Crypto Thought — How long to keep Bitcoin
On October 31 world Sees Bitcoin — the $7k Crypto Turn 9 Years Old Tuesday marked nine years since Satoshi Nakamoto announced the creation of the Bitcoin “Peer-to-Peer Electronic Cash System.
The Bitcoin whitepaper, still available on the same Bitcoin.org domain as it was in October 2008 , offers an increasingly fascinating view into the niche project which in October 2017 has a market cap of over $100 bln. The document famously begins:
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”
“Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network.”
Those networks are now used by three million users every day, with that number expected to increase to 200 mln within just seven years projections state.
Now coming to today, I was sitting and lost in thoughts of the great Bitcoin rise and my wife asked what I am thinking. I said about the new heights Bitcoin price has raised, for her my indulgence in Bitcoin is like any passing excitement which I had on various technologies and trends over the years, hence the twinkle that I had in my eyes was not shared by my wife. She asked one simple question “How long to keep Bitcoin” many have asked me the same question and even today many had asked me the same question. Generally this is what I would answer to anyone would be “HODL”. And that is what I even told my wife. My wife asked me to quantify. Now I was stumped. And I started explaining the technicalities of the volatile market that is Bitcoin trading.
I explained her that Bitcoin trading was even volatile than commodities or stocks and was a very speculative market and also explained how some traders kept it for 30–50% profit booking and then cashed out and would exit or re-invest in Bitcoin. But it did not cut any ice with my wife. Even my wife was angry that I kept on talking but did not come to the point of how long to keep Bitcoin. And that is when I went into a defensive mode, had some argument and I seemed to have lost the family battle and some how was loosing my first convert so to speak — My wife from learning about Bitcoin.
Simplifying Bitcoin for common man — in my case my Woman
Her complaint was genuine. While I understand the technology and everyday I am getting so much in-depth understanding of Bitcoin and Cryptocurrency market and the Blockchain Technology but explaining to someone in simple terms who wanted to just invest in Bitcoin started sounding a very daunting idea. Having lost the argument I gave the cliché, that well I need not explain Bitcoin, its price will itself attract people in investing in Bitcoin. Well this was my last ditch attempt to save my grace for not being explaining Bitcoin trading and investment in simple terms.
Comparing Bitcoin & Cryptocurrencies to Stocks
Since I have told my wife earlier that Bitcoin was a long term investment that is why she wanted to know about Bitcoin as an investment opportunity and how long to invest in Bitcoin before coming out of it and that she was not interested in Bitcoin trading nor its volatility or its technology. Hence when I said that it is just 9 Year old technology and just 4–5 years since transaction volumes have picked up and that it is this year only that Bitcoin price has picked the bullish momemtum.
If one sees the price rise then one could see that much of the bullish momentum in Bitcoin price has happened since early 2017. And this year not only the coverage of Bitcoin and Cryptocurrencies has become mainstream but also more and more people are coming and asking how to invest in Bitcoin and what is Bitcoin?
Which is good but is also a challenge, because there is not straight answer to explaining it without going into the technology part, hence I took the help of stock markets where I explained Bitcoin is like Apple or Facebook of stocks who have got really big market cap and started from humble beginnings. Then my wife asked then why not invest in Stocks for long term or in Mutual funds, why Bitcoin. Well that is where I had to explain unlike stocks the real money that many whales or traders made was in Arbitrage where investing in one exchange they could sell the same Bitcoin in another exchange for higher price. Which was not possible in stocks. Also one of the key features for more tech savvy can be said that you hold your own keys and your own Bitcoin in wallet safely present in the peer to peer Blockchain. That is not the case with Stocks, there your stock is just a number in the exchange and is guarded by a custodian and to get access to any such market you need a broker to invest.
Conclusion
While to explain Bitcoin in layman terms is very difficult but to many people it is now akin to Digital Gold and that is why the whole hijack of the economic network via Bitcoin forks are happening. If Bitcoin had no economic value no one would bother, but today everyone starting from VCs, to hedge funds to common man and even governments want a piece of this digital gold. But at the end of the day for a common man apart from Gold, today Bitcoin looks like a legitimate long term investment where even though one should invest the money which one is ready to loose but still its a investment which more and more people are starting to trust and can directly buy and it becomes our responsibility as humanity to keep and increase this store this value while the fiat currency system continues to fail.
