, hence, blockchain.
These computer users verify these transactions because they will earn and be paid in bitcoin themselves, so as long as the value keeps going up, it's in their best interests to keep doing it.
This is also what helps it stay clear of fraud and thieves. With all of these hundreds of thousands of computers all verifying each transaction, it makes it practically impossible for theft.
They also run their computers to "mine" for bitcoin as there is a finite amount in existence - 21 million bitcoins will ever be created. This will induce scarcity, and when you have a finite amount of a product, the value can only keep going up if everyone wants some. Unlike the U.S. dollar, which the government can print at will. That is why the value of the dollar is going down. It takes more dollars to buy certain things as compared to the past. This is something that bitcoin can help solve. For the record, I am invested in bitcoin and a few other currencies at the moment, but I am certainly not an expert on the subject. I've just begun learning about it myself and have voraciously been reading about it online. I'm trying to give you the best information I can here, but please do your own research if you want to learn more.
I think it's worthy of a small, speculative investment (not an official recommendation!) if it fits in with your risk-management plan and portfolio make-up.
In order to buy or sell bitcoin, you will need to open up an account on a coin trading exchange that specializes in cryptocurrecies. You cannot trade these things in a regular brokerage account.
One of the most popular and safest exchanges in the U.S. is Coinbase.
If you want to open an account, use this link to get started. If you do, we both will receive $10 worth of free bitcoin after you've bought your first $100 worth. You'll see my name come up on that link as the referral (it will show as Aron Lowell. Lee is my middle name).
Now, with bitcoin trading at $5,730 per coin, you don't have to buy a full coin. I wouldn't want to plunk that much down just for one coin.
The good news is that you can buy fractional amounts of bitcoin for any dollar amount you want to spend.
If you open an account, my advice is to play small, use a very long password, and sign up for the two-factor authentication. This is just an extra layer of protection when signing into your account.
You can read my previous blog post about the subject. Remember, check periodically on the blog to see my thoughts on all things investing. Sign up and become a member. It's free. This way, you can make comments and we can all discuss.
That was the update to my readers just this past Friday October 27, 2017. Bitcoin has since gone up another $700 per coin. Unbelievable.
If you are involved with Bitcoin, congratulations! If not, please do your own due diligence and don't confuse this post as an outright recommendation.
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