The world is moving fast and keeping up with technology is key to thriving long term in the financial markets. Lately bitcoin has become a hot topic on the internet. So I’ve been scooping it up over the last few months. I mentioned this on Twitter.
The last time I blogged about buying bitcoin was in 2017 where I made a decent profit by pumping and dumping. However this time will be different. Instead of trading, I plan to buy and hold BTC as a long term investment. 🙂
I currently own 0.28 BTC. Why this number? Because according to analyst Jake Levison, 0.28 bitcoin is all you need to be in the top 1% of all bitcoin owners. 🙂
This amount represents less than 1% of my net worth. I can lose all 0.28 bitcoin and not care too much about it. But if the value soars then being in the 1% club should give my future purchasing power a significant advantage. I may buy more BTC on price pullbacks until it’s 2% of my net worth. 🙂
But this post isn’t about convincing anyone to buy bitcoin. There are plenty of other articles on the internet for that already if you search for them. To be honest I don’t fully understand bitcoin myself yet.
The point of this post is to outline the reasons why I’m adding bitcoin to my portfolio so readers know what I’m buying these days, and that I am biased.
Reasons why I’m bullish on bitcoin
- It’s a hedge against inflation because it’s a deflationary currency. Only 21 million bitcoin will ever exist.
- It’s been here for over a decade so it will probably stick around.
- Institutional investors and large fund managers have began to show interest in cryptocurrencies.
- Many macro strategists including Lyn Alden started to become bullish and are buying bitcoin this year.
- Widespread adoption in 2020. BTC is now compatible with mainstream financial services like PayPal.
- Governments have announced they want to adopt digital currencies. Central banks are creating their own.
- Citigroup bank says Bitcoin could be “the currency of choice for international trade” in the future.
- Goldman Sachs is restarting a trading desk for cryptocurrencies, offering BTC futures by March 2021.
But due to its speculative nature it’s hard to recommend BTC to someone who don’t already have some level of investment experience. It’s a good idea to build up at least $10,000 in stocks, ETFs, or other traditional assets before buying bitcoin.
There are also transactional fees to consider. If I take out my physical wallet and hand you $1, you will be $1 richer. But if I send you 1 BTC from my digital wallet, you will receive less than 1 BTC due to fees. This makes bitcoin difficult to use as a widespread currency.
And if you have trouble handling large price fluctuations then BTC is definitely not for you.
You know yourself better than anybody else. Don’t just follow what others do on the internet. Learning to develop your own strategy will give you more conviction and control over your financial outcome. The attitude to adopt isn’t who’s going to lead you. It’s who’s going to stop you! 🙂
How to buy bitcoin
There are many different ways to buy BTC. Coinbase is very popular in the United States. For Canadians I would suggest using Shakepay as it is what I currently use after comparing many different services. Just make sure you understand all the risks and talk to a financial expert before you buy anything.
Shakepay actually has a special promotion right now. If you use my referral link here, we will each receive a $30 cash bonus once you spend at least $100 on the platform.
So if you do conduct your own research and decide to buy BTC, then getting a 30% discount on a $100 bitcoin purchase is not a bad way to get into this space; most people have to pay full price. 😉 But this offer is only temporary.
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Random Useless Fact:
Predators evolved to have better depth perception and focus for hunting. Preys have a wider field of view to better spot danger.
Can it be bought in a registered account?
You can buy Bitcoin indirectly through funds such as QBTC which trades on the Toronto Stock Exchange. It works as any other ETF in a registered account. QBTC if using CAD, or QBTC.U with USD.
This gives you exposure to the price of bitcoin, but it’s not the same as owning BTC directly. The management fee is 1.95%.
I personally like to buy my own coins on a cryptocurrency exchange and then transfer them to a secure wallet offline. It’s more involved than just buying an ETF, but there are pros and cons to both methods. 🙂
Also, governments seem to be moving towards digital currency. What will happen to the value of bitcoin if that happens?
I don’t know. My best guess is that bitcoin’s value will go higher. As more people adopt digital currencies, existing ones like BTC will see higher demand. Government digital currencies can be created without investing any human capital or resources so it’s inflationary. But bitcoin is deflationary so that’s another reason why BTC may rise in value compared to the dollar over time. 🙂
Great article.
How to get offline wallet ?Is there any extra fee to pay for that?
How liquid BTC is? Can you sell it like stock on any trading day ?
What are you thoughts on ETH? Does it have same prospectus as BTC?
Thanks
That’s one of the main issues with BTC right now. It’s still not easy for most people to safely store it. But the most common ways are to use a USB drive, a paper wallet which is free, or purchase a hardware wallet made by a trusted manufacturer. For example, a Ledger Nano S is about $80.
In terms of liquidity over $1 billion US worth of BTC is traded every day. Because the cryptocurrency markets never close, there are no opening or closing prices. The real question is how liquid is the exchange you are trading on. But even if an exchange drys up you can still sell your BTC somewhere else. In today’s market there is plenty of liquidity for retail investors. But it’s hard to say what will happen in the future.
I don’t know much about ETH. I used to like it more than BTC because I thought smart contracts have a lot more practical potential. But after 3 years it doesn’t look like Ethereum has made a major breakthrough yet. That’s why I’m more bullish on BTC than ETH at the moment.
So over my head but seems like a lot of smart people are into it now as opposed to the more speculative nature of it a few years ago. Though obviously still a speculative bet, seems like the smart money is literally on your side. I can’t help but think of tulips in Amsterdam but while I’m busy poo-pooing alternative investments people are making very real money. Might have to buy a small amount just so I don’t feel left behind.
That’s how I feel as well. I expected Jack Dorsey and other silicon valley giants to buy bitcoin, but even older, traditional quantitative investors like Jim O’Shaughnessy have bought it. One reason he has some is because he is curious to see where BTC will go in the future, and it’s hard to track something if you don’t have skin in the game.
I don’t fully understand cryptocurrencies. But there must be a reason so many macro strategists, and wealthy people on Wall St. have such high conviction for bitcoin. Maybe they see something that I don’t. 🙂
Thanks for the Shakepay recommendation. I had looked into Coinbase and others a few years ago and seemed like all the fees and hoops you had to jump through were not worth the hassle. Almost put money on Quadriga at the time (that exchange ended very badly). But Shakepay seems transparent and seamless if you’re Canadian. The $30 holiday bonus was sweet too. Merry Christmas!
Happy holidays. Thanks for the bonus. 👍 I think bitcoin will be one of the best performing assets of 2021.
Is a good time to buy Bitcoin or I should wait that the price drop?
Thanks
That would depend on your current situation. Personally I think bitcoin’s price will probably drop in the short term. But because I don’t know when exactly that will happen my strategy is to buy some now and if it drops later, buy more.
The way I see it – it’s better to own a small amount of something that could become worthless, than to miss out on something that could be worth a lot. But I’m prepared to lose 100% of my bitcoin investment because I know it’s pure speculation for me.
Hi Liquid, I opened an Shakepay account using the link in the post. While seeking for the $30 cash bonus to their customer service, they asked for your @shaketage or referral code info? Any chance you could provide it to my email?
Sure, I’ll send an email your way. Thanks for considering using my referral code. 🙂
Hi Liquid, can you send me as well?
Hello Lina. You can use BCIUCLK as the referral code, or go directly to https://shakepay.me/r/BCIUCLK on your mobile device to download the app. Happy investing. 🙂
Thank you so much Liquid!
Liquid, your timing is impeccable, yet again. I’ve been subscribed for 5 years now and have been amazed how your (unconventional?) strategies seem to work time and time again. I don’t know if it’s luck or skill, or a little of both :), but I hope you keep at it and keep the blog going!
I’ve been debating how best to get into Bitcoin for a while now since I think it could reasonably go up over 100K this year: https://www.tradingview.com/chart/BLX/uYKn9Nrx-Bitcoin-longterm-chart/
So after seeing your ShakePay recommendation a couple weeks ago I bit the bullet and bought some using your referral link a couple weeks ago. Again, looks like your timing couldn’t have been better.
Thanks for the kind words Jay. That’s a neat graph you referenced. I also think there’s a decent chance BTC can reach $100K this year. 🙂
A few years ago, I watched my fellow blogger were able to retired by investing in litecoin, it was literally went from $6 to $60 in just a matter of a couple month. It was still way too much risk for me.
I read your post, since you bought in the the $10K, and bitcoin shot up to $42K before cooling down. I thought, man, you’re a genius.
But it’s still way too much risk for me. I’m more of a the proponent of “no skin in the game”. I found Etoro trading platform, they offer $50 to sign up and invest $100, it’s like 50% off. So I signed up put in my $100, I got the $50 bonus, so I sold $50 worth of bitcoin, transferred $100 back to my bank. Now, I got $50 to play with.
You can do the same with the referral code to get a free $50. 😛
https://etoro.tw/3i3lOsb
I’m sure there’s a lot of bitcoin millionaires out there, lol. I haven’t heard of eToro before. Looks like an interesting service. But it won’t let me access the sight since I’m in Canada. Maybe I need to use a vpn or something.
I checked again, EToro is only for the US investor.
I’ve never heard of it until I saw the ad in Coinbase to join for the bonus.
Coinbase is going IPO in the first quarter of this year. And EToro is filing to IPO in the second quarter of this year. EToro is own by the 2 Bitcoin billionaires.
I might buy the IPO if it doesn’t exploded 3x the IPO price like AirBNB . I made a couple of trades and they earn 1.5-3% depending on the type of crypto OMG they’re so profitable both Coinbase and eToro. I think I’ll bet with the house instead 🙂
EToro and Coinbase are crambling to get more customers/traders hence all the bonuses that they’re offering.
Great post, as always. Can you buy Lite coin ,ETH or others cryptos with Shakepay or just Bitcoin. How much is the fee for a CAD 100.00 Bitcoin. How will Shakepay deliver it to me and how to store Bitcoin once you purchased. I have heard if you lose hard drive you will lose them and cannot recover ? Would you mind sharing the way you are storing your Bitcoins?
Thanks
BTW I used you link to open account with Shakepay
Thanks for using my referral code. Right now you can only buy BTC and ETH. I don’t know if they will add Litecoin in the future.
The fee is usually pretty low, but it depends. Once you buy BTC on the platform Shakepay will store it in your online wallet. You can access your online account via a computer or mobile phone.
You can move your BTC to your own digital wallet if you have one. You can create one on your local computer, phone, or USB device. But you have to remember your password, which is the key to withdrawal any coins in it. If you forget the password and don’t have the recovery seed then you are essentially locked out of your own wallet. If you lose your hard drive with a wallet on it, you can still get your coins if you have the seed phrase.
I store my bitcoin in multiple wallets. Most are in cold storage. I only have a few thousand dollars worth in my Shakepay account right now.
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