Bitcoin memes on Instagram? Tickers tracking the price on CNBC? Bitcoin, Bitcoin, Bitcoin!
Bitcoin’s epic rise to $20,000 is attracting attention and everyone has Bitcoin on the brain. Welcome to the show! This surge will come with another correction downward, but when will it happen?
Before we get too much further I should let you know I am not a financial adviser and I do not play one on the internet.
Back in January 2013 the Bitcoin price jumped from $13 to $200 by April. A whopping 1,438% increase. As President Trump would say, “HUGE!” Then on April 9th 2013 at 5PM the value plummeted. It dropped from $200 to $76 in 48 hours. Let that sink in.
The price did a yo-yo like sprint until November 2013 where it took off like a rocket! In the month of November 2013 Bitcoin rose from $200 to $1,100. Another giant order of magnitude jump! Up 450%!
With the good comes the bad. In the next two weeks there was a sharp crash down to $576 followed by a two year slump to $177. Yikes. A very difficult pill to swallow for individuals who invested in Bitcoin at the peak prices.
Chart from blockchain.info/charts/market-price
Think critically before jumping into Bitcoin. You must be prepared to take a long position and ready to lose everything. Bitcoin and cryptocurrencies are speculative and your average Joe can be extremely emotional with investments. Right now if you can order an Uber you are tech saavy enough to buy and sell Bitcoin. Buying low and selling high is much easier said than done. The cryptocurrency markets operate 24/7 across the world. The markets can swing 50% up and down in a day. Government regulations, crime, software bugs, and internal Bitcoin community disputes are a few factors that have impacted price historically.
If you are thinking about investing into Bitcoin or any cryptocurrency then do your due diligence. Study how Bitcoin functions technically and learn how to store it securely. Insurance for stolen Bitcoin is a rarity. Learn about the technology behind Bitcoin instead of studying the price. How does a person in Kenya use text message to send money to someone in Canada instantly? Magic internet money you say?
Read the Bitcoin white paper. Read it once, take a walk, then read it again with a pencil and paper. Write lots of notes and keep a google page close by. You will need it. It took me over a year to understand and I work in the tech field. Thankfully there are many Youtube explanations out there. My introduction to Bitcoin was through Steve Gibson on the Security Now podcast. Andreas Antonopoulos is another great resource for providing eloquent and technical information. All his books I highly recommend!
Bitcoin can open up a new way of thinking for those interested. You will learn about the economy, decentralized networks, cryptography, and game theory.
Now that you have done your homework it is time to get some Bitcoin! But Bitcoin is trading at $18,000! You don’t have that kind of cash laying around? That is okay. Purchase small denominations.
Understanding the price in relation to Bitcoin as a unit is important!
A Bitcoin can be broken down eight decimal points. 1.00000000 Bitcoin. $18,000 will purchase 100,000,000 units.
Fun fact: in Bitcoin slang the smallest denomination of a Bitcoin is called a satoshi.
If you purchase a Bitcoin for $18,000 you are pay $0.00018 for one satoshi. We can do the math differently and instead say we paid $1.80 for 10,000 satoshis.
This means that you can purchase one Bitcoin for $18,000 or purchase a fraction of a Bitcoin at $5. In-fact someone can send you less than a penny’s worth of Bitcoin. Interesting, eh? It gets more interesting the more you learn.
Thanks for reading and please leave a comment below.