bitcoin_basics_of_investing_2 -

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Investing in Bitcoin the basics Bitcoin observes a deflationary policy For an investor the salient fact of the invention of Bitcoin is the creation of a new scarce digital good — bitcoins. Bitcoins are transferable digital tokens that are created on the Bitcoin network in a process known as “mining”. Bitcoin mining is roughly analogous to gold mining except that production follows a designed, predictable schedule. By design, only 21 million bitcoins will ever be mined and most of these already have been — approximately 16.8 million bitcoins have been mined at the time of writing. Every four years the number of bitcoins produced by mining halves and the production of new bitcoins will end completely by the year 2140. In Bitcoin, as the number of bitcoin increases (blue line) over time , the inflation rate (red line) decreases. Oppositely , paper money is inflationary. In 1923 there was inflation in Germany after WW1,today we have covid: As the money keeps being printed, the value of bitcoin rises: (price prediction is the white line ,just read the corresponding price on the left), yes, it’s not a mistake,you are reading well… 288.000 USD on Dec 2021, and 1 Million USD on Dec 2025 STOCK TO FLOW model explained: • The previous chart depicts the stock to flow model, the white line represents the mathematical model, the coloured line represents what happened in reality. As you can see the two lines converge, this means its predictions have been turning into reality almost every day in the last 12 year. Is not 12 years statistically enough to validate a statistical model? • Why does bitcoin go up? Because the more money the government prints, the more money is available to buy assets, bitcoin included. In fact even the stock market is at an all time high,and it’s going to keep rising. • In addition to this, bitcoin price is driven up by the increased scarcity over time after the halvings , plus the network effect (aka the viral effects ,just like facebook, amazon ,apple etc..) • The US has printed 12 trillion during covid, and the EU has printed 8 trillion. The political power has decided to keep printing even more money in the near future, not to mention stimulus packages etc.. • 12 trillion is the equivalent of the money printed in the last 20 years,well, they printed the same huge quantity in a few months during covid. It’s not going to go away anymore, it’s printed . No chances to hide it for long. • Why are we not seeing inflation already? Because the commercial banks hold this surplus of money. As time goes by, it’ll start to get out of banks through loans and tax returns. • It’s just at that stage that you can see the inflation, not now. However, it won’t take that much to reach that level. The Venezuelan Stock Market’s on Fire as Inflation Heads to 1,000,000% : And how Venezuela ended up: «The Washington Post reports that Venezuelans are storming supermarkets and attacking trucks as food supplies dwindle.» Same thing happened in Iran, as money supply increases: Poverty increases as well: Most recent example: March 22,2021 The more they print money , the more all of the assets go up: (this is our economy, the s&p 500) Such a steep growth driven by money printing and no actual value, is it sustainable? (look at what happened in 1929) .Or it is fake? Your call… Why bitcoin ? • Because bitcoin is the opposite of this system based on hyperinflation. • In fact,as has been said, it is deflationary , less and less units are going to be created over time. • it’s the scarcest asset ever, given that we don’t know how much gold is available on earth. We know gold is scarce , but we don’t know exactly how much scarce it is, and maybe if we dig more, we find more gold,hence the value of gold drops. • The scarcer is an asset , the more is worth. (supply and demand) • Bitcoin is simple math, the less is available, the bigger its value Why is bitcoin scarce? • Because every four years the quantity of bitcoin being produced halves (where there are the vertical red lines) ,this is set by the software and cannot be modified ,hence the less bitcoin is available the more its price rises: What’s next ? • The more the population is going to find out that the value of their currency has been debased, the more they move into bitcoin as a store of value, a better version of gold. • In the meanwhile the institutions are buying bitcoin, but why are they purchasing it? • Because they have understood its value,simple as that. • And why don’t they tell the truth to the people? • Because the more they keep the current financial system up and running , the more money and bonuses they are going to earn every year. • And when the bubble bursts, they are safe with their bitcoins. … another 2008 crisis? Here are the financial institutions and trading legends that have recognized Bitcoin is Gold 2.0 over the last months: - Morgan Stanley - Fidelity - JP Morgan - Bloomberg - Deutsche Bank - Citibank - Jefferies - Blackrock - Susquehanna - Paul Tudor Jones - Stanley Druckenmiller - Guggenheim - AllianceBernstein - Bill Miller - Mass Mutual - Ray Dalio --And what about you?-- Risks of investing in bitcoin • Bitcoin is an already leveraged asset, its levels are not based on the price like normal assets , but can be counted in terms of returns (2x , 3x, 20x ) , because Bitcoin follows a logaritmic progression. • Bitcoin is the only asymmetrical asset in the financial world. In fact,unlike the classic leveraged trading, you can lose just what you have put in, no more than that. Oppositely, if its price rises as shown on the stock to flow model for instance, then you have huge returns, and that is life changing. In short, you know the downside, but you never know the upside. • Bitcoin is volatile Risks of not investing in bitcoin • Money depreciates in value, the USD has lost already 20 per cent of its value just in one year , as a result of money printing • The government is going to try to water inflation down,they can delay it but they cannot unprint money,in the end there will be no way to hide it. • The government by printing money takes value out of your pocket • Inflation is a good business for the government, they just earn more, you lose. Why does Bitcoin price go up? The price of bitcoin is driven up by: -money printing -increased scarcity -network effect Investment strategy • Buy and hold , because: • «Time in the market beats timing the market» W. Buffet. • Buy just what you can afford to lose • If one day you need money there are crypto-banks like blockfi.com or many others CEFI’s which lend money to you while holding your bitcoin as collateral. Lending is not a taxable event, plus you still hold the bitcoin which could keep appreciating while having the money you need for your expenses, at the same time. • In case of a bear market, at least you earn an interest, while holding. Pieces of advice: • Follow the stock to flow chart as a reference, and never sell, if you need money you can borrow against your bitcoin. • Volatility of bitcoin is high, buy just what you can afford to lose. • We are in a bull market, and bull markets don’t end in 2 months, this last one is going to last until december 2021 • We are still early Could Bitcoin fail? • Here’s a list with all of the doubts,explained: • https://www.notion.so/Bitcoin-FUD-Fort- 456668d9383a46399d903b0a29184c1d Must read, must watch: • https://vijayboyapati.medium.com/the-bullish-case-for-bitcoin-6ecc8bdecc1 (english version) • https://ryandelongpre.medium.com/il-futuro-dei-soldi-bitcoin-dfddd5ef7308 (italian version) • https://qf6gb36owd563gmlpphvahb5k4-adwhj77lcyoafdy-danheld-substack- com.translate.goog/p/a-bitcoin-supercycle (italian version) • https://danheld.substack.com/p/a-bitcoin-supercycle (english version) • Must watch videos: • https://youtu.be/LszOt51OjXU • https://youtu.be/xbuErMhe7g4 • https://youtu.be/6pAlxGgv4-g Stock to flow model: • https://digitalik.net/btc/ • https://www.lookintobitcoin.com/charts/stock-to-flow-model/ • https://medium.com/@100trillionUSD/modeling-bitcoins-value-with- scarcity-91fa0fc03e25 (mathematical calculations) Must follow: • https://twitter.com/100trillionUSD (creator of the stock to flow model) • https://twitter.com/woonomic (reliable bitcoin analyst) • https://twitter.com/danheld (early bitcoiner with a focus on teaching the fundamentals of bitcoin) Easiest places to buy, safe and reliable: • www.bitpanda.com (Europe) • www.gemini.com (US) To earn interest: www.blockfi.com (funds are allocated on gemini,insured) Self- reflection: • Is money in the bank actually yours? • Bitcoin is the biggest transfer of wealth from the old generation, to the new generation • The internet had made facts a commodity. Now, the value is in the analysis and the speed in which you do it. Investing is the most lucrative area where this is playing out and can give individuals the chance to compete and win against Goliaths (aka the big firms). - Chamath Palihapitiya , investor. • This way, finance is being democratised • Bitcoin is e-cash, unconfiscable,actually yours. • Bitcoin is freedom Feel free to share or edit this guide. If you liked it, please donate for mental health research and innovation: Bitcoin Litecoin : THANKS