Saturday, December 9, 2017

My adventures with #Bitcoin and crypto mining. And about the cryptocurrency boom.

Everyone is talking about Bitcoin, the most speculative investment to hit the world in recent memory. Investments in Bitcoin have made fortunes for those who went in early on a wing and a sliver of hope, and now that #Bitcoin has hit US$15,000, many others are wondering if they should invest in Bitcoin and other cryptocurrency like Ethereum, Bitcoin Cash, Ethereum Classic and Monacoin. Or whether it's too late to invest in cryptocurrency?


Dinner in Moscow, living a #Travelife

I first heard of Bitcoin -- at least, as a serious topic of conversation -- over dinner with a friend in Moscow who was gung-ho about the future of Bitcoin and the future of cryptocurrency in general. He was adamant that cryptocurrencies were the cash of the future, and in fact he was planning to switch careers and plunge in, head first, into the murky world of cryptocurrency, cryptovault and crypto mining.




All these terms were a completely new language for me, even if I am pretty well versed in finance. But his tales of promise were so compelling that even before we'd finished dessert in Moscow, I was on my mobile to finance friends in Hong Kong, Tokyo, Singapore, New York and London to ask what they thought of Bitcoin. And I put everyone on speaker phone to Moscow.

In Russia, living a #Travelife

Interestingly, the response about Bitcoin and other cryptocurrency from the mainstream financial industry experts was unanimous: Bitcoin is a highly speculative investment, and none of them had actually put any money in it. This was in September 2017, by the way, which is already late, as far as real Bitcoin investors are concerned.

So I put my Bitcoin thoughts on hold even as my Moscow friend looked at me, nodded his head, and said very plainly: "You're going to miss out on a very big boom."




Three weeks later, I was in Tokyo and I tagged along to a private conference with some of the big IT investors of Tokyo and lots of Tokyo banking CEOs who had come to hear about block chain technology, Bitcoin and a new crypto coin that a young company in Berlin was launching as an ICO over lunch.

The room was very clearly divided: the IT venture capitalists had at least a working knowledge of the blockchain technology and cryptocurrency concepts being explained; while many of the big bank CEOs just couldn't grasp the idea of putting so much money into things that had no real assets.



As for me, I listened intently in a way I hadn't done since being in a classroom in college as I really wanted to grasp this concept of Bitcoin and cryptocurrencies. Then during the Q&A portion, I think I asked the most questions compared to the big league venture capitalists with serious money -- causing lots of smiles among my friends in the room.


Bitcoin and other cryptocurrency

Anyhow, one of my investor friends in Tokyo advised: "Just put money into Bitcoin that you don't mind losing. This is pure gambling."

My friend in Moscow thinks otherwise, though, and he's convinced cryptocurrency is the way of the future. And this dichotomy made me realize one important thing about this whole Bitcoin issue:

In Moscow, living a #Travelife.
This is the view from the rooftop of The Standard Moscow.

Those who don't know much about the cryptocurrency concept -- as it is very cutting edge and therefore hard to grasp -- believe that investing in Bitcoins and other cryptos is purely speculative. For them, it's really like going to a casino and rolling the dice. Traditional investors too, who are more accustomed to analyzing investments on the basis of assets, are still shying away from this.

In fact, some of the smartest people I know in the global finance world are actually not keeping track of Bitcoin at all. In fact, they find it funny that I'm sending them happy WhatsApp messages about Bitcoin hitting US$15,000.

"It did?" This is the kind of unemotional answer I'm getting back from them.


Bitcoin and other cryptocurrency

However, those with enough knowledge about cryptocurrencies see a real value in these, going forward, as cryptocurrencies will eliminate barriers and paperwork, but also encourage porous borders for finances -- for good and bad purposes.

Thinking about the current wariness over Bitcoin, I was reminded of a very long time ago, when as a student in Tokyo, I was offered a temporary job to transcribe the discussions at an international conference on -- guess what -- the Internet.


Bitcoin and other cryptocurrency

The speculation about the Internet was exactly like the speculation over Bitcoin now -- and this conference was attended by the leading Internet experts of those days. Half the experts were gung-ho about the Internet and the other half sat warily on the other side of the fence, because the Internet then was a very new and unknown concept.

Of course, this Bitcoin rise may be just one big speculative bubble and some investors may lose everything. I don't recommend putting all your savings into Bitcoin unless you're seeking some kind of Hail Mary Pass to an easy fortune. And please note -- this may not be it, and you may lose every dollar you've put in. Investing in Bitcoin is certainly not for people who cannot stomach the extreme highs and extreme lows.

As for me, four weeks ago, I put a little bit into Bitcoin and a couple of other crypto currencies like Ethereum and the Monacoin. Monacoin is the Japanese crypto currency that is slowly becoming usable in Japan. Would you believe it's named after a cat mascot?

On my way to Moscow the other month,
living a #Travelife


But the amount I invested in Bitcoin and other cryptocurrency is the equivalent of what I'd pay for dinner at a fancy Michelin three-star restaurant in Paris. Or, perhaps more accurately, I'd invested enough for a nice weekend holiday somewhere.

So far so good, although the highs and lows of Bitcoin and other cryptocurrency remind me of skydiving. I wake up one day and I'm US$2000 richer, and then over lunch on that same day I lose the whole amount I've made. Also, it's important to know that the spreads for cryptocurrency are quite big, in general, so it's not quite so easy to buy a Bitcoin today and cash in tomorrow -- in spite of the hype. It takes time to cover the spread, especially now that these currencies have risen so much already.

But I'm keeping my Bitcoin investments for now, and buying a little bit more on dips, just in case cryptocurrencies go the way of the Internet so many years ago. And, if it does, I hope this will help me go on living my never-ending #Travelife.

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