Now that 2020 has a come and go it’s time we talk about the elephant in the room:
Bitcoin
You can no longer ignore it. You can no longer hate it. It’s here to stay. It’s not going to zero. Now what the f**k do we do with it?
Well first step is your need to give it some respect and the second step is you need to consider buying it.
We live in a evolving complex society that is becoming increasingly more digital. If you believe in that statement like I do, then the natural conclusion is that we will evolve into a effortless cashless system.
The Covid-19 pandemic has accelerated this evolution. Personally I hate using cash but there is a substantial portion of society who still use it and the pandemic exposed the issues with cash.
Cash in my opinion is completely inefficient. It is essentially an end state.
A tenant of personal finance is making sure every cent and dollar is put to work. Well when you perform transactions in cash there is a small amount of waste which also occurs. Think about it? When is the last time you could account for every sent after spending a dollar?
In 2008, Satoshi Nakamoto (aka Bitcoin Jesus) introduced Bitcoin as a electronic cash(less) system. This paper allowed us to start to wake up.
In nine pages of brilliance, the mysterious Satoshi began to challenge how we view money and our payments system. However today, Bitcoin doesn’t resemble what Satoshi originally theorized.
Bitcoin is like any other startup product. The true use case wasn’t known until the product was built and the public began to use it. A great way to document its progression is to see how the Bitcoin Bulls have viewed it over time.
We’ve come a long way in 13 years.
From someone selling 1,700 Bitcoin at $0.06 per Bitcoin (which today is valued at $32,162.27 per Bitcoin or roughly $55 MILLION) to Jim Cramer recommending Bitcoin as a possible investment to use as a store of value.
I am pretty sure Satoshi Nakamoto didn’t have this in mind when the white paper was released. The public has determined this is possibly the correct use of it. Or at least this is how WE currently want to use Bitcoin.
However we need to remember that Bitcoin is still young. Its often compared to gold but thats not appropriate either. Gold has been used as a store of value since at least 700 B.C., meanwhile Bitcoin is 13 years old.
Its still in it infancy so volatility is to be expected. This also means its lasted a decade. If it was going to fail it would have done so during its earliest years.
Bitcoin is here to stay.
Now who should buy it? Well all of us. But we shouldn’t risk everything on it. The volatility is hard to stomach for some and there are risks. Which is why if you’re going to buy Bitcoin it should not exceed more than 5% of your net worth and for most risk averse investors it probably shouldn’t exceed 1%.
Because it is in its infancy there is a chance here to hold on to this forever and use it to create generational wealth. Thats how I view it. Bitcoin may not settle in its value until I am long and gone, but my grandchildren or great-grandchildren maybe able to benefit from my purchases today.
I don’t view Bitcoin as something that I need today. I view it as something that it useful 50 years from now.
Now Bitcoin is not without its drawbacks.
We can talk about it original days being used for the black market, or the issues with holding private keys, or the energy production from Bitcoin mining operations. I can go on and on but you get the gist.
It has its issues.
However the risks of NOT owning it outweigh the benefits of avoiding it. Bitcoin is risky. It is volatile. However 1% of your networth won’t break you or prevent you from achieving your goal. If Bitcoin is indeed at its infancy, you’re getting in on the ground floor.
If you want to learn more about Bitcoin or cryptocurrency in general, MIT Opencourseware has a great course on it.
As always if you have questions or concerns regarding creating an emergency fund, investing, real estate, insurance, or planning for the future, don’t be afraid to speak with qualified financial advisor. Smart Asset has a great tool to find an advisor in your area or feel free to email me (contact@surgifi.com) to help you on your path to financial independence.
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