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Investing in Bitcoin

Innoware
Investing in Bitcoin

As per coinmarketcap.com, there are already 1300 crypto currencies in the market. More ICO (Initial coin offerings) are planned every day. Considering this, it is natural that many of the smaller crypto currencies will fail. 

The top 3 cryptos in terms of market capitalization are Bitcoin, Ethereum and Litecoin. All three of them have seen very nice value appreciation over the past months.

After completing my book on “Trading Volatility using the 50-30-20 strategy” with Brennan, I am now writing our second book on “Investing using Stock Market Indexes”. After completion of that book, we will be writing our third book on “Investing in Crypto currencies”. This book will cover Bitcoin in detail and address things like what is block chain technology, is Bitcoin a bubble, why we feel Bitcoin is now unstoppable etc.

At this stage, you can do your own due diligence and decide if investing in Bitcoin is for you. If you feel that a small percentage of your portfolio (1%?) is worth risking in this new investment arena and never knew what to do next, we present some ideas which we have already implemented.

Bitcoin Buy and hold or Trading at GDAX.com 
You can go to http://gdax.com and register. Transfer funds. Place a buy order for bitcoin. If your order is filled, you are a proud bitcoin owner. If you know how to use gdax.com, you can even avoid transaction fees. Let’s say bitcoin is trading at $7735. You can place an order to buy 0.10 bitcoin for $7734 or $7730 – a price that is below the current price. If the price falls and the order is filled, you pay no fees to gdax.com. Same would hold in case you want to sell bitcoins that you own. Enter your order at a price above the current price and wait. We have seen all our buy and sell orders getting filled without any fees. Of course, if you want, you can buy or sell at market price for a fee as well.

Bitcoin Mining at your home 
The coauthor of my book – Brennan Nykreim – owns a bitcoin mining machine for the past one year. When I came to know about it, I was impressed with how much he has learnt or done in his young age. Here is how you can mine bitcoins at your home. Go online and order a new or used S9 Antminer. This is a machine that should cost you around $3500. Once you get the machine, hook it up with the internet and it will work 24 x 7 and mine you bitcoins which you can sell later. But this operation is not as exciting as it sounds. The machine makes a lot of noise which is indeed unbearable, to say the least. Also, you would face a decent electricity bill as this machine with be working 24 x 7 x 365. If you are in technology and want to learn new things, this is a good option to try.

Cloud Mining Bitcoin 
An easier option to mine bitcoins is through cloud mining. There are many cloud mining companies on the internet and lot of them are scams. With our due diligence, we have enrolled in bitcoin mining contracts at hashflare.io and genesis-mining.com

A disclaimer, this is not investment advice. Please do your own due diligence. In hashflare.io, you can choose SHA256, move the slider amount to a dollar value that you want to invest and place your buy order. As soon as your order is confirmed, you have started bitcoin cloud mining. The first trial contract I took was HashFlare.io SHA-256 Hashrate 1.8 TH/s for $278 which projected a return of $900 in one year – a whopping 223% ROI.

There is so much demand for bitcoin mining on genesis-mining.com that there are no open bitcoin contracts available currently. Last week, I ended up signing up for a small bitcoin mining contract here but they will start mining only on February 28, 2018. For now, I do have small contracts to mine Ethereum, Monero and Zcash at genesis-mining.com.

Bitcoin Lending on Bitconnect.co 
This appears to be a Ponzi scheme, but I enrolled in it more to investigate if it’s a scam or not. I put in $200 worth of bitcoins here. Next, the site allows you to convert these bitcoins to bitconnect coins and then lend it out. So, I started with $200 and every fourth day, I get paid $10. I have already received this $10 payment twice, which I have reinvested. The expect all money invested here to be locked for 299 days. In one of our blogs after 299 days, I will report out the results. I am prepared to lose my investment here and the aim is to just understand what this is all about.

Bitcoin Options 
I was so enamored with what one could do with bitcoin investing, that I ended up enrolling in deribit.com and bought some deep in the money December 2017 bitcoin calls, sold some December 2017 bitcoin deep in the money puts and made some money. The point I noted was that the bid / ask spread is not that helpful. I would wait for the volume to improve on this site to do more bitcoin option transactions.

Why I am bullish on Bitcoin? 
There can be a total of only 20 million bitcoins. Out of this, 16 million bitcoins have already been mined. So, by just considering the supply angle alone, bitcoin is poised for an explosive price increase with time. Demand for bitcoin is growing at a very fast pace. It is gaining more credibility. CME group is going to start bitcoin futures soon. Considering all this, I expect bitcoin to touch $10,000 in a couple of months, $25,000 in a couple of years and even $ 1 million after a decade.