My Crypto Portfolio, Day 1: Bitcoin

in cryptocurrency •  10 months ago

bitcoin-chip-1.jpg

Yesterday I wrote that to kick off 2018 I'd be posting about my crypto portfolio: https://steemit.com/cryptocurrency/@davidpakman/welcome-to-2018-my-cryptocurrency-portfolio

Today I start with Bitcoin (BTC). Bitcoin is in many ways the bellwether coin, with huge first to market advantage. BTC is the first coin I ever purchased, and I'm doing these posts in order of my ownership of the coins chronologically. By market cap, it is still the biggest crypto out there:

bitcoin.jpg

I have been in Bitcoin for some time, but not A LONG TIME compared to the real early investors. The pros as I see them of BTC are:

  1. Liquidity: Price, transaction speed and transaction fees aside, BTC has high liquidity where I know I can buy or sell at any time without liquidity issues

  2. Ubiquity: BTC is on almost every exchange, and of course is on Coinbase, which in and of itself is huge

  3. Trade peg: Although this may change, currently BTC is one of the only or FEW options for trade pairs to other currencies on many/most exchanges

  4. I believe that because BTC has the first mover advantage, it will do well if crypto more broadly does well.

However, BTC has cons, for sure:

  1. Transaction speed: BTC is now consistently the SLOWEST coin to transact, of the coins that I own. I haven't had the "multi-day" nightmare scenarios others have described, but it is always the last to arrive when I've moved some around.

  2. Transaction fees: In addition to being the SLOWEST to move around, BTC is the MOST EXPENSIVE of all coins I own to move around, commonly paying transactions feed of $20-$30 USD.

  3. Structural limitations: This is beyond my level of expertise, but I've read enough about Bitcoin to know that there are structural limitations in place that underlie the coin which may prevent both the transaction speed and fee issues from being improved upon over time

  4. For being the bellwether first mover in the crypto space, BTC valuations are still VERY ERRATIC, but this is also a positive for many in that they see a big future for BTC above and beyond the $19-$20k highs we saw at the end of 2017.

I am holding BTC and slowly adding little bits to my position in it, and it currently represents 14% of my total crypto holdings.

What are your thoughts on BTC? Leave them in a reply!

Tomorrow: ETH

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Because of Bitcoin's 2017 price appreciation, I don't like the risk/reward scenario for the coin. At best Bitcoin may reach 30,000- 50,000 $ in 2018 but I see a fair bit of downside risk as people start with Bitcoin as an entry but educate themselves on cryptocurrency from there. Bitcoin doesn't look great when you start to look at it technically and its development team can't seem to get anything done, which at the moment cannot function as a currency. So at its current price, why invest in Bitcoin when there's so many great projects with great tech and great teams applying blockchain to the worlds needs.

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I couldn't have said it better myself. At this point I am investing in the coin that could make me substantial gains, and at this point I find it will be a lot more challenging for BTC to double or triple in value when compared to things like EOS or Steem

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My thoughts exactly.

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Why is it that BTC can't operate as a currency as it stands now?

I think, that at the moment, bitcoin is taking a break that was really needed, because the rises of the past month didn't have anything to do with real market or technology.
Nevertheless I still see huge potential in Bitcoin if the fix the mentioned technological problems.
It's reputation just can't be switched to another coin even if the technical aspect is a bit better there

BTC shcould be 50% of your Portfolio. The rest into altcoins. IOTA, XRP, ETH - in the end just take any out of the top ten. Cant be wrong on that one.

Good luck my friend.

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I don't see ETH as an alt-coin. It is a) widely used and held if only for ICOs and creating ICOs, b) the other most commonly traded pair in exchanges (especially for ERC20 tokens, c) has a very substantial market cap butting heads only with Ripple which no one I know actually uses, d) has a very substantial developer community and huge amounts of improvements in the works that will, eventually, be integrated.

I divide my thinking about coins/tokens into two facets each with three categories:

Project type:

  1. blockchains, DLT, and decentralized consensus platforms e.g. BTC, ETH, IOTA, XRP, XLM
  2. add-ons and platforms built on top of 1) that need a token but not really an end-user application eg. RDN or DNT
  3. end-user applications (using assets and derivative currencies) built on top of 1) e.g. STORM or BERRY

Maturity:
a) as yet un-demonstrated, not live, or purely hypothetical instances of 1-3) - typical ICO stage stuff e.g. EOS
b) usable but not established and possibly incomplete - typical of the one to two-year rollout phase of projects eg. SKY, BLOOM
c) widely used with significant utility BTC, ETC, STEEM

I might even add

d) legacy coins

and lump all of the original "shitcoins" and "altcoins" into that category. Controversially I'd put Bitcoin into that category too - unless it can demonstrate it can be put on an evolutionary path I think we are looking at its last year of dominance. Personally, I think the best thing for Bitcoin would be for someone to create a hard spoon of Bitcoin (a spoon is a friendly fork) as a token on top of Ethereum and then everyone decides to abandon the old Bitcoin.

As for investment strategy... I'm 50:25:25 BTC:ETH:other and I'll probably sell BTC to buy ETH but not the other way around so I think BTC will drift lower - either by ETH mooning or me diversifying out of BTC.

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Thanks for your thoughts. As for ethereum is or is not an altcoin i dont really care. To your investment stratagy. Dont forget Bitcoin is still the most known Coin. Only because people in the cryptoworld know more, new people prefer bitcoin, because thats what they heard of. Think about Coca Cola or Red Bull Energy Drink. They are not nececarraly the best but the most profitable once.

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good point....i dont think many people understand that..

I see that CARDANO rising quickly

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Thats good😉

I share much of what you and others have mentioned. BTC is about 50% of my crypto portfolio. As an investment advisor with a appreciation for precious metals, one thing that has become very real to me over the past 5-6 years, as precious metals went down while the markets went up, is that markets perform - ultimately - based on capital flows. In my opinion, more investors "ought to have" shifted more funds from stocks & bonds, into gold & silver BUT they don't know about gold & silver, believe the FUD, or bought and sold b/c they are not "strong hands". As i see it - most traditional investors and institutions do not own any crypto. IF that changes such that most embrace it as an asset class and give it 1-3% of their portfolio, it would add tremendous market cap to this whole space. What do first time investors do when they enter this space? They buy Bitcoin. Over time, they learn of others and slowly shift some of that. If you believe 2018 will see an meaningful increase in NEW investors with meaningful overall portfolios, Bitcoin stands a good chance in benefiting disproportionately. That said, one must take into account those holding bitcoin already that simply feel forced to manage their downside risk thru diversification by spreading the love around to rebalance with other coins/tokens. Great start in market cap in the new year so far. :)

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interesting, 50% in BTC alone is high

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Good observation. My BTC % has been steadily declining as I learn about other coins/tokens.

I know BTC had it's downs over the past few weeks but it's gonna blow up again soon. If I had the financial possibilites I would definitely invest in BTC the most.

Bitcoin is not going to be fully developed or become main stream at least a decade from now. And anyone can worried because not much has happened in the past 3 weeks. If someone can't handle 30-50% corrections in the short term, then crypto is not for him.

Dear thats really nice post.
Keep on the good work.
Follow me @zahidzzs

Interesting idea for a series of articles! Personally, I think Bitcoin has a lot going for it. The lightning network is close to being implemented and fees are coming down. I am curious to see how these "lightning channels" change the current fee structure.

I found your article to be extremely informative, especially the way you explain the pros and cons. I would love to share a link with the readers at https://honeybadgerdaily.com/ with tomorrow mornings headlines. I hope that you don't mind, Cheers!

As financial planners and investors, we are always looking for emerging asset classes which can provide diversification and improve a portfolio's risk-adjusted performance. One asset class which can no longer be ignored are cryptocurrencies. I hope you enjoyed my little upvote

Thanks for that insight to BTC. Do you think we have seen an end to this bear?

btc is such a good crptocurrency but i think there is cryptos with a lot of features better than bitcoin , anyway keep up the great content :D

I really think it's gonna keep rising , as long as we keep pushing.

BTC is about 35% of my portfolio excluding Steem. It is a bad coin technology wise but it is a very "proven" coin.

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Kind of ironic, isn't it? The only reason why people don't use it more are the exorbitant transaction fees. Waay too expensive...

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It's also hella slow. You should use ETH more often. Ripple is even faster - you can actually wait the few seconds for the transaction to complete before proceeding without it feeling burdensome. Even better think about STEEM - free AND fast transactions. EOS will have that and be highly scalable with contracts. It may well crush them all.

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It's why I've been building out LTC, DOGE, and STEEM as my main cryptocurrency. I'm mining BTC through NiceHash, but only because it's the easiest to work with. Once I have enough to start investing it into mining, I will, but only to pull the profits into other crypto.

Hi David. I hope that your crypto will be in the forefront of such a summary in 2018. :) https://steemit.com/cryptocurrency/@cryptorep/which-cryptocurrency-has-the-largest-increase-in-value-in-2017

I would like to jump into the Bitcoin bandwagon, but I assume anyone not already invested in it will see far fewer, if any, gains in value. This leads to me to think that it might be better for me to look into investing in other cryptos (perhaps Ethereum or Steem).

It is worth buying TRON.
Has a large patent for growth.