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Buying crypto currencies, including Bitcoin and Ethereum

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Buying Crypto-Currencies

As some of you will remember I used to run a tip sheet called The Big Pension. I stopped publishing it one day when I realised that for the foreseeable future I would be writing the same short paragraph each month. When the price of Bitcoin was $282 I suggested that all my readers do at least one thing; lock up 1,000 in Bitcoin. That amount of money is not much to lose, but, as far as I could see, Bitcoin was going places. Back then you would have managed to grab yourself four coins. They are now worth about $40k. I would not be at all surprised to see four bitcoin worth $400k some time next year.
Those of you who subscribed to The Big Pension will also no doubt remember the time I suggested yet again that you buy into cryptocurrencies. Bitcoin was then trading around the $600 mark. Finally, I gave up, and said something along the lines of "This month's recommendation is to buy Bitcoin at $800. Next month's recommendation will be to buy even more bitcoin, and the month after that I will suggest you buy even more bitcoin. Instead of doing that, I am giving you a year's worth of advice in one issue: Just keep buying bitcoin and ethereum.
We all know what happened. Bitcoin went to $20k and Ethereum went to $1400.
We also all know what happened next. All the cryptocurrencies collapsed.
If you look back over the history of cryptocurrencies you will find that collapses of 75% are not unusual. In fact, I'll rephrase that. Collapses of 75% are the norm. I dont know about you, but I held. After all, I stopped buying once bitcoin burst through $2k.
I'll rephrase that as well. I have now bought some more at a rather higher price.
The great thing about new investment vehicles is that you can buy when the price is on the floor. That means it's very difficult to lose. Let me give you one glaring example.
I bought Stella Lumens when it first hit the streets at the grand price of one cent. I reckoned it only had to rise to two cents and I will have doubled my money. It was based on a bank. Is the bank likely to go bust? I couldn't see that happening, so where was the risk? There wasn't one.
I was somewhat amused to read that a rather famous investment guru thought that bitcoin would go to zero while the coin to buy was Stella. He recommended folks to buy at 0.70. And people paid money to buy his tip sheet. Those who bought there are now looking pretty silly while even though I didn't cash out at the top, I can hardly complain at its fall from grace because my investment is up 800% even at today's much reduced prices. I'm holding. All this stuff is the stuff of our future world.
In short, buying at the bottom is low risk. The lower the price the lower the risk, and I have to admit I dont mind risk.
Which cryptos should you buy?  I'm not running a tip sheet so I am not going to make suggestions, but I will try and look at what I consider to be some of the more useful ones. For this week's issue I will just stick to the two stalwarts, Bitcoin and Ethereum. So let's have a look at what's going on.
First, there are the halvenings in Bitcoin. Every few years the pay-out for mining the coins halves. This usually coincides with the price doubling, for obvious reasons. We have a halvening coming up next May. The price of bitcoin is likely to be higher this time next year. I can't guarantee that, but then who can guarantee the future?
So far investing in crypto currencies has not been like other new technologies. Generally it's the big boys who get first chance of buying shares in new companies while the rest of us come late to the party.
This time, because of regulatory problems, things are the other way round in the crypto world. Large investment houses have so far been prevented from investing, and they want to get their clients in. There is pent-up demand, and that demand equals trillions of dollars of money looking for a home. Once the regulatory problems are ironed out (in other words in a few months time) a deluge of money will hit the crypto coin world. Most will go into bitcoin. That will send the price sky-rocketing. I have decided that if I buy a coin for $10k, and it goes to $100k, so does my investment. That's serious money. I have to admit that I cant think of a good reason for not buying.
The other way to look at cryptos is to say that in order to buy the other coins you usually need to get bitcoin or eth (ethereum) first, so there is always going to be a market for those two coins. I am, of course, buying eth as well.
There is a third issue to look at, and that is the behaviour of banks, the behaviour of governments, and the problem of a permanently decreasing in the value of fiat currencies.
Banks are not exactly very efficient. They have failed to enter the digital age with any real skill. I can open a crypto account in minutes and keep my identity without passing huge chunks of it on to bank officials. I can use that account to send or receive money across the planet within minutes at a negligible cost. I can also use my accounts to create passive income, and that income is orders of magnitude higher than your average high street bank can manage.
At the moment, my view is: Banks? Who needs them?
Using crypto isn't exactly easy at the moment, but in a couple of years time things will have changed drastically and I suspect that most of the population will start to wonder why they had been so suspicious of crypto previously.
The great plus in the digital invasion is the general removal of middle-men. We don't need them once we fully embrace the digital world, and they are being ousted across many industries. I could write a whole article (even a book) on this very subject, but for the moment let me just say that the only reason we need banks is because we like to trust them.
With the recent change in the rules, that trust no longer has legal backing. Your money can be sequestered to support a failing bank. That's what happened in Greece and Cyprus a few years ago, and if you don't think it could happen elsewhere, then ask yourself why the legislation for it to happen exists across most of the world.
By the way, I have said for some time, the bank to watch is Deutsche Bank. It's been collapsing in slow motion for years. The collapse is getting rather serious at the moment. It will be interesting to see how it is shored up, or whether it is shored up.
If a bank goes insolvent it can and will use your money to support itself. It can legally do that because the money in its vaults belongs not to you, but to the bank. You have a claim on that money because you have passed the actual cash over to the bank's possession. But what use is a claim on a bankrupt bank?
Get rid of the trust angle and what else is left in favour of using a bank instead of doing the banking yourself?
In short, banks in their present form are outdated and either must change or fade away. Cryptos, and their big sister, blockchain, will take over.
We'll have a look at some of this next week.
And do remember I have written a book about understanding cryptos. Most of the chapters are also in audio format and a few chapters are respoduced in video format as well. Let me know if you want a copy, but here's a link to my book pages.
I am not suggesting you follow me beyond this point, but in next week's issue I will be looking at a few of the other coins out there that I think are worth looking into.

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