As we leave 2017 behind in the dust, there aren’t many people left who haven’t heard a whisper or murmur of the word ‘Bitcoin’. In fact, towards the end of 2017, the hype and media coverage around Bitcoin and other Crypto Assets seems to have reached fever pitch. With the constant media fluctuations between reporting the almost unbelievable and meteoric rises in value across the crypto markets, and then subsequently swinging to the opposite end of the spectrum to denounce Bitcoin as dead, a scam or worse, it’s nigh on impossible for the average person to determine who’s right and who’s wrong!
In addition to this, and even compounding the issue, is that although most people in the world now know of Bitcoin’s existence, they still have no idea what it is, or WHY is exists.
This understanding is really the missing link between the general population being able to form an educated opinion on crypto assets, and being blindsided by FUD (fear, uncertainty and doubt) and extreme propaganda from both sides.
Having been interested in Bitcoin specifically since 2012, and having traded the assets through multiple investment vehicles now since 2016, I have learned a lot about these new digital currencies and the underlying technology, and this understanding which gives me such a high level of confidence in talking about my bullish expectations for the crypto revolution.
So, today I want to share some of this knowledge with you in the hope that it will help you better understand how the world is changing with the ever more pervasive deployment and integration of crypto assets; and not just in the financial sector – across ALL sectors.
Crypto assets have already changed the face of the world with their early implementation, and we’re only just getting started. These new technologies WILL affect you and they will change the world as you know it. Bearing this in mind, better to be armed and ready rather than to allow yourself to be caught by surprise in the changing tide, and in turn to miss all the opportunities that come abound with revolutionary paradigm shifts – just like the introduction and mass adoption of the internet.
So what the fuck is Bitcoin?
Okay, so in simple terms Bitcoin (with an upper case ‘B’) refers to the Blockchain technology that sits behind the currency; bitcoin (with a lower case ‘b’) refers to the digital currency element that is created by miners, and is used as both a store of value and as a transact-able currency (though more the former than the latter as it’s current stage of development).
This is an important distinction; as although the digital currencies are revolutionising finance, there are also crypto-commodities, and crypto-tokens that have different characteristics and different use cases. Then there’s the underlying Blockchain technology which facilitates everything from a decentralised world computer, to tokens that are used to deliver financial rewards to content creators by way of community validation in a completely decentralised way.
The point here is, there’s a LOT more to crypto assets than just Bitcoin, or just exchanging value with each other (paying for goods and services). This is largely why I am so bullish (bullish simply means that I have a positive outlook on the asset class and therefore expect it’s value to increase over time due to it intrinsic value being recognised in the market price).
Okay, so what the fuck is a Blockchain?
A Blockchain is quite simply a decentralised ledger of transactions – much like that stored on the central computers of banks. It’s just a record of who’s sent what to who, and when. So, a block is just a page of recorded transactions and once a block (or page) is full, that block is closed and a new block opened – it is upon the opening of this new block that more of the asset is minted/created/mined through what’s known as a coinbase transaction. It’s worth noting here that the amount of the asset mined depends on the type and stage of the underlying algorithm – for example, there will only ever be 21 million bitcoin in existence, and the amount of bitcoin that is created or mined in any given coinbase transaction is halved every 4 years. In bitcoin, this mining process usually happens once every 10 minutes, and so as more miners join the network, the algorithm makes it harder and hard to crack the code to ensure this time spacing is maintained regardless of what size the network grows to.
Okay, so let’s break this down; a crypto asset has to fulfil certain criteria in order to qualify as a true ‘crypto asset’ – here’s what to look for:
- The technology/software/hardware should be completely open source; this just means that the code that comprises the underlying technology should be open and available to the general public and NOT kept secret and locked behind a company’s closed doors
- It should be completely decentralised; this means that it should not exist or be controlled from a single place, or by a single person or entity. Why? Because this removes conflict of interest and the risk of ‘bad actors’ defrauding the system, and it means it is controlled and in the hands of the people – there is no single point of contact and so it cannot be shutdown, and there is no single person or company in control, meaning there’s no potential conflict of interest or danger of wrongdoing – the Blockchain is owned by the community that mine and use the assets, and everything is verified by that community
- The asset that is created through the mining process should be of limited supply, or be built around a system that self cannibalises it’s own currency to keep the supply within a predetermined range. This is important because it stops deflation of the assets value – this is a key difference to the system of fiat currencies in that at the moment our governments can just print money and pump it into the economy which cause the country’s currency to lose value against the overall market. This cannot be done with a true crypto asset (and this is the main reason I do not like, trade or invest in Ripple (XRP))
- Finally, the asset must form a function of value in the real world, else it’s existence is pointless. For example, bitcoin (BTC) is a store of value similar to gold (and in fact a lot see it as the digital version of gold). Ether (ETH) is the currency mined by those working the Ethereum Blockchain, and this Blockchain serves as a world computer upon which D-apps can be built and operated – think of Ethereum as the operating system on your computer, and the D-apps as the programmes and applications. Monero (XMR), Z-Cash (ZEC) and Dash (DASH) are all privacy coins that allow the user to transfer value between people with complete anonymity. They all serve a purpose, and so any true crypto asset must follow suit
There’s obviously a lot more to crypto assets than what I’ve outlined above, but that gives you the core principals of what a crypto asset should be, and how it can be defined in real world terms.
But I’ve been told that Bitcoin is a scam and all the investors will lose their money, and it’s only used by criminals so is dirty and can’t be trusted!
Yes, this is a familiar rhetoric.
Bitcoin is 9 years old this year, and if I was given a tenner for all the times someone had said Bitcoin was a scam, was dead, and is a bubble just waiting to pop, I’d be a multi-millionaire.
We hear these same cries of fear and propaganda at least 6 times a year when these markets correct, quite simply because the people talking about it don’t understand what it is, how it works, or the core principals behind it. When you look back on the candle charts (these are financial charts that show the price movements over time and are predominantly used by traders and investors to time their entries and exits from the markets), you can clearly see that we’ve seen 50-60% pull backs in price (so, an asset losing 50-60% of it’s value) in weeks if not days, and every time we see the same patterns – the price falls off a cliff, it consolidates, and then it shoots up past previous all times highs to amazing investors and onlookers once again as it reaches fresh new dizzying heights.
As crypto traders say:
“If you can handle the 50% pullbacks, then you don’t deserve the 5000% gains”
The thing is, that people who know these markets because they’ve been watching or trading them for several years know that this is all part of the game and nothing new – yet, every time it happens, the media write its obituary and proclaim it’s death in a torrent of doom and gloom that seems to sweep most novice investors and onlookers along for the ride. The media like to get you emotional because it sells papers, but emotion is the last thing you want to entertain when looking at the markets.
The increasing adoption of Bitcoin and other crypto assets, as well as the prevalence of new ICO’s coming out by the minute, should be evidence enough that crypto assets are not only here to stay, but are gathering some serious momentum as more and more interest (and money) pours into the markets.
Okay, so I get all that about the cryptocurrencies and different types of crypto assets but you say they’re changing EVERY industry – how?
The examples in answering this question are many, so I will cover the main ones here in brief to inspire your appetite to go and do your own further research.
- Smart Contracts – this is a super exciting one that has massive potential to disrupt multiple industries. A smart contract is a decentralised contract that lives on the Ethereum Blockchain that is self-administered. In short, it is a computer protocol that digitally facilitates, verifies, or enforces, a contracts performance or negotiation. In effect, this allows the facilitation of credible transactions without the need for a third party… can you think of a few professions this may disrupt? Who usually administers contracts? Lawyers better watch out and start looking at their business model sharpish… the best way to describe them is to liken them to a vending machine – you put your money in, you punch in a code, and your beverage or snack is delivered to you without the need for any third party. This is exactly what a Smart Contract does, only at a much higher level
- Cloud Storage – Crypto Assets like Storj have been designed to use their networks to provide decentralised cloud storage solutions which utilises the hard drives on the entire global network and rewards those forming the network through the mining of it’s associated digital asset
- Pooled Decentralised Computing Power – Crypto Assets like Golem allow it’s users to effectively ‘rent’ computing power so anyone can pull on the resources of the whole network to create a super computer with massive computational potential facilitating access to massive amounts of computing power to everyone
- Insurance Claims Processing – this is a big one because as present insurance companies are fraught with fraudulent claims, masses of paperwork, and the very real risk of human error. Blockchain technology will allow the entire process to be completely decentralised and de-risked
- Public Access to Information – from music and healthcare through to government, Blockchain technology would allows everyone to access specific information with their own specific keys whilst the information storage is decentralised and encrypted. This is also going to revolutionise the voting system, making the whole process transparent and much more secure against hacks and fraud. There’ll be no more rigging votes when we’re voting through a Blockchain!
That covers some of the main points and I hope has helped you gain a deeper understanding, not only of bitcoin and cryptocurrencies, but Blockchain technology and Crypto Assets as a whole.
To find out more about investing in crypto assets, please fill in the form below and I will send you some information on the educational courses I run, and the 1-2-1 sessions I run with a selection of my clients. We cover everything from understanding the fundamentals, to reading charts, and buying and selling the assets with full support for 12 months thereafter.
Using crypto assets to build my wealth as a key part of my portfolio has delivered amazing results for me, and as my mission is to help everyone reach their full potential financially, physically and mentally, I would love to work with people who are committed to making a change in their lives to get the results they want. If that’s you, just send me a quick message below and I’ll send you the full details for the sessions.