Dabbling in Cryptocurrencies on the Weekend
Do you have a few extra dollars sitting around unused? Here’s what you can do with them:
First, donate to the Oregon Food Bank. Anything helps.
But if you’re curious about Bitcoin and other cryptocurrencies, there are a couple of ways you can get involved… especially if you’re like me — not a technical person. Technical people are the ones mining cryptos and trading them on altcoin exchanges. For many of us, that’s pretty far out there.
One thing I believe, though, is that blockchain technology, digital currencies, and and distributed database technologies are going to play a bigger and bigger role in the future. Putting a couple hundred dollars into that sector was a good incentive for me to start learning more. I knew that the worst case scenario is that I’d lose a bit of money, while learning about a critical new and exciting set of technologies. Best case scenario is that I’d learn all that and turn those hundreds into thousands.
Please note that none of this is investment advice. I’m just sharing what I’ve learned.
Bitcoin Investment Trust (GBTC)
Greyscale Trust trades publicly with the symbol GBTC. Shares of GBTC can be purchased the same way you would purchase any other stock. Basically, you get a small piece of Bitcoin when you buy this stock, though it doesn’t correspond with the actual valuation of the underlying coin.
GBTC has been a rocketship so far this year. As the only simple way for average traders to buy a piece of Bitcoin through reputable ways, the stock has benefited from high demand and very limited supply. It shot up over $1000 per share before the Labor Day weekend, before dipping again and dropping close to $500. Since then, it shot up to over $1,700.
One of the reasons for the stock’s performance is investors’ hopes that it will be listed as a traditional ETF. The Winklevoss twins tried twice in early 2017 and were blocked by the SEC. However, they are appealing that decision and will get another shot. Even though the stock is overpriced (realistically, it’s not worth much more than $700 in terms of the actual amount of Bitcoin your share entitles you to), it is the only current way for day traders to get their hands on Bitcoin through the market, so the bubble could expand quite a bit.
There has been some good news for GBTC in terms of being listed as an ETF. On September 1 it was announced that the new ETF regulator at the SEC comes from a firm that represents the Winklevoss twins. Here’s a writeup about that.
There is a lot of risk associated with GBTC. At this point you’ll need nearly two thousand dollars to buy a share, and there’s no telling how high or low it might go.
Disclosure: I don’t own any of this stock anymore.
Bitcoin Services Inc (BTSC)
Bitcoin Services Inc is another way you can invest in the crypto market on public exchanges. Here’s how Bloomberg describes it:
Bitcoin Services, Inc. provides online based consumer transaction services and software. The Company provides escrow services for buyer and sellers of bitcoins and for the mining of bitcoins, as well as engages in the development and commercialization of blockchain software.
So you wouldn’t be buying any actual Bitcoin, but you could invest in a company that’s on the forefront of the industry and as of this writing trades at $0.30 per share. If you like penny stocks, here’s one.
Looks like something happened this past year. Disclosure: I don’t own any of this stock.
Coinbase
Coinbase is is widely considered one of the safest and most accessible avenues into the world of cryptocurrencies. Its userbase has more than tripled in the past year. Using Coinbase, you can use dollars to purchase three relatively stable coins: Bitcoin, Ethereum and Litecoin (and yes, that’s an affiliate link, which will get us both $10 if you try Coinbase).
Bitcoin, Ethereum and Litecoin are the most stable coins available, and all three have been on a months-long hot streak. As of this writing, Bitcoin is trading around $14,000, Ethereum is about $440 and Litecoin is at $100. Keep in mind that when you use Coinbase you don’t have to buy a full coin. You could use a handful of dollars to buy a fraction of a Bitcoin through a secure website and see what happens.
Levelheaded analysts predicted, months ago, that Bitcoin would pass the $7,000 mark in November. It did much more than that. Other analysts have predicted a $100,000 cap — which I used to think was a big exaggeration — but watching Bitcoin surge toward $15,000 now, in December, suggests that people have a whole new view of the cryptocurrency. Who knows what will happen if it actually goes mainstream.
Getting involved
So, these are three ways you can go from being an outsider to dipping your toes in the cryptocurrency markets. Again, these are volatile markets right now. Don’t take any of this as advice, and be sure to do some research before buying anything.
When Bitcoin passed the $10,000 mark, many of my friends told me they wished they’d bought in earlier. People said the same thing at the $7,000 mark, the $5,000 mark, and the $1,000 mark, all of which happened within the past year. Invest wisely my friends.
