Photo Illustration by Omar Marques
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Most people know little about Bitcoin. It’s a brand, like the internet was in the late 1990s that created great excitement in a small fanatical audience but confusion, indifference and often hostility in the mainstream and establishment.
“I don’t need email,” people said, while many would look blank and not know what it was. It wasn’t until the social media floodgates opened that the mainstream piled in. Now all the marvelous benefits and distractions of being connected are taken as read.
The benefits of crypto are not well understood or even considered beyond the possibility of a life change rising in value for coins that an investor might ride to riches. This may well be the future for Bitcoin so to start a list of reasons why you should hold some Bitcoin must start with:
1) A lottery ticket to a ride that some see having a 1,000% upside.
It could happen. There are only going to be 21 million bitcoins (BTC), many of which like Roman gold coins are already lost forever. If bitcoin was to be worth just half of the gold in the world it would be about $200,000 a coin. If all the BTC was worth $1 trillion then the price would be north of $50,000.
With BTC currently at $7,400 and the ability for people to buy tiny amounts, there is a fun dividend in actually holding.
2) Blockchain is “the next big thing.”
If you want to catch that wave when it lands, you need to know a bit about it. Buying crazes on the basis of zero knowledge is the short cut to the poorhouse. Owning bitcoin and going through all the stages to “get” crypto will position you perfectly for the day “crypto IPO” hits. That day will come and it will be big. Owning bitcoin will position you to take advantage of that boom.
3) Portfolio diversification is crucial.
Everyone should have a little gold, for example, to buffer the roller coaster of other financial instruments. Bitcoin and gold are very similar in as much as they are havens. “Physical” bitcoin however is easier to store, faster to sell and has much greater upside if you are laying in assets for what you see as being extremely volatile times in the future. If you are not in the “bullets and corn beef” legion, the gold, silver and bitcoin are must haves, with bitcoin the king if you feel you might have to jump on a plane to safety. It’s easy to travel with bitcoin; with gold bars and sacks of silver, not so much.
4) Bitcoin is currently a great hedge especially for equities.
This is because for now at least, bad news for equities is good news for bitcoin. That bad news is currently the China trade war. The trade war is bad for equities and there is a clear link to moves in BTC and emergent good/bad news on the trade negotiations. Bitcoin sends the signal then the news appears, which one would imagine is because of the insider news flow in crypto-hungry China.
5) Bitcoin is useful money.
You can buy things with bitcoin, and with bitcoin debit cards you can use it to buy things anywhere that takes Visa/Mastercard. While this can prove expensive, a bitcoin debit card is another off ramp for holders wishing to spend their profits. Bitcoin is also a useful currency for B2B and while currently niche, bitcoin use for international payments is quickly expanding when products need to be bought quickly and the vendor needs to establish transfer of funds fast to cut out delays. For large sums bitcoin beats credit cards hands down as a bitcoin transaction can’t be reversed unlike a credit card payment that is always vulnerable to charge backs. Transfers can take days to materialize, so for anything that’s a “rush job” bitcoin is the best possible way to pay if the vendor takes BTC.
Every investor should buy some bitcoin, even if it’s just $1. It is always best to be too early to a financial phenomenon than too late and it turns out the bitcoin story is still in its early chapters.
The Bitcoin story is still unfolding.
If you are an investor, it was obvious you need to hold equities, bonds, gold and cash. That is still true but these days, you need to hold a little crypto, because it is a new positive sum financial instrument. If you don’t have Bitcoin, the world won’t end, but you will be less diversified and more at risk than an investor that does hold some. Bitcoin will continue to be the ‘kingpin’ of the emergent blockchain industry and everybody needs a little bit of exposure to that in the same way as they needed a little Amazon in 2002.
In 2018, Chambers won Journalist of the Year in the Business Market Commentary category in the State Street UK Institutional Press Awards.