Dear Early Investor,
People think you should buy bitcoin because the price might go up.
But the real reason you should own bitcoin – especially in your retirement portfolio – is that it’s a bet on a monetary revolution.
Crypto assets are all about cutting out the banks, middlemen, financiers and academics who control our current monetary system.
The monetary policy of today’s world is a mess rife with conflicts of interest and bad incentives. Every country does it similarly. And government is always tempted to print money. It punishes savers and rewards borrowers.
A well-constructed cryptocurrency, on the other hand, has a hard cap on the number of “coins” in existence.
There will only ever be 21 million bitcoins. You can’t change that number. There are a little more than 15 million available today.
So if we’re looking at bitcoin as a competitor to the dollar, there’s no contest. The U.S. government, for example, borrows more than $1 million each minute… printing money like crazy all the while.
That’s why bitcoin has risen from around $0.005 in 2010 to more than $5,000 today.
Bitcoin is a call option on a future where it is mainstream money. You don’t sell for double or triple what you put in; you hold on and hope it keeps going up. Less than 1% of people own bitcoin today, and if it becomes mainstream money, today’s bitcoin owners may be tomorrow’s new 1% of earners.
But it’s not just bitcoin anymore. There are hundreds of interesting cryptocurrencies out there – all competing against each other, sharing code and breaking new ground.
Here’s what’s really revolutionary about it…
All these “coins” or “tokens” (digital assets) have their own funding mechanism – the initial coin offering, or ICO – in which well-run projects raise tens of millions of dollars each week… hundreds of millions in many weeks, actually.
So they don’t need the stock market or venture capitalists. Crypto is its own funding source.
These crypto projects are trying to do big things like overthrow large incumbent financial institutions, software companies and (in some ways) governments – or at least loosen their monopoly on money.
After all, there’s no good reason a government should have a monopoly on legal tender. Libertarians like Ron Paul have long been calling for “currency competition.” We shouldn’t be forced to use dollars that erode in value.
The stakes are high.
Crypto has the potential to be a better form of money, compared to the current (barbaric) methods employed by most governments.
So that’s why you would want to own at least a little bitcoin in your retirement account. Capital gains taxes can be major there. Because if the crazy revolution happens, you’ll do very, very well, as long as you buy before half of the country gets in.
If it becomes popular as a way to store value for even 10% of the population, that’s more than enough to take it to at least $100,000 per coin by my rough estimates. It’s hard to say exactly, but demand is high and rising fast.
Each bitcoin is divisible into 100 million pieces. Each piece is one “satoshi.”
If bitcoin continues to rise in value, we may start thinking about prices in satoshis, not bitcoins. Bitcoins will be for very large purchases, and satoshis will be for everything else.
This is already happening in the crypto community. When we buy other cryptocurrencies, we usually buy them with bitcoin. It’s easier to think about thousands of satoshis than it is to think about tiny fractions of a bitcoin.
You don’t need to buy a whole bitcoin. Start small, and it could still turn into a great deal of money one day.
If you’re looking to do it in a retirement account, the most well-known player in the space is fittingly called Bitcoin IRA. The company takes a 15% upfront fee, but the tax savings down the road could be tremendous if bitcoin goes mainstream.
If you’re intrigued by bitcoin and the idea of investing in smaller (new) cryptocurrencies, watch my new presentation and join First Stage Investor. It includes my top four coins, all of which are brimming with potential.
Good investing,
Adam Sharp
Co-Founder, Early Investing
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Source: Early Investing