Thinking about Bitcoin?

Sounds good doesn’t it, all the news and all the investors saying about how much money they have made. 10,000, 100,000 or even millions. It’s a very attractive thought but the reality of the situation is if you are a normal individual with a small amount of spare money to play/invest with then Bitcoin will not make you a millionaire. Chances are it won’t provide you with enough to pay the mortgage and it won’t be enough to retire.

Now obviously I am assuming a lot of you with those bold statements but let us assume you are an average man for a moment and live in the UK. You are 38 years old, 5ft 9in, weigh 13 stone, you got married at 30 and earn £28,270. Those statements will cover a lot of people. If you got married 8 years ago I will assume kids are here or planned so disposable income is limited. Realistically what could you afford to save/invest each month? Maybe £200 if you are lucky.

I know you have probably heard these stories of the guy that brought a pizza for bitcoins and every time I hear it the number of bitcoins changes. Its probably an urban myth, but if I said to you buy me a pizza and I will give you 1000 ABC coins, would you? A lot of people wouldn’t but that person took a risk on bitcoin and hopefully he held out long enough that he made some good money. Bitcoin had a long time of not doing anything or at least very little. If I gave you 1000 ABC coins for a pizza and a year from now they were valued at £5000, would you cash in? Part of making a good financial decision is not just making the decision to buy in the first place but it's knowing when to sell. You only make money when you sell and until then it’s all just speculative.

So, we could take your £200 a month x 12 month we have £2,400 to play with. The best price you would have got in the last 3 months is about £3000 per coin so your investment has got you 0.8 coins. Today’s rate (31/12/17) is £10,200 per coin so now you have 0.8 x £10,200 = £8,160. Not bad, would have been a lot better had you sold last month but no one knows what’s around the corner so we just take today as an example. To triple your investment in 3 months sounds great, even after you add a few transfer fees and pay the tax you have done great. The concern and thought process is always because you have tripled your money in the last 3 months should I leave it for another 3 or another 3. Just remember though Bitcoin isn’t a great product and at some point, a new coin will replace it with fewer flaws and you only earn money when you cash out. Also, if we are truly honest £8,160 is nice, but it’s not life-changing money. You can’t pay the mortgage off, you’re not retiring and no Lamborghinis are being brought just yet.

So now what? Well, Bitcoin isn’t the only coin available, there are a lot better options available. Bitcoin is expensive to transfer, not private and too slow to send. So, I think you should look at what else is on the market, what solves these problems and what can give you better growth potential than 3x in 3 months and essentially diversify your portfolio so that if something happens to Bitcoin you protect yourself.

Nowadays when a new coin is launched the team is assembled, a gap in the market identified and white paper (proposal) is written up. If people buy into their vision whether its unique or they aim to follow someone’s else’s path but with a twist then they can invest. Things happen a lot quicker now than they did for Bitcoin because the market is already made and its so much larger now, new coins can give you much quicker returns than Bitcoin ever could.

Another thing to consider is the supply. Bitcoin is clearly the largest in crypto with a circulating supply of 16.7million, each valued at £10,200 giving a market valuation/cap of £170 billion. Another very popular coin is Ethereum. ETH has 96.6 million coins in circulation at a price of £558 each giving a market cap of £54 billion.

So, the total Ethereum was to ever catch up with Bitcoin for market cap the price would be in the region of £1800/1900 per coin, that is just 4x. That’s not going to happen overnight, some people think it can’t happen and of course this is the best case situation that it could catch up with Bitcoin. So, if you were hoping for massive returns we cannot look at this high-value coins as they are already too expensive for our budget and we need to pay attention to the number of coins in circulation in relation to the market.

So, let us look at the smallest players. The lowest fee for a crypto coin is 1 Satoshi. A bitcoin split into 100 000 000 parts is 1 Satoshi. If a coin ever costs 1 Satoshi (sat) and it moves to 2 sats you just doubled your money. The problem is that usually, any half decent team with a good product will not be coming in at this level. NAGA coin just started and they were selling at $1 per coin. So, to make a life-changing amount of money you need a decent amount in the game, and these are coins that have not launched yet, no history, no trends to look at. Just a fancy website and promises of what that could achieve. So are an obviously high risk.

My recommendation to you is to look for a coin with some history so you can see some trends and you can witness the community behind it but still new enough that the price is still reasonable. Also, look for something that comes to the market to fix a problem that other coins are trying to do. This way you can see there is a market for it. If I create a coin with blockchain technology for people to upload their children’s pictures too, as wonderful as this may seem is there really a market for it?

One coin that I believe meets a lot of this criteria is DeepOnion. 6 months old, valued at £5 per coin, focusing on the anonymous transactions which clearly as a large market to grow into already with Dash at £775, Monero at £260 and Zcash at £410. If they only match Monero that’s a 52x return. Plus do you remember what we spoke about supply: Monero has 15 million coins in circulation compared to DeepOnion 4.5million. Suddenly your £10,200 investment could achieve 52x and that could do some great things for you and your family.

DeepOnion has lots of great features to come online in 2018 but I will let you read all about it yourself at www.deeponion.org

Obviously, every investment is not without risk and tomorrow it could all be worth nothing. But you will not get 52 times your investment with any savings, premium bonds, ISA or Bitcoin and as we are talking about £200 investment of spare cash you have it is not the end of the world if you lost it. But what if? What if by having 1 less meal out or fewer beers to put aside that £200 a month you could generate life-changing money. Is that worth a try?