Is bitcoin here to stay?
Disclaimer: in this article, I will explain why I believe it is safer to trade bitcoin and other cryptocurrencies on eToro. If you are interested in this approach, please feel free to open an eToro account using the following link: https://goo.gl/ti4F6R
Unless you've been leaving under a rock for the last 6 months, you must have heard of bitcoins and cryptocurrencies. A quick query on Google Trends shows how the general interest in Bitcoin (Btc) has skyrocketed in the last three months (since October 2017).
Many say that 2018 is going to be the year of bitcoin. As a matter of fact, I went to my bank today to bring 700 grams worth of coins which I stored in a box. I was fairly disappointed when the coin machine displayed that the content of my box was worth a mere $83.30. I was seriously expecting to get $150 out of my coin "treasure". Quite frankly, what shocked me the most was how inefficient and outdated the current monetary system is. Why do government keep on spending a fortune (and tonne of metal) minting coins when most people prefer to use electronic payment? Think of the tonnes of metal which would be saved if we did not rely on metallic money. Also, these coins are pretty easy to counterfeit. The current monetary system is outdated. Electronic currency are the way of the future.
Old, inefficient, bulky, easy to counterfeit - what is it not to love about our good ol' coins?
Blockchain and Decentralisation
Simply put, the genius who invented bitcoin created a system where banks are pretty much redundant. Bitcoin is only the monerary application of a broader concept called 'Blockchain'.
The blockchain technology is a way to record any kind of information (financial transaction, movement of people or goods, time-stamped contracts, etc) in a public ledger which cannot be tampered by anyone. More precisely, we are talking here about a digital ledger which is shared across a network of computers without any need for a central authority. The key word here is 'decentralisation'. Using the public ledger, people can share information without the need for central authority. In the case of bitcoin, we are reducing our reliance on the "middle men", a.k.a. our dear 'banks'.
The long and painful process to start investing in bitcoin
However great bitcoin will be in the future, the current interest in bitcoin is mostly motivated by pure speculation. The price of btc has gone through the roof in the last 12 months and people are investing in btc to make a profit.
Investing in bitcoin is still a rather painful process. First you need to transfer your money (local currency) to an intermediary website (for instance Coinspot.co.au) that will convert your local currency in USD and then buy bitcoins using your USD. Then you will need to open an account with an Exchange such as Bittrex.com, Hitbtc.com or Poloniex.com. You will then need to transfer your btc to your preferred exchange by copying and pasting a long string of characters. I can tell you most people sweat a fair bit the first time they transfer btc as it may take up to 30 - 60 minutes to appear on the exchange of your choice. Once received on the exchange, this is where most of the speculation take place as people trade bitcoin for other forms of cryptocurrencies such as Litecoin (Ltc) or Ripple (Xrp).
The issue with exchanges
The main issue with exchanges is that they are unregulated. We are talking about pure financial far west here. These exchanges handle millions of dollars every day and yet they can shut down overnight. A few popular exchanges were shut down in the last few years, including MtGox.com, Btc-e.com and Cryptsy.com. In other words, you might be able to make a small fortune by trading on exchanges but you might just lose it all if your chosen exchange finishes business overnight. The good news is that there are ways to protect your savings. For instance, you can save your cryptocoins offline using an electronic wallet (Trezor or Nano Ledger s for instance) but this will stop you from trading your coins on an exchange. Alternatively, you can use eToro.com to speculate without taking the risk to see your cryptocoins disappear.
This is the front page of Btc-e.com
And now Cryptsy.com, not much more reassuring
Lastly, some exchanges will tell you overnight that they simply stop their trading services to comply with their new local regulation. This is what happened recently with Bter.com in China.
The eToro solution
eToro currently offers the option to buy 7 major types of cryprocurrencies, which are:
- Bitcoin (btc)
- Bitcoin Cash (bch)
- Dash (dash)
- Ethereum Classic (etc)
- Ethereum (eth)
- Litecoin (ltc)
- Ripple (xrp)
eToro has also recently released a new Cryptocurrency CopyFund, the first of its kind in the world. eToro CopyFunds enable you to invest quickly and efficiently in pre-defined investment strategies.This is done by combining a selection of markets based on a similar theme – in this case cryptocurrencies – or by combining the strategies of some of the most successful traders on the global eToro network. You can do all of this while not risking to lose your entire gains if your crypto exchange was to shut down overnight.
What kind of gain can I expect to get on eToro?
Well it depends on the investment strategy you pick. You can either trade yourself or copy-trade your preferred investors or a mix of the two. The copy trading function is great. It allows you to mirror the investment of your preferred traders. In other words, you don't have to worry about day-to-day investment. You pick your investors and you let them do the work for you. I spend about one hour per week monitoring the health of my portfolio and adjusting my investment preferences if necessary. Doing that, I made 34% in the last 9 months. Including May 2017 which was a crazy month for me (+167% increase), my portfolio performance has been 250% since January 2017.
How do I sign up to eToro?
Simples! Use the following link to open your account today: https://goo.gl/ti4F6R and start earning straight away! If you use this link, I will get a small referral bonus so I thank you in advance.
