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By Mauricio Di Bartolomeo
Special to the Financial Independence Hub
Bitcoin’s price has more than doubled over the last four months: from approximately USD $3,400 in February to a current price of USD $10,700 at the time of writing. While it is unreasonable to attribute the recent price increase to any particular news or headline, there are growing narratives and investment thesis that support making an investment in Bitcoin as a digital and apolitical store of value.
As some of us in the industry have come to expect, the runup in price has unsurprisingly led to renewed media coverage which, in turn, leads to thousands of new people looking to learn about Bitcoin and a desire to participate in the market.
For those currently invested in Bitcoin, or those interested in getting involved, here are five tips on navigating the “Bitcoin craze” with ease:
1.) Know where to buy your Bitcoin
When making your first Bitcoin purchase, make sure you use a trusted and compliant exchange. Avoid using exchanges registered in foreign jurisdictions or exchanges that don’t comply with your local jurisdiction. Bitcoin prices can differ between exchanges, they can also have different fee structures. Exchanges like Bull Bitcoin provide simple and fast platforms to buy Bitcoin. They are a non-custodial exchange so you will need to have your own wallet or a savings account to send the bitcoins to once you make the purchase. The next tip will guide you on how to get one.
2.) Know how to store your Bitcoin
In the past, some exchanges have been the target of hack and theft due to the need to keep Bitcoin ‘online’ for trading purposes. After purchasing your Bitcoin, make sure you know how to keep it safe. You can use a hardware device such as a Ledger or Trezor that you can manage yourself: be sure to read the instructions carefully when setting up your device. If you want a simpler approach to keeping your bitcoin safe, you can use a third party custodian like BitGo that keeps your bitcoin safe through insured custody, or deposit your bitcoins in a savings account to earn interest. More on that below.
3.) Do more with your Bitcoin
The best way to make more out of your Bitcoin is to use a Bitcoin Savings account that pays interest on your Bitcoin deposits. Earning interest helps you grow your bitcoin position: which can appreciate in dollar terms over time. There are only a few compliant companies worldwide offering this type of service: when searching for options, look for the compliant companies offering these services in your jurisdiction.
4.) Boost your investment by using credit services built for Bitcoin
Leverage or credit can be a great way to boost returns for long-term investors. Use it wisely to access liquidity once the price reaches your targets or to increase your exposure to price moves during strategic times in the cycle. Ledn provides loans backed by Bitcoin at 50% loan-to-value.
This means that for every $100 of bitcoin deposited, Ledn can provide a $50 loan. You can use this to purchase additional Bitcoin, or to diversify your holdings into other investments.
5.) Focus on the long term
Take time to understand the value proposition in Bitcoin as a digital store of value. The stronger your understanding and convictions, the better your investment decisions will be.
While the media loves to about Bitcoin’s short-term price movements, investors should remain focused on the long-term structural trend in Bitcoin adoption and usage. In markets like Latin America, bitcoin solves a different set of problems: like protecting your savings from inflation. In that region, volumes have been rising consistently over time despite price volatility.
Those of us in the industry today are as bullish as ever given the amount of development and usage that we are seeing in the space: and we are still in Bitcoin’s early stages. With the proper tools and the right advice, you can participate and hopefully profit from this ongoing financial revolution.
Mauricio Di Bartolomeo is the Co-Founder & Chief Strategy Officer of Ledn Inc., a company built to provide savings and credit products for Bitcoin holdlers. The company underwrote Canada’s first-ever Bitcoin-backed loan in 2018 and in June 2019 it launched Canada’s first-ever Bitcoin Savings account. Ledn currently helps Bitcoin holders across Canada save and borrow, and is officially launching its savings and credit products in Latin America during this year’s Latam Blockchain Summit.
Mauricio has been involved in Bitcoin since 2014: when in Venezuela he learned that friends were using it to earn an income by mining it and protecting their wealth by converting it into a censorship-resistance currency. Now residing in Canada, he has been working on Bitcoin full-time since then, developing technology to make it easier to hold and use.
Mauricio understands the use-case for crypto-currencies in authoritarian regimes and the life-changing liberating effect that it can provide to its users. He is also well-versed in the limitations of the current solutions and what can be done to improve usage/adoption. Ledn, which has grown to a team of 10+ professionals, is tackling these issues by making Bitcoin easier to hold with products such as fiat-loans, savings accounts and credit cards.
Mauricio is also an active member of the Canadian Blockchain developer community with strong ties to professional working groups, contributing research and opinion pieces to active University PhD teams. He holds MBA and HBA degrees from the Richard Ivey School of Business.
