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Downside risk

While investing, one thing to try to protect yourself from is downside risk.  What happens if your investment looses value?

One thing that I have tried to do is invest in projects that return fiat/cash monthly and buy bitcoin to pay me back.  That way, if the market price of bitcoin drops, these investment would buy more bitcoin at the cheaper price to add to my collection.

Another point is that selling bitcoin for fiat/cash is not it’s only use or way to get out of bitcoin.  There a companies that accept it for payment.  I like to use Purse.io and have people buy Amazon wish-list items for my bitcoin at a discount!

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What gives bitcoin value?

The value of bitcoin is a difficult question because so many miss it the first few times they hear about bitcoin.

  • One value is a set supply.   This helps to build confidence that this token will be scarce in the future. There will only be 21 Million bitcoins according to the software today.  We are not quite sure how many dollars the federal reserve has created since it was found out that they created secret loans to corporations during the 2007 financial crisis.
  • Another value is uncensored transactions.  Today it seems that more and more people are not allowed to make transactions with others according to the powers that be. You might even say that we may be creating the enemies of the future by denying them the ability to transact in the present.
  • Bitcoin grows in price and value as more people are able to transact inside the network and less people need or want to convert the bitcoin into fiat/cash.  Though, there are people who buy bitcoin to look to “cash out” later with great fortunes.  Others say bitcoin will crash to zero as there are not enough dollars to hold the price up to the market price as everyone trades back into fiat/cash.
  • We are the value.  As we continue to transact inside the network, the network gains value.  Imagine a small community who trade gifts as they help each other create things of continued use for the group.  If their basic financial needs were able to be met, you could start to see the wealth of the community grow.

These are the things that I have learned in my time with bitcoin.  I hope they help you to think of bitcoin a little differently.

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What is an ICO?

ICO stands for Initial Coin Offering.  it is a slight change from IPO Initial Public Offering on the stock markets.  At first there were only clones of bitcoin being released, but now it has progressed to tokens on the Etherium network.  The term is now used for both alt-coins and tokens.  These events are getting a lot of attention because Millions of dollars are being raised for these groups, so with only a white paper and no proof of concept.

Here’s a great interview from MadBitcoins on the current ICO market.

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Where does the bitcoin price come from?

There are several exchanges on the Internet that host trading of bitcoin 24 hours a day, 7 days a week.  With all of the buying and selling on the order book, just like in the stock market, a price is discovered.  Right now, in 2017, the prices on the exchanges do not match up together as much as they used to.  In fact coinbase, one of the easiest exchanges to buy from in the US, has one of the highest prices.

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Getting started in Bitcoin is free!

Some people probably don’t know that to get started in bitcoin all you need is wallet software.   Get a wallet for your smart phone from mycelium, airbitz, or breadwallet.  Once you have that, you can get a public address.  With that address you can get some bitcoin from a website called a bitcoin Faucet.

Try this one out!