BEWARE OF BITCOIN, PLEASE!


Investing & Money
piece written on the 5th December 2017 by  

I remember buying my first coins (yes, plural, back when that was possible as a South African) in about 2013 or so. Not many people had heard about Bitcoin and it was seen as a bit of a taboo, something that only geeks were looking at as a method to buy things in an alternative way where it was anonymous. I remember chatting with friends about it and there really wasn’t a huge interest but regardless, a lot of us did purchase – albeit, not enough!

After writing several blog posts about Bitcoin, a few people came out the woodworks and started to look at it more seriously and I found myself having a greater network of people to discuss this phenomenon with. It wasn’t enough people for the news to spread wide enough. We should have enjoyed that knowing that it would become globally known and we could have bought up more coins and then enjoyed the upward trend as so many individuals bought in – Metcalfe’s Law.

My posts:

It was only in 2017 where mass media started to pick up on it and now everybody is talking about it. There are countless meme’s going around mocking how everybody is talking about it. With all the posts about people who’ve made tens of millions, it’s natural for it to have become the new in thing. These days I receive at least one query every single day from someone asking for advice about it – how do I buy, should I buy, how much will it grow? The problem with this is that the people asking these questions really don’t know much about it, they don’t know what the blockchain is, how it works and, most importantly, how volatile it is.

My concern is that a lot of people are seeing these headlines and thinking they’ll make a fortune, and although that could happen, it could go exactly the opposite way and people could lose a lot of money. Bitcoin is incredibly volatile, nobody truly knows what might happen with it. One might say that trading is volatile in general, but the difference is that if you’re investing in bluechip stocks, they don’t go up and down so dramatically and out of the blue like Bitcoin does. So, although trading is always risky, Bitcoin (and alt coins) are far riskier and I want all my readers to know this.

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If you’ve caught onto the hype and you want to get in, I’d like to encourage you to read about Satoshi Nakamoto, what blockchain is and how it all works. You wouldn’t invest in a company that you know nothing about, why would you invest in Bitcoin if you don’t understand it? Don’t go to YouTube and watch a quick 5-minute video entitled, “Bitcoin for dummies”, spend a couple of weeks reading about it, see what it has been doing over the years and see where people anticipate it going. I’m so worried that people will look at big numbers, see gold and think it’s their ticket, only to get in at exactly the moment it all starts to drop.

I’ve been following Bitcoin for about 4 years, I do technical analysis with charts and I read the news. I’ve bought Bitcoins, I’ve sold Bitcoins, I’ve made money, I’ve lost money and I’ve taken the time to really understand it. BUT, I am still uncertain about so many things and if that’s the position I’m in, I can confidently say that most people catching on now have very very little idea of what it’s about and that’s a recipe for disaster. Don’t lose your hard earned money because you read an article saying you could make millions – don’t be that person, please!

If you’re in a position where you simply cannot spend time reading and just want to get right into things, do so with a very small amount of money. Bitcoins are not whole numbers, you can buy parts – in other words, buy 0.00000001 Bitcoins and see what happens with that rather than trying to buy a whole Bitcoin which will cost you well over R100,000 (R174,000 at the time of writing this) and that’s a great deal of money to take a chance on. Buy a fraction, see what happens, play with it and get a good feel for things from a practical standpoint. Perhaps whilst you wait for the money to go up or down, start doing that reading I recommended. I should note, though, if you’re going to buy, please look at the fees charged by the company that you buy them from – this is no joke. Understand the fees, all the fees! Research the place you’re going to buy from too, don’t just buy from anyone, there are only a few institutions that you can safely buy from in South Africa at the moment. The most common platform is Luno, I’ve personally used Luno a lot of times and can recommend it. My only concern about Luno is that it is its own exchange which means it operates differently to international exchanges, which means if something happens internationally, it might take time for the reaction on Luno – you could use this to your advantage though ;)

Promotion: If you click this link and buy R500 worth of Bitcoin, you’ll score R10 worth of Bitcoin free. I’ll also get 10 bucks.

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