“Disclaimer – I am in no way a financial adviser, and all views and opinions expressed are of my own personal experience. This article is merely an outline and an explanation of Bitcoin that readers may find interesting if they are considering Bitcoin as an investment .”
If you haven’t been living under a rock for the past six or seven months, at some stage you probably would have come across the term “Bitcoin”. Now what is Bitcoin you may ask? Well to make it simple so every Tom, Dick and Harry can understand, it’s basically just a decentralized currency, or cryptocurrency, and I’ve heard people call it a digital currency. If you don’t know what decentralized currency is, it just means that it has no affiliation with any banks, governments or middle men, and the price is purely determined by the factors of supply and demand.
Now let’s just get into some history here. So the year is 2008, the housing market has just collapsed due to subprime mortgage bonds and synthetic CDO’s. (if you don’t know what any of those are, then I highly suggest that you watch the movie called the “The Big Short”, and just by the way it’s a 10/10 movie.) But anyway, so what happened was, a lot of people lost their money, but that’s another story. In November of that year after the whole housing market hit the fan, a mysterious white paper emerged of a “Peer-to-Peer Electronic Cash System” that was written by an alias named Satoshi Nakomoto, who outlined the fundamentals of what Bitcoin is today and has taken the globe by a storm.
As of today, 14/11/2017, one Bitcoin is valued at R103,700 in South Africa, just to give you a heads up, in 2009 you could have bought one Bitcoin for around R20. Sort of kinda makes you contemplate life right now if you were to have actually bought them back then. South Africa as of now haven’t really adopted the concept yet, but it is slowly creeping into the mainstream here. There are a few places that do accept Bitcoin as payment, but there are so few it hasn’t really become a viable option, other than it’s a great store of value. Think of Bitcoin as gold and as a scarce resource, there is actually a cap of 21 million bitcoins, once that cap is reached, then no more bitcoin can be produced and put into circulation.
I personally first came across Bitcoin in mid 2011 on a Reddit thread (Reddit is a very popular online forum, it’s up there in the top 7, with Facebook being 1st) explaining to people what it was, but at that stage was not really well known, and I brushed it off as just a scam. Today i’m regretting that.
Over the last few months I have invested a sizable amount into Bitcoin and for those of you who are skeptical or are wanting to get into it, here is just some food for thought, that should be of use to you.
Bitcoin is very, very volatile, meaning that it can jump 20% or dip 30% in the space of a few hours.
HODL!! (hold on for dear life) Don’t think that you are Jordan Belfort and start day trading it, because you WILL, I repeat WILL lose your investment. “Hodl” and let your investment grow. If you are down by 10% in one day, don’t worry, that’s not actually a lot due to the volatility of bitcoin it will bounce back.
Don’t invest in Bitcoin for a quick buck, I can tell you right now, that if you have that mentality, you won’t be smiling.
Mass adoption and a store of value is what you should be investing in it for. As I stated earlier, “hodl”!
Have a good news source. Don’t bother with news and media companies, because they won’t give you good information. Bitcoin is an internet currency, so use forums such as Reddit and 4Chan for your information and get involved with those communities to hear first hand what’s going on. A new post is up every 30 seconds to a minute, so you won’t ever get late news.
Did I mention “hodl”. Always be “hodl”-ing, AlWAYS!
Buy in the dips, and never sell, unless you have done your research and you are sure.
This is common sense, don’t invest anything you are not prepared to lose.
By now you are probably thinking where you can buy Bitcoin? The most reputable and trusted company to buy it in South Africa is Luno.com or you can download their IOS or Android app and do it through there. I’d highly recommend using them, I have never had a problem and the customers service is top notch, so if you do have trouble with the app or your account, always expect a speedy reply. You can store your Bitcoin in the Luno Wallet or if you so please you can transfer it to a paper wallet for better security of your funds, I personally just keep it in my Luno wallet.
To end this off, I hope that this has given you a better understanding of how Bitcoin works, and feel free to be the judge of this cryptocurrency for yourself. Below will be link the original white paper by Satoshi Nakomoto for to you read. It’s just a very detailed overview of how peer-to-peer transactions work.
Edit: Just a word of advice, over the the last couple of months, a few Bitcoin scams have been popping up, I’d just like to advise anybody that feels this might be an opportunity, please reassess your views, and stay away from anything called “Bitconnect” and “Bitclub”. Please again, do your own research, and stick with Luno.com when purchasing you’re Ethereum or Bitcoin, as it is safer than getting involved with these Ponzi schemes.