We hope the new year has been treating you well! Did you think we closed up shop and shut down?! Our bad. We know we haven’t been around much lately; it’s been a couple months since we’ve posted. So where have we been?
Well, a sizeable investment we made in Bitcoin back in 2013 has paid off over the last couple of months and we are happy to say we’re now Financially Free and newly retired… we wish! You weren’t really buying that were you?
The truth is, life got in the way so-to-speak and we haven’t been able to put our complete focus into the blog. We plan to get back on track and look forward to settling into a good routine in 2018 of giving new and original content to our readers on a regular basis, and that starts today.
Speaking of Bitcoin, how about that run it was on, huh? If you hadn’t heard of Bitcoin in the middle of 2017, you had by the end of the year. The frenzied pace at which the buying, the media coverage, and the hysteria occurred was fascinating to watch. If you had any skin in the game it was even more than that.
I first heard of Bitcoin sometime at the start of the decade. I was instantly intrigued. The concept – an online currency that could be used to make payments from person-to-person without the need for a middle-man – made a ton of sense to me, even if I didn’t understand the underlying technology.
So way back then, although I had heard of Bitcoin and thought it was an awesome idea that could change the world, I wasn’t tech savvy enough to make a purchase. It wasn’t until mid-2013 when Coinbase began operating and Bitcoin was at a then all time high of around $800 that I actually decided to buy some.
I told anybody that would listen about it, my goal being to get at least a couple of friends as enthusiastic about it as I was. What I accomplished instead was to basically get laughed out of the room and told how ridiculous the idea was, that Bitcoin had no inherent value, and that I might as well throw my money in the trash. One buddy reluctantly decided to go along with the hype and we each decided to put in the big sum of – wait for it – $200!
All of a sudden I was the proud owner of .250 BTC. I wish I could say I used dollar-cost averaging and kept funding my little Bitcoin venture but alas, I did not. What I did instead was put my $200 in and pretty much forget about it. Even that didn’t turn out to be such a bad deal, because at Bitcoin’s high in 2017 that $200 investment was worth over $4,000.
Still, it’s hard not to feel like I missed the boat there, especially considering how early on I knew about and believed in the potential of Bitcoin. So, when the cryptocurrency craze started heating up there in the 3rd quarter of 2017, FOMO started setting in hard. How did I assuage it?
By investing in altcoins, of course!
What are altcoins?
Altcoins are cryptocurrencies other than Bitcoin. Some of them are very well known (Litecoin, Ethereum, Ripple) while others are lesser so (Verge, Tronix, Golem). There are hundreds of them, most of which are developed for a specific reason, and many of which are useless.
CoinMarketCap shows the market capitalization of most circulating coins, and gives a good visual of who the major players are. As you read through that list, chances are the further down the list you go the less likely it is that you recognize the coins.
Most altcoins are so obscure and useless that you’ll never hear about them. That being said, in my mind there are still some altcoins that provide a good buying opportunity, and reasons you may want to put some skin in the game. Today we’re going to talk about what those might be.
So why invest speculate in altcoins over Bitcoin, anyway?
Well there’s a few reasons that I do it.
1. Get in at the bottom.
Altcoins are cheaper than Bitcoin, and generally speaking they are much cheaper. Like, super-duper cheaper. You can buy some of them for pennies on the dollar. Again, most of them are junk, but it doesn’t take a lot of money to get in the game and when you can buy them for less than a pack of gum it’s easy to diversify and hope one hits big.
2. Better technology than Bitcoin.
Bitcoin is the standard-bearer for which all other cryptocurrencies are measured not because it’s the best cryptocoin, but because it was the first. When it was released, it’s blockchain technology was an innovation and had a promising future. Now it’s been surpassed – technologically, at least – by other coins. Do these others have a brighter future than Bitcoin? Who knows, but if it’s the technology you’re betting on, Bitcoin might have the big name but it doesn’t have the best stuff.
3. Have some fun.
That’s what this is all about. Let’s be realistic here: The chance to hit the next Bitcoin and become extraordinarily rich on a very small investment is very low. That doesn’t make it any less fun to think about, though.
Why should you stay out of the game?
Well, there’s probably a bunch of reasons. Here’s a few. (1/17/18: Now would be a good time to state that this post was written before the last two days. If you’ve been paying any attention to the cryptocurrency markets lately, you know that they’ve been plummeting. This only further underscores the reasons you should stay out of the altcoin game).
1. It’s a speculators sport.
Quick, what’s the cost of a Bitcoin right now? If you’ve been following the cryptocurrency markets at all you know it’s a fool’s errand to look it up because by the time you get me an answer it will have already changed. Altcoins move the same way, sometimes with wilder swings.
2. High barrier to entry.
Bitcoin, Litecoin, Ethereum, and BitcoinCash have become easy buys thanks to Coinbase. Getting into altcoins is not so simple. A little bit of research makes it easier, but it still takes some technical savviness to make altcoin purchases and store them properly. You need to be comfortable with using an online cryptocurrency exchange, and hopefully proficient with cryptocurrency wallets. If you’re not, you need to do some research.
3. You just might lose it all.
Dabbling in any kind of cryptocurrency is a risky venture. Make no mistake about it, you could easily lose your entire investment for reasons that are totally out of your control. Remember that $200 of Bitcoin I bought back in 2013? Well, what I failed to mention was that I took half of that initial investment and sent it to an exchange where I wanted to dabble in some altcoins at the time. Long story short, that $100 I sent to the other exchange disappeared into thin air when that exchange shut down out of the blue. It stings already to think of what that $100 would be worth now if I would have just kept it in Bitcoin; it’s really going to hurt if Bitcoin continues making gains.
4. The game is rigged.
Against you, at least. The day-traders that on a regular basis move the altcoin market in wild swings know these coins inside and out. You and I don’t.
So What Altcoins am I invested in?
As mentioned earlier, most definitions of the word “altcoin” includes all cryptocurrencies that are not Bitcoin. This would include Litecoin, Ethereum, and BitcoinCash.
Personally, I don’t really think of those 3 as altcoins because they are so easy to purchase. With a credit card or bank account you can purchase them as simply as buying something from Amazon.
So, even though I do own a little bit of all 3 of the aforementioned coins, they’re not what I think of first when I imagine altcoins. Still, I’ll include them here in my Cryptofolio.
- Litecoin. Bitcoin’s “little brother”. Faster, cheaper, and… lighter, I guess?
- Ethereum. Blockchain technology that focuses on “smart contracts.” I don’t get it, but it’s making a lot of people a lot of money, so whatever here’s 50 bucks.
- BitcoinCash. The offshoot of a Bitcoin “fork,” a split in the blockchain that occurred when an agreement couldn’t be reached on how Bitcoin should have moved forward. I got some for free basically because I owned Bitcoin prior to the fork. It’s enthusiasts say it’s a better than it’s namesake. I’m not sure.
- Ripple. This is the one I’m banking on, literally. Whereas most cryptos think of themselves as adversaries to the banks, Ripple is trying to work with them. It wants to be the settlement currency of the future for banking institutions, and it’s making headway in its quest.
- Verge. A privacy coin. That’s pretty much all I know about this one but John McAfee tweeted about it and is there anyone better to take financial advice from? (Rhetorical question, in case it wasn’t obvious).
- Tronix. Wants to use blockchain to decentralize the internet… or something.
- Stellar. Similar to Ripple in that it wants to improve currency settlement times and fees. Instead of trying to convince banks to use its technology it is focusing on individuals, especially in developing nations.
How Do You Buy Altcoins?
As I mentioned, you can easily purchase Litecoin, Ethereum, and BitcoinCash on Coinbase.
It can be more difficult getting your hands on the other altcoins. There are some different ways to go about it.
The first would be to go onto Coinbase and buy Litecoin or Ethereum. From there, transfer however much you want (you can transfer fractions of a coin) to a crypocurrency exchange, such as Binance. Once your transfer has arrived, you can use their trading platform to purchase whichever coin you’d like. It’s not recommended to leave your coins on an exchange for any extended period of time, so you’ll need to evaluate how to set up a cryptocoin wallet as well, especially if you have any significant money in your coins.
The second way would be to use a platform such as Shapeshift to send your coins straight from Coinbase to a wallet you’ve already set up. You pay a transfer fee to Shapeshift for handling the exchange.
I really enjoy dabbling in the cryptocurrency world. It’s fun to dream about the possibility of a coin I bought for pennies going on a crazy run, but in all likelihood it’s just that – a dream.
I think of my cryptocurrency portfolio as play money. When figuring up our portfolio we don’t include our cyrptocurrencies. In fact, we couldn’t tell you how much money we have in crypto because the prices fluctuate so much it’s not worth trying to keep up with it. Buy-and-hold is our motto, and we don’t plan on worrying about removing anything from our crypto accounts for a long time.
What do you think? Are you currently invested in altcoins? Is it a dumb idea to be, or do you agree that it’s okay if it’s just for fun? Let us know in the comments!