The logic board on my iPhone 7 Plus tapped out last week and I was sans phone for a couple days. It was glorious, on the one hand, but admittedly, there was a part of me that felt stripped. I’m so dependent on that damn thing, as much as I would like to deny it. I had retired to my home office to work through my inbox when a new email surfaced from Debbie, one of my trainees. The subject line read, “I’m at my parent’s house, and they have questions for you — stock market. Please call me if you have a few minutes.”
“Call you in five,” I responded.
What the hell, I figured. I’ve helped dozens of investors lose money in the stock market, including myself. Of particular note, I boast the dubious distinction of being one of the only investors who has lost money on Facebook since their initial public offering.
“It’s not about a stock. My dad wants to discuss how to acquire Bitcoin, and I told him you made a speculative investment some time ago.”
RECENT: Ping Pong and Powerlifting
Bitcoin is a consensus network that enables a new payment system (and arguably a store of value, akin to gold) with a completely digital money. It is the first decentralized peer-to-peer payment network. Its users power the network with no central authority or intermediary.1
“Congratulations on your investment,” he said. “It is great you had the foresight to make that decision.”
He was unaware of how modest my returns were at this stage, but I didn’t want to interrupt his praise. Bitcoin's proof of concept was initially published by Satoshi Nakamoto, a figure much akin to the fictional character Keyser Soze in the movie The Usual Suspects based on his anonymity. The mystery of Nakamoto alone has raised concerns among potential investors. Much like no one owns the technology behind email, nobody owns the Bitcoin network. From a typical user’s perspective (myself included), Bitcoin is nothing more than a mobile app or a computer program that provides a personal Bitcoin wallet and allows a user to send and receive Bitcoins.1
“How do I acquire some Bitcoins?” Debbie’s father asked.
I first gave him my disclaimer, which is that much of what I know about Bitcoin I’ve learned through speaking with fellow investors (one very knowledgeable investor, in particular), listening to podcasts produced by proponents of the digital currency, and doing some reading. In other words, I know a small amount but am by no means a professed expert.
Image credit: solarseven © 123rf.com
“I would recommend purchasing Bitcoin at a Bitcoin exchange,” I said. “I utilized an exchange to make my initial investment. My friend recommends Coinbase. I don’t know enough about any other exchanges to speak intelligently about them.”
From the Coinbase website:
"Coinbase is a secure online platform for buying, selling, transferring, and storing digital currency. Our mission is to create an open financial system for the world and to be the leading global brand for helping people convert digital currency into and out of their local currency."2
Coinbase simplifies the process of buying and selling digital currency. It also functions as a digital wallet (i.e., storage for the currency). I know nothing about portable digital wallets, nor am I inclined to purchase one in the near future. I have enough problems keeping track of my keys and my conventional wallet.
“Erik, how do I use Coinbase?” Debbie’s father asked.
“Create a Coinbase account online and link it to the bank account you intend to use to fund the transactions. You can then use the application to purchase and sell digital currencies, and transfer between wallets and merchants.”
“That’s great,” Debbie’s father said. “We can do this.”
“For full disclosure, I am not recommending you invest in Bitcoin or any other digital currency for that matter. Bitcoin has been exceptionally volatile, particularly as of late. I am only investing money I am willing to lose. The part of the investment thesis that sold me is the simple supply and demand aspect; supply and demand determine Bitcoin’s price as well as the faith of those in the network. Bitcoin is unique in that only 21 million Bitcoins will ever be created, so there will be a limited supply.”
For those of you saying, "I want to be in the game, but cannot afford to risk $12,000 to purchase a single Bitcoin," don’t worry. You don’t have to. You can risk or invest much less. There are 1,000,000 bits in one Bitcoin. An investor can purchase only one or several bits if that amount best fits a given risk appetite. Bitcoins divide into eight decimal places (0.00000001) and potentially even smaller units, depending on future transaction size requirements. That means you can invest in Bitcoin in small fractions (e.g., my initial investment was 0.10 Bitcoins).
“Now, Erik, what about these other currencies?” Debbie’s father asked. “Can I use Coinbase to invest in some of these other names?”
“Yes, through Coinbase, you can invest in Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. I only invest in Bitcoin, primarily because my knowledgeable friend specifically advised me to avoid the others. I can’t help with any other cryptos because I haven’t done any work on those.”
“Good deal, Erik. Thank you for the information. We really appreciate you taking the time.”
Blockchain
The Bitcoin network is sharing a public ledger called the "block chain." The ledger contains every transaction ever processed, allowing a user's computer to verify the validity of each transaction.
"A blockchain, originally block chain, is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a hash pointer as a link to a previous block, a timestamp, and transaction data. By design, blockchains are inherently resistant to modification of the data."3
The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses, allowing all users to have full control over sending Bitcoins from their own Bitcoin addresses. Anyone can process transactions using the computing power of specialized hardware and earn a reward in Bitcoins for this service. This is often called “mining.”
"Mining is the process of spending computing power to process transactions, secure the network, and keep everyone in the system synchronized."1
Blocks and Chains
It was 9:30 PM and I was hiding in the Beast’s back office, slurping a lukewarm coffee from the old Keurig. I had just completed my deadlift training for the evening. My body was already throbbing and I was looking forward to closing down the gym for the evening and getting some sleep when Owen poked his head in the office.
“What’s up, dad?” he asked. The “dad” moniker, from an inside-joke at my expense, was his affectionate way of calling me an old man.
“Just trying to recover,” I said, taking another gulp of liquid love. “What’s on your mind, son?”
“My deadlift is stalling,” Owen said. “Do you have any suggestions to help me get it moving again?”
“Yeah, I have actually been thinking about that,” I said. “I’ve been watching your training over the last month and wanted to suggest you cycle in some block pulls in lieu of pulling off the floor.”
A block pull is an elevated deadlift from varied heights; the plates rest on “blocks” which decrease the range of motion anywhere from one to six inches by raising the height of the barbell at the starting point of the lift.
“I love pulling off blocks — mostly because I am old and will do anything I can to reduce the range of motion for a given lift. However, in your case, I think it would be a great way to intelligently add overload to your training program, forcing you to adapt to heavier loads.”
“Overload?” Owen asked, moving from the doorway to one of the office guest chairs.
I guess I’m not getting home early tonight.
“Yes, to induce the strength adaptation, we need to ensure you are applying an exercise overload. To maximize the carryover to your deadlift, we want to choose a lift involving the technique that is similar to the deadlift.”
“I’m with you so far,” Owen said.
“Lots of powerlifters use rack pulls, which are fine too, but I find the technique pulling off blocks is truer to a conventional pull. It’s comparable to how the bar would come off the floor in terms of both the setup and the need to pull the slack out of the bar at the onset of the pull. I think the primary reason your strength is stalling is that you have employed the same exercises and training loads over long periods of time. By substituting the block pulls for a short training cycle, you will benefit from both the change in exercise and training load, effectively inducing the strength adaptation.”4
“Don’t block pulls overload the top end of the lift?” Owen asked.
“Yes, absolutely,” I said. “They concurrently overload the top end of the lift and allow for the feel of heavier weights. They can also take some of the pressure off your lower back. The other ancillary benefit I have found myself is that by forcing me to handle heavier weights they boost my pulling confidence before a powerlifting meet.”
“What are your thoughts on accommodating resistance?” Owen asked. “Like chains or bands?”
“I am definitely a proponent,” I said. “For your next training cycle, let’s implement straight weight, and down the road, we’ll look to add some chains to the bar to even further overload the top of the lift and force you to focus on speed off the floor.”
“How do I get my bench moving again?” Owen asked.
“It’s 10:30. Let’s leave the board press discussions until Wednesday.”
Look Before You Leap
Bitcoin prices have been extremely volatile, notably as of late. They had bounced back from the lows of early January when the currency dropped nearly 50% from its mid-December high. While the swings aren’t unusual, the recent drops have been fueled by crackdowns in China and South Korea as well as threats of hacks and scams. Some economists have warned that the cryptocurrency bubble is ready to burst.
Disclosure: At the time of this writing, I do have a position in Bitcoin.
I wrote this article myself, and express my own opinions herein. I am not receiving compensation for it from Bitcoin, Coinbase, or any other cryptocurrency venue. I have no business relationship with any entity whose wares are mentioned in this article.
References
- https://bitcoin.org/en/faq
- https://www.coinbase.com
- https://steemit.com/blockchain/@tellmehowblog/advantage-and-disadvantage-of-blockchain-technology
- Zatsiorsky, V. M., & Kraemer, W. J. (2006). Science and Practice of Strength Training. Champaign, ILL.: Human Kinetics.
Call me old school (I'll embrace it) but no matter how many finance/investing podcasts I listen to about the underlying concept of blockchain, I have no idea how the stuff works and it blows my mind to think well established governments will be entirely fine with the concept taking over fiat currencies.. Wish the best for any EFS readers on the chain though, don't forget to share the wealth if it keeps booming for you!
Cryptocurrencies are a bubble, and a big one at that. The fact that they have permeated the mainstream media and even the completely unrelated EliteFTS says that people who want to "get on board" have long missed the boat. I have absolutely no idea why this has made it to EliteFTS. I get that EliteFTS will post articles from authors, but really, cryptocurrencies? The bulk of finance news is clickbait and cryptocurrencies are just a new clickbait headline. They don’t even understand cryptocurrencies but pretend they do.
Also, the blockchain (people call it a technology; however, it is simply an operational and systematic method of having a public ledger) has not yet been successfully commercialised despite millions upon millions of dollars (or whatever currency) having been poured into it. There is some possibility of it working in shipping/transportation (as there is a semi-public ledger of sorts, but essentially it is an updated method replacing a similar older one), but otherwise nought. Again, why this is on EliteFTS befuddles me.
Further, part of my background is science and maths majoring in astrophysics. Why there was an article on the Fermi paradox, which to the author's credit contained a reasonable basic explanation, is beyond my comprehension. There seemed to be zero carryover into the powerlifting blurb in the latter part of the article, thus further raising the question as to why the Fermi paradox was even mentioned at all.
Maybe EliteFTS should stick to its stitching and its circle of competence (generally OK but which at times pushes the boundaries of credulity too). Stepping outside is showing flaws in the authors’ thinking and EliteFTS’ management of their knowledge and article base.
Cheers,
T
Please remind me how you were acutely aware we had all missed the Bitcoin boat when this article was published.
I suspect Paul Tudor Jones, Stanley Druckenmiller, Michael Saylor (MicroStrategy), and MassMutual Insurance (to name a few) would beg to differ with all of your above assertions.
Cheers,
E