Bitcoin continues its slide in November, 2018 - What can I do?
The latest decline in Bitcoin and the other usual suspects (BCH (abc), ETH, EOS, etc.) has a lot of people grabbing their chests and looking for the nearest skyscraper. This is because they thought crypto was a get-rich-quick scheme and they are coming to grips with reality. It is NOT. It is, however, quite possibly, a change-the-world-slowly scheme. If it succeeds, it might make the faithful HODLers a lot better off, economically, in the long run, but it requires a plan. It is going to take an organized effort from all of us. It means we must use crypto as it was intended.
Once again, I look for analogies that can communicate my opinion of what most cryptocurrencies actually are and how I view them. This is not meant to be investment advice. Just my opinion regarding Bitcoin, et al.
I will discuss two of the more popular cryptos to date: Bitcoin and Ethereum.
Bitcoin:
Bitcoin is a Peer to Peer Electronic Cash system. This means it can be used, like cash, to pay for transactions between two parties. I would not consider it an investment any more than I would consider a credit card an investment. It is another method of payment. There are many advantages to using Bitcoin, where accepted, but that does not mean I would hoard it waiting for an increase in its value. I would use it whenever possible over cash or a credit card. To do that, I would have an exchange account and I would buy the amount of Bitcoin required for my transaction. Then I would spend that amount of Bitcoin on my transaction. There are exchanges that will exchange your cash for crypto with ZERO fees. Look around and you will find them.
Velocity of Bitcoin:
When you spend Bitcoin, it moves around the ecosystem. In economics, the rate at which a currency moves around is called Velocity. Velocity of a currency builds faith in its ability to support the needs of its spenders. This causes its value to APPRECIATE. Hoarding (HODLing) a currency does the opposite. (get the picture?)
Velocity increases as more people spend Bitcoin and as more merchants accept Bitcoin as a payment. Note to merchants: you have the option of immediately converting your Bitcoin into a fiat currency of your choice, through an exchange. There are payment processors out there, waiting to help you do this. But it would make even more sense for you to restock your inventory by paying for it with those same Bitcoin.
So, Bitcoin is a method to move value. At this moment, it is, obviously, entirely too volatile to be viewed as a store of value. Would you buy paper currency merely on the hopes that it would appreciate in value? I hope not. (Yes, I know about FOREX trading, that's different. Holding usually happens for a relatively short duration.)
Ethereum: (Forgive me, Vitalik, for butchering this all too simple explanation)
Ethereum is in essence a programming/scripting language used to create a global, virtual computer that can execute commands in the form of Smart Contracts, Smart Contracts can be combined to create Decentralized Apps or DAPPS. Using Ethereum, I can make an automatically enforced agreement between myself and another party. This could be compared to many real world contracts. Ethereum lends transparency and accountability to the contract. Real Estate transactions and Trusts or Wills are examples of the use case for Smart Contracts. So in my opinion, Ethereum is like a young version of MS-Windows® or MAC OS X®, that creates a global virtual computer. In 1995, did you buy a copy of Windows 95, thinking that it would be a good investment to sell later? Probably not.
In summary:
The point is that Bitcoin and Ethereum are tools. They are the next step in the technological revolution called the Information Age. Treat them as such.
Ask your broker for good investment ideas. - Ask a developer for good crypto ideas.
I plan to:
Spend as much Bitcoin (or other crypto) as possible. - Buy more to replenish what I spend.
Encourage merchants to accept crypto as payment and to use it to pay for their inventory.
I will not treat crypto as an investment. I will USE crypto to build something of value.
