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👋Hello friends, 

Welcome to The Strive Journal, this week will be a little bit different than prior journals. I've gone back and forth about sharing my thoughts on the following content but ultimately decided it's worthwhile to share what I know so you can generate your own informed opinion or, at the very least, increase your awareness of the concept. Besides, this journal is a channel to deliver what I'm learning to your inbox and I've learned the most about this topic in the last year. The topic is cryptocurrencies but more specifically, Bitcoin. 

I'm new to the space, but I've been researching the subject for months now and am very excited about its potential. Today's newsletter will be all about Bitcoin, its definition, purpose, and forecast. It goes without saying that the subject is too complex to describe entirely in such a short form so contact me if you have any further interest or questions; I'd love to help out (you can reply to this email).

If you're not interested, no worries because we're back to the usual next week. If you enjoy this newsletter enough to share it with friends, you can do so with any of the icons here:

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Remember: I am not a financial advisor. 

Let's begin. 

1) What is bitcoin?

💸 Bitcoin is one type of many cryptocurrencies but it's the first and most recognizable. Cryptocurrencies are just like normal currencies except they exist only digitally and cannot be copied or counterfeited because of algorithmic cryptography. 

Bitcoin is unique:
  • It was created in 2008 and started trading in 2009. Since its inception, it's had an average growth rate of 408% annually.
  • It's completely digital. 
  • It's decentralized (which means no one authority governs it or has power over it).
  • Its value is decided only by what others are willing to pay for it. Nothing backs or guarantees its value. 
  • There will only ever be 21 million Bitcoins released (it's estimated 3 - 4 have been lost forever due to poor password storage).

👽 Bitcoin was created by a mysterious figure known as Satoshi Nakamoto and along with its invention, he released a document called the white paper that outlined his purpose and intentions. 

It was invented to counter the dangers of government control over money (or just any authority having that much control). It had two intended ways of providing the world financial value: 
  1. A medium of exchange (Ie. global currency)
  2. A store of value (Ie. an investable asset)
Currently, it's being used as a store of value more than a currency but this trend might change as developing countries begin to adopt it as a primary currency. This has already happened in El Salvador and more countries will soon follow. 

Both forms of use are good for Bitcoins' growth. 

2) Why is it not a bubble? Why is it important?

🗯️ Bitcoin is here to stay because it offers effective solutions to the global problems it's tackling: 

🏆 Problem #1 - A Store of Value: When nations experience economic problems (like a pandemic), the government will try to keep everything progressing positively by printing money and injecting it into the economy through major projects (think infrastructure) or social programs (think subsidies and grants). This merely puts a band-aid on a leaking damn. It only serves to shove the economic burden down to later generations. This process of increasing money supply is called inflation and although a little increase is manageable, a lot of inflation has many consequences. We're in a period of high inflation right now. Historically, the wealthy class buys finite assets that appreciate as the money supply increases like stocks, real estate, and commodities (gold and silver). These investments act as an insurance plan when money printing is high. 

Solution: There will never be more Bitcoin printed. The supply is locked and deflationary (it only gets reduced). This makes it a very pristine investment asset. Beyond that, it has a cheaper barrier to enter than real estate and its returns are astronomically higher. 

🌐 Problem #2 - A Global Currency: In developing nations, a stable currency is a vital tool for economic growth. In a country where large portions of the population have no bank accounts, they don't have a way to safely store, transport, save, invest, or earn interest on the money they earn. They're stuck in a loop of struggling from paycheque to paycheque without a tool to create meaningful change for their families. The fascinating part of this is most people in these countries don't have bank accounts, but they do have smartphones... with access to the internet.

Solution: A stable, appreciating, and global currency recognized and accepted by everyone is a revolutionary tool to aid developing countries. Bitcoin can be that currency and all you need is a phone to store some.  

3) Why should I care?

✨ If you do decide, like many others have, that this revolution is paving a path for new ways of creating, storing, and trading wealth, then you'll also discover that there are incredible benefits to jumping aboard early. 

🌱 At a current price of $64,000 USD, we are still incredibly early in the global adoption of this asset. It's been estimated that there are over 100 million active digital wallets that hold bitcoin. That means a little over 2% of the global population is involved. As that number rises and countries begin adopting Bitcoin as a reliable currency and companies (+ people) start investing in Bitcoin as a reliable store of value. The price of 1 bitcoin will rise dramatically. 

📈 The price in the short term is difficult to predict but a dutch economist that goes by the pseudonym PlanB is trusted for his expertise in the space and believes it will reach $135,000USD by end of this year and >$500,000 by 2025. This is not one person's guess though, plenty of investing experts have come out with similar predictions and have invested massively into Bitcoin including Cathie Wood, Mark Cuban, Kevin O'Leary, Elon Musk, Jack Dorsey, and many others. 

📀 My opinion is everybody should have at least some savings invested in it (>5%) for the same reasons that investors advocate some exposure to Gold. Bitcoin is the new gold. 

4) What are the risks?

🔴 Every investment has risks. Even the most prominent players like Apple, Amazon, and Netflix come with many risks. Bitcoin is no exception. Bitcoin will create a ton of wealth for individuals who invest in it in the future but it's no getting rich quick scheme, it should be treated as a long-term investment for a portion of your wealth you're comfortable with storing (and potentially losing). This way the risks involved are significantly lower. 

Here are some prevalent risks in Bitcoin:
  • Regulation has a long way to go. The currency is embraced in countries like Canada, Australia, and the US but government agencies still need to develop proper regulations for the asset. If they over-regulate, it could slow down growth. 
  • Price is never guaranteed. Many experts believe it will rise but that doesn't mean it's a sure thing. 
  • The digital nature of you holding wealth online like Bitcoin means it can be hacked and stolen
  • The fact that it is still so early means that price volatility is high. The price will rise and fall at faster and larger rates than normal assets. 
  • The Bitcoin network itself could be overrun. The chances of this are incredibly small as it would require computing power that does not currently exist. 
⚡ Timing is also a risk. It's important to note that as I write this we're near the all-time highest price of Bitcoin. If the price reaches $100,000 before the end of the year, many people will rush in fueled by greed and FOMO to pour big chunks of their wealth into Bitcoin only for it to dip shortly after. Don't be this person, follow the strategies in #5. 

5) How can I be smart and protect myself?

💂 My advice to anyone who wants to explore Bitcoin as an investment is this:
  1. Learn as much as possible (InvestAnswers and Anthony Pompliano are great sources to start with) 
  2. Use a safe, secure, portal to invest in.
    • Shakepay* is the most straightforward (Canada only)
    • Gemini adds a little complexity but still pretty easy. (Canadians/Americans)
    • Binance is complex but robust and has low fees (Canadians)
    • Coinbase is complex but robust and has low fees (Americans)
  3. Use Dollar-Cost Average - A method of entering an investment in which you commit to a set payment on a set schedule. (Ie. $50 every Friday or $75 every bi-weekly paycheque) 
  4. Use a complicated password to the chosen portal and protect it. 
  5. Don't access the portal from multiple different devices (Ie. Mobile, laptop, computer). Choose one access point.
  6. Never invest what you can't lose. 
  7. Contact me with any questions. I've been invested in crypto for nearly a year now and have researched it a ton. I know how to enter the space safely given the risks. 
*Shakepay is an affiliate link. If you use it, you get $10 free and so do I. 

💧 The most advisable way to start investing in Bitcoin directly is to allocate a small portion of your overall savings to it and commit to a regular schedule of payments. Scheduled payments remove emotion. Emotion is a terrible way to invest. As the price rises your confidence and excitement will rise and you'll want to add more money. Then when the price dips you'll question your decision, and want to add less or worst, withdraw. This is how people lose money fast. 

You can also indirectly invest in Bitcoin (and other cryptocurrencies) through proxy investments like crypto ETFs, Bitcoin mining companies, or companies that own a lot of Bitcoin. These can be found on the stock market and invested inside of your TFSA, RRSP, or IRA fairly easily. 
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