Bitcoin is the clear and outstanding cryptocurrency basis for our sound money future. Bitcoin is an engineering breakthrough. This is our generation’s internet. Blockchain is the next internet.
Call me a Bitcoin maximalist, but I forged my experience during the great 2017-18 crypto pump and dump. I’ve learned a lot since then and this has led me to speculate back into the space. I’ve learned by doing. Over time my mistakes and learnings have greatly improved my fundamental understanding of Bitcoin, cryptocurrencies and where this new technology is taking us. Blockchain is the next internet.
Blockchain technology is “eating the world”
I believe a speculation in cryptocurrencies is a speculation on the future. I’ve really enjoyed the novel and challenging experiences of navigating early-stage blockchain or “distributed ledger” technologies. The interfaces are clunky and evolving. The only way to learn is to actually use the blockchain, to transact with real money at stake (more correctly – currency at stake – thanks Mike Maloney). Yet, the experience is similar to the internet experience of the 1990’s. Who remembers bulletin boards, IRC and even Archie? Things took a big step up with the Mosaic browser in the mid 1990’s. This is where we are now, with apps like Crypto.com being the modern step-up akin to the early Mosaic browser.
Have a look at the adoption rate chart below to get a sense of where we are.
Why Bitcoin? Blockchain and the decentralised immutable record.
Bitcoin, crytpocurrencies and blockchains are here to stay. Blockchains will underpin most of our future services. They already underpin more than you may realise. It’s unavoidable and down to the intrinsic properties of a public, distributed ledger.
Every transaction is recorded on a public ledger. The public ledger is stored by every node on the network. The Bitcoin blockchain is decentralised: a peer-to-peer network with no off switch. The blockchain is immutable: transactions cannot be changed afterwards unless you change everybody’s copy. The Bitcoin blockchain is based on open source code. It is in everybody’s interest to ensure it is safe and working correctly.
Why Bitcoin? Sound Money.
Bitcoin was the first cryptocurrency. Bitcoin has the has consumer recognition and first mover advantage. It already has the network effect. Scarce by design, there are only a limited number of bitcoins that will ever be created – 21 million. It’s deflationary. Finite money for a finite planet. Welcome to our future. The market dynamics of supply and demand means the price of Bitcion in whatever fiat currency you measure must increase as supply decreases. All the Bitcoin that will ever be mined have almost all already been mined.
Compare this with the fiat currency (fiat means “let it be”) our central banks and governments rely on. These fiat currencies (commonly called US dollars, British Pounds etc.) grow on the magic money trees called the printing press and the fractional reserve banking system. Most fiat currency is digital and is not actually printed, but the metaphor is apt. Money printer go brrrrrrrr.
Few politicians understand how money actually works. Be one of the few people who understand how money works. The 2008 financial crisis and the 2020 pandemic have shown us very clearly there is a magic money tree when it suits governments. Worse still, many central banks, such as the American Federal Reserve banks, are actually private corporations!
This deceit and double standards don’t sit well with public sector workers in Britain. These key workers have endured a decade of zero salary increases and public sector austerity. Why? Because apparently there is no magic money tree. Wrong.
Why Bitcoin? Be your own bank.
If you watched the videos and went down the rabbit hole you now understand that fiat currency is debt. In order to create more currency more debt must be created. Such “money” is inflationary and is a ponzi scheme run by the banks and central banks. Bail-outs and bail-ins happen regularly around the world.
Bitcoin is different. You own your own private keys. You are thus your own bank. Don’t lose your keys! It’s incredibly empowering. Your bank now travels with you, freed from geography. Such great power does come with great responsibility. You need to become digitally literate. We must all become literate in encryption as our privacy is lost. You can only learn this by doing. This is the excitement and learning of blockchain as the next internet.
Storing your Bitcoin with a third-party, like a bank, an exchange or any third party service provider, comes with risk. If you don’t own your keys you don’t own your Bitcoin. The exchange could be hacked or close down – any of the same things that could happen right now with your fiat currency bank or brokerage. Your country has a deposit protection scheme you say? That promise is backed by the central bank’s ability to create more debt. In effect, that promise to pay is borrowing from future generations. Opt out of all of that nonsense and be your own bank with Bitcoin.
Why Bitcoin? An engineering breakthrough and a store of energy.
Bitcoin takes energy to mine by solving cryptographic algorithms or problem sets. As its value grows, it represents a store of energy. We need a finite money for a finite planet. This is an interesting and novel concept at the edge of our imagination. All revolutionary technologies have enabled things beyond the original conception.
Are you ready to go deep down the rabbit hole? Do you want to know the taste of the orange pill? Have you watched the Hidden Secrets of Money? Do you already have a firm understanding of sound money principles? Prepare for a masterclass in history and technology with Michael Taylor. You will have your mind blown afresh with each listen.
How to invest in Bitcoin and other cryptocurrencies
Bitcoin and Cryptocurrency Tax
As we enter the next phase of Bitcoin’s growth, you may well sell or take profits at some point in your journey. In the United Kingdom, Bitcoin is regarded as a capital gain if you are not a “trader”. That is, you do buy and hold kind of activities for personal investment. You already have a £12,300 pa allowance for capital gains in the 2020-21 tax year. The “know your customer” requirements regulate your activities. Any company you use to get your fiat currency, like Pounds (GBP), into Bitcoin will ask for identification documents. HMRC has required some exchanges or third-party crypto companies to report their customer assets. Assume your assets will be reported too.
If you trade Bitcoin or cryptocurrencies as a business activity then HMRC treats your gains as income. HMRC applies complicated “share pool accounting” for calculating the cost basis of cryptocurrency disposals and gains. Read further in this useful crypto tax guide.
Cryptocurrency Index Funds
At first, I sought broader exposure back into the cryptocurrency asset class via diversified index funds. I sold my Bitcoin and selected the Invictus Captial C10 Hedged fund. This fund gives me exposure to the broader asset class of crypto currencies. It also moves the fund to cash when Bitcoin goes down hard! This proved to be a class-leading cryptocurrency index fund.
Proven methods to invest directly in Bitcoin
As my knowledge grew, I came to truly understand that I had to own Bitcoin directly. These index funds are great for broader exposure and can replace the crack rollercoaster of novice altcoin trading and sleepless nights.
On this journey I’ve tested countless exchanges to invest in Bitcoin and other cryptocurrencies. I’ve mostly looked with a preference to UK-based investing using Pounds (GBP). That wasn’t luxury I could afford in the earlier days when I had to transfer funds in Euros using the European SEPA network. You always want to avoid the SWIFT network. For moving fiat between bank accounts in different countries I use and recommend Transferwise.
Here are the best ways to buy Bitcoin in the United Kingdom (and Europe). You can do this.
Here are the best ways to automatically buy Bitcoin in the United Kingdom (and Europe) with regular investments. Bitcoin Boss Level! Automate your investments.
Bitcoin is the clear and outstanding cryptocurrency upon which to base a sound money future. Look around you. There is no competing technology. This is our generation’s internet. Get on board the crypto train!
Learn from my mistakes so you can make better mistakes. If you value these learnings please support this work and use my links to sign up for services. Are you new to Bitcoin? What are your thoughts on Bitcoin as the next internet? Let me know in comments below.