DISCLAIMER: Every information contained in this document is based on the experience of a blockchain and BITCOIN strategist and should not be regarded as financial advice or a solicitation to buy bitcoin.
This documentation is the continuation of the previous version, this content will cover the Bitcoin Adoption Strategy phase known as (COHORT TWO).
LEVERAGING THE BITCOIN ECOSYSTEM.
The last decade has been a breakout year for Bitcoin performance as well as its adoption. We believe that acceptance of digital assets is in the early stages and should continue to grow markedly in coming years. This content explains how you can leverage the bitcoin ecosystem as a beginner and as an investor who can weather the volatility associated with the market. We seek to provide you with a guide to understanding digital currencies and where and how you might fit in an investment portfolio.
In this article, we will explore:
- Few of Bitcoin’s use cases.
- Associated risks and price volatility
- Best Investment Strategies.
- Suggested Applications and Platforms to leverage based on your jurisdiction (insight on Hard Wallets).
FEW OF BITCOIN USE CASES.
Some of its most effective use cases are in Cross-border remittances, Daily transactions, Store of value as well as Increasing cash flow. Indulging it as a way of building generational wealth is not uncommon because of the Return on Investment (ROI) it has generated in the last decade irrespective of the price volatility.
ASSOCIATED RISKS AND PRICE VOLATILITY.
No investment is without risk, but investing in bitcoin carries different risks and responsibilities compared to traditional investments in stocks, bonds and funds. Bitcoin investors play a big role in keeping their bitcoin safe.
These are the key things to know: –
The value of bitcoin can be extremely volatile BUT irrespective of the volatility, when you invest and think long-term, you are wise and safe because you will end up incurring what is known as “Long Term Capital Gains”
Many investors piled into Bitcoin after it broke the $20,000 barrier in December 2020 and continued its bull run into April, when the spot price surged above $64,000. But in the months after, the price began a long decline, with the spot price falling below $32,000 by early June. Longtime investors in cryptocurrency had seen this before and are panic-free because they know
“Every all-time high will become a dip, and every dip will be followed by a bull run”
so, one of the best ways to play safe is by investing for a long period (long period is classified as at least 48 months and more) and buying more time to yourself as an investor. Bitcoin reached its previous record high in December 2017, when the spot price came near $20,000, and one year later the spot price was below $3,400. So, when investing in bitcoin, understand that the value can drop quickly and may take months to regain previous highs.
BEST INVESTMENT STRATEGIES.
I will be Highlighting the best strategies for beginners who are willing to invest and not day-traders who are keen about short-term gains. The following are the recommended investment strategies.
1) Dollar Cost Averaging (DCA)
is a simple and powerful investment strategy. Rather than finding the perfect moment to buy and sell bitcoin, dollar cost averaging simplifies investing by focusing on investing a fixed amount of money into your portfolio at regular intervals. That is, buying bitcoin recurrently either daily, weekly, bi-weekly or monthly based on your financial strength.
The benefit of this approach is that you don’t need to worry about short-term volatility like a trader, you will only be adding to your portfolio and investment regardless of whether the market is up or down. The focus is long-term returns, as Bitcoin is an asset with strong fundamentals that tend to increase in value over the long term.
For example: (this is just an illustration for the sake of explaining DCA)
Let’s assume you invested €1,000 on the 7th of each month into bitcoin. The price of the coin always bounces around, like any asset, which means that each month, your €1,000 will buy a different number of coins.
According to our illustration, In January, the price of bitcoin was €10, so you were able to buy 100 coins. In February, the price dropped to €5, so your €1,000 bought you 200 coins. Then in March the price went up to €20, meaning you could buy another 50 coins. Overall, you would get 350 bitcoins for €3,000, at an average price of €8.50 per coin.
Investment from Jan 7 – Mar 7
Now let’s look at if you’d made a one-time purchase of €3,000 in any one of those months, and how many bitcoins you would have as a result:
€3,000 purchase in January = 300 coins
€3,000 purchase in February = 600 coins
€3,000 purchase in March = 150 coins
When looking at these numbers, it seems like the best approach would have been just to buy the coins in February, and experience even higher growth once bitcoin’s price increased in March.
There are two problems with this approach:
Problem one, is that you have no way of knowing how the market will behave in the short term. If you invest in Bitcoin, you might be able to predict that the price will increase over the long-term, but it’s very hard to predict what will happen in the next week or month.
If you take this approach, of saving your money until the price hits its lowest, you could find yourself waiting for a long time for what you believe will be the all-time low, if the price gets there at all (because remember that while it’s easy to look back at the Bitcoin price history and point out the low points, at the time it’s very hard to know when the market has bottomed out).
This is a time when you could have been building your crypto portfolio and growing your wealth. Problem two is that you might not have €3,000 to invest in one go. Most people have income that is paid at regular intervals, such as a monthly salary, which means it’s simple to set aside a small amount each time we get paid to put towards our investments. In the previous example, by the time the low hit in February, you would have only had €2,000 to invest (based on the schedule of putting aside €1,000 each month), so it wouldn’t have been possible to invest the full €3,000 at once.
Today, it’s very easy to say, “I should have invested €10,000 in Bitcoin when it crashed in March 2020.” But did you have that much free money available to invest at the time? If not, investing a small amount each month, even as the price goes up, is a better approach then putting aside your money in the hope that there will be another crash, which may never happen.
2) Hodling (Buy and Hold)
It is both known as a misspelling of the word ‘hold’ as well as an abbreviation for ‘hold on for dear life’ – is a long-term strategy that has proven to be one of the easiest and more effective approaches out there. The strategy is simple, you buy your bitcoin, then you hold them and you wait for at least three to five years. To date, this has been the method that has produced the biggest gains with Bitcoin.
SUGGESTED APPLICATIONS/PLATFORMS TO LEVERAGE BASED ON YOUR JURISDICTION (INSIGHT ON COLD WALLETS).
Many Bitcoin experts advise transferring your bitcoin into a cold wallet, an offline storage device, much like a USB stick rather than keeping the Bitcoin stored on an exchange platform. Cold wallet storage can help eliminate the risk of online theft, and such devices range in cost from $100 to $200. Examples of trusted Cold Wallets are “Ledger, Trezor and Coldcard”.
“I absolutely would recommend moving your Bitcoin into cold storage as soon as you buy it,” but pending the time you get yourself a cold wallet, you can make use of warm wallets which are software applications on your device that gives you access to your Seed phrases or Private keys. Examples of warm wallets are the “Edge Wallet, Trust Wallet, Exodus and the Munn Wallet”.
The Warm and Cold Wallets listed above works perfectly in every country unlike exchange platforms such as Gemini, Binance, Crypto.com, Kraken, Okex, Coinbase, Paxful and others that work based on your jurisdiction and are restricted in some areas due to Federal policies or operating regulations.
However, based on experience and our research.
I will recommend the Cash App platform as the easiest app to buy Bitcoin for beginners especially for folks in the United States (USA).
If you are living in a country like Canada, Shakepay is the easiest platform to purchase Bitcoin.
For folks in Africa (especially Nigeria & Ghana), Bitnob is the easiest platform to purchase Bitcoin.
I’m recommending these platforms because of their excellent User Interface, User Experience and top-notch features like “Dollar cost averaging” and the “Lightning network” feature on some of them.
Bitcoin and the cryptocurrency ecosystem contents are voluminous, I will encourage you to keep doing your due diligence on any information that comes your way in regards to what digital currencies entails. The above information in this document is brief, concise and excellently compiled for the purpose of educating and explaining the best investment and Bitcoin adoption strategies you can leverage as a beginner to avoid being a victim of the volatile Bitcoin space. For questions, more information or consultation, reach out by tagging @DigiOats and tweeting your view, opinion and observation through the Twitter platform.
“We are first Bitcoiners before anything else.”