Your Top 10 Crypto Questions Answered
Here’s the problem: Most people who know a lot about bitcoin can only speak ‘tech’.
I was at a conference recently. I was the keynote speaker but had zero talk prepared (as usual). It was a crowdfunding conference, so I ‘crowdsourced’ my talk.
I told the audience: I can talk about entrepreneurship or I can take 15 minutes to explain bitcoin without using any technical jargon.
Clap for which one you want.
Almost 100% of the audience wanted to learn about bitcoin without the technical jargon.
People are hungry for this. They don’t want to hear about ‘crypto’ or ‘blockchain’.
They just want to know what all this bitcoin stuff is about.
Back in 2013, I thought bitcoin was a scam. I was wrong.
First, some credentials…
In early 2013, I had my doubts. I started reading everything I could. Then I got my hands dirty.
I’ve been a coder/programmer since 1985. I decided to code up a bitcoin-only store (maybe the first ever) and sell my book, Choose Yourself, on it before it was released on Amazon.
It was very hard. I had to develop the store from scratch since there were no easy tools to help me. There still aren’t (hint: business opportunity).
Once I launched it, quite a few people bought my book. I sold a PDF of my book for 0.1 bitcoin. Bitcoin was then $60, so I sold it for about $6 per PDF. Right now, it’s as if I sold each PDF for $1,600. I sold many copies.
I went on CNBC when they heard I was doing this. The anchor asked me, ‘Did you just do this for publicity?’
I said, ‘Well, I’m on national TV, so I guess it worked.’
Another thing worth noting: Most of my customers came from one domain name (they had to submit their email addresses for me to process the sale): Amazon.com. Make of that what you will.
A few months ago, I started writing about cryptocurrencies again. I saw so many people getting involved in scams, I wanted to help.
The other day I had an Uber driver who thanked me during the car ride for helping him ‘get it’.
And last night at a restaurant, at the end of the meal, the waiter shook my hand and thanked me for helping him ‘finally’ begin to understand what bitcoin was about.
In order for cryptocurrencies to succeed, people need to understand at a basic level what they are. Nobody needs to learn complicated cryptography or blockchain.
Just understand why now. And why this is important for us as a society.
Below, I answer the top 10 questions I’m often asked about cryptocurrencies. Is it too late to get aboard? What will be the total value of cryptocurrencies one day?
Your crypto FAQs
Here are some frequently asked questions I often get about cryptocurrencies, and the answers I give.
There are more, but these are some of the most common:
1. Why do we need other cryptocurrencies?
Why do we need more than one currency at all? Why is there a US dollar and a Canadian dollar?
For no reason. Just an artificial border created in 1770, resulting in two different currencies.
Cryptocurrencies have what I call ‘problem borders’.
One coin is better than bitcoin for making contracts (Ethereum).
Another coin is better for privacy (Zcash).
A problem with bitcoin is that although there are no names on a transaction, I can see the size and the time. So privacy is still a slight problem.
Another coin might be better for solving a problem of decentralised storage (as opposed to storing all of your photos in one centralised spot that can be hacked, like Google Drive). Bitcoin doesn’t address this problem. Problem borders create new currencies that provide solutions to existing problems.
2. Is it too late to invest in bitcoin and other cryptocurrencies?
Right now, this reminds me of the internet in 1995–96. There’s a bit of irrational exuberance in new coins. Prices are going crazy.
There will be a massive pullback. But the legitimate coins are here to stay and will keep going.
Amazon, of course, pulled back, when the internet pulled back. Now it will eventually be a trillion-dollar company. Many companies that started in the 90s have survived and thrived, and were great long-term investments that have paid off.
Cryptocurrencies are the ‘internet of money’.
The internet is here to stay and so is the internet of money. We are only in inning one of the cryptocurrency shift in our money.
3. Will cryptocurrencies replace paper money?
Yes. Eventually. It might not be bitcoin, although bitcoin will always exist. But each country, to solve the problems of paper money, will eventually switch. Countries that are debating it include Israel, Estonia, Venezuela and Argentina.
Countries that will use some aspects of cryptocurrency technology in their central bank will soon include China, Korea, Russia and the United States.
And many countries will reject cryptocurrencies, but their population will shift en masse to cryptocurrencies in order to avoid corruption, human error, theft, etc. First on my list for this is Argentina.
4. What will the value of cryptocurrencies be?
When I first wrote about this, all cryptocurrencies added up came to about $200 billion. Now it’s around $750 billion. Although I do view many of the currencies as scams, so the number is really less.
That’s the ‘supply’ of cryptocurrencies.
The ‘demand’ is the amount of paper money plus gold that exists.
That number is $200 trillion. So, in order to go from under $1 trillion to $200 trillion, that’s more than a 200-times gain. In other words, $10,000 turns into $2 million.
And if you focus on the legitimate currencies, the gains are much greater. So, again, we are very much in the beginning of this. There is no other investment opportunity in our lifetime greater than this. And we are at the beginning of this mega-trend.
5. What are the legitimate cryptocurrencies?
There are many. I don’t want to get into the weeds here and discuss all the technology. And I also don’t like all the speculative trading that is going on in cryptocurrencies. Speculation leads to scams and bubbles.
But just as there were internet companies that survived the bust and became the companies we use every day, there are cryptocurrencies that exist now that we will use every day 10 years from now.
6. You said on CNBC that bitcoin will go to $1 million. Were you kidding?
No. Bitcoin hit $20,000 recently before pulling back some (which is normal and healthy). I just said it could go at least as much as 200-times higher. That’s $4 million. So even at a million, bitcoin will be a buy.
7. How else can one make money in the bitcoin sector?
You don’t have to be a software developer. When the gold rush hit in the 1800s, Levi’s Jeans became the big winner. And the companies that sold picks and shovels.
There will be many ‘pick and shovel’ companies in the bitcoin space.
Sites that have the latest bitcoin news and analysis will do well. Exchanges will do well. Companies that help integrate traditional companies with the deeper parts of bitcoin technology will do well (like whoever is helping UPS integrate blockchain tech into its logistics).
Companies that help new cryptocurrencies launch will do well. And on and on.
8. Someone said you called bitcoin a Ponzi scheme in early 2013. Why should we trust you now?
First, I believe that the best investment is in yourself. This will provide greater than 200-times returns.
That said, I was wrong in early 2013.
I’ve been a software guy for 25-plus years. I’m able to do my research. Which I did.
By May 2013, I had already done enough research to build my own bitcoin store, go on CNBC and discuss bitcoin, and be an advocate when bitcoin was just $60. This is all public information.
But for me, focusing on my physical, emotional, creative and spiritual health will always be the most valuable ‘currency’ I can develop and trade in.
9. Could bitcoin be just a fad?
No. Paper money does have the problems described above. Someone has to solve those problems. Bitcoin and other cryptocurrencies solve them.
And every industry evolves. Cryptocurrencies are the ‘In Data We Trust’ way in which money is evolving.
And $750 billion believes in me on this.
10. Well, what should I do now?
Don’t listen to me. Educate yourself about cryptocurrencies and money in general. Here’s how I suggest you get started:
1. Get an account on Coinbase (or wherever). Buy $10 worth of bitcoin just to taste and feel it.
2. Then read. Read a lot.
Here are some books not about bitcoin that are worth reading:
Sapiens by Yuval Harari
The Evolution of Everything by Matt Ridley
The Ascent of Money by Niall Ferguson
Antifragile by Nassim Taleb
There’s a lot of discussion of cryptocurrencies on Reddit and Twitter. DO NOT read those. Most of those discussions are filled with trolls, although there are some decent sources there.
If you want to check out some blogs or sites, start with CoinDesk and CoinTelegraph. You’ll find the rest as you read more.
OK, now here’s a bonus question I’m often asked:
Who is Satoshi?
Satoshi is the secretive founder of bitcoin. He is worth many, many billions in bitcoin right now. He is anonymous, and reporters, governments, etc. have never figured out who he is.
That said, a number of people know who he is. I read his blog every day. He is a secretive person and nobody wants to blow his cover.
For The Daily Reckoning Australia
PS: Go here for all the introductory material you need to get going in the crypto market. Things change fast here. Regular updates are a must.