What is the value of cryptocurrency asset class?

If you are an investor you probably know about the “Digital Asset Class” of investments and you may have diversified your portfolio with crypto assets; this blog will keep you up to date with blockchain technology which is also known as distributed ledger technology (DLT) and the fluctuation of bitcoin’s and altcoins’ value.

If Digital Asset investment is something new to you, this blog will show you the benefits of blockchain such as (1) its super fast transactional characteristic, (2) minimum cost to transfer money, (3) protection against inflation, (4) protection against the ups/downs of the country issuing a currency, (5) protection against a country’s monetary policy and much more…

Let’s begin with a crypto currency market overview, as of January 3, 2018 at 3:00 PM PST, the total CryptoCurrency Market Cap is over $730 billion USD; just eight months ago, it was $25 billion. It’s important to note that the cryptocurrency market capitalization took eight years and four months to reach the $25 billion market cap milestone on May 2017. Within eight months, the cryptocurrency market exploded in value with an infusion of $705 billion dollars.

What’s the reason behind the massive growth in market cap? A key contributing factor is the influx of massive investments from institutional investors such as capital venture firms, fortune 500 corporations in all sectors of industry and even governments globally. All these industries and governments are racing to be the first to develop robust blockchain applications which will revolutionize how entities operate in the digital domain.

In layman’s terms: we are witnessing the GOLD RUSH to Internet 5.0 Blockchain Technology Innovation! What is the blockchain innovation?

Blockchain (also known as the distributed ledger technology – DLT), the technology underlying bitcoin and other digital currencies, is the catalyst for innovative application developments at the enterprise level in all sectors of industry. While Bitcoin introduced the blockchain technology to the world, Ethereum is revolutionizing its enterprise use.

Blockchain technology was used to create bitcoin as a solution to failed monetary policies created by governments

Bitcoin was invented in the aftermath of the 2008 financial crisis (read a summary of impact by the Pew Charitable Trust, Business Insider, United Nations) and the crisis was a clear motivating factor for its creation.

Numerous banks and other financial institutions failed across the world, and had to be bailed out by governments at the expense of their taxpayers. This underscored the fragility of the modern financial system, where the health of our monetary system is reliant on banks and other financial institutions that we are forced to trust to make wise and prudent decisions with the money we give them. Too often for comfort, they fail to carry out this fiduciary responsibility to an adequate degree.

Of particular note is fractional reserve banking. When you give a bank $1,000, the bank doesn’t actually keep all that money for you. It goes out and is legally allowed to spend up to $900 of your money, and keep just $100 in the off chance that you ask for your money back. This type of monetary policy contributes to creating another financial crisis. Most alarming is potential for a financial crash from the derivatives market. Warren Buffet (Chairman and CEO of Berkshire Hathaway with market cap of USD $504 billion), an American business magnate, investor, and philanthropist warned that derivatives are like “weapons of mass destruction”. He maintains that derivatives “pose a threat to the global economy and financial markets“.

Bitcoin was created to address these monetary policy issues with its inherent decentralized nature. Bitcoin can not be created or devalued by national governments and is therefore immune from inflation.

Citizens of impoverished countries can buy bitcoin to protect their money from the decline in value of their national currencies. The same applies to dollars, pounds and euro.

The future of bitcoin value is growing rapidly as a result of its limited supply. Only 21 million bitcoins can ever be produced based on its distributed computer code (over 16.7 million bitcoins is currently in circulation) which means that bitcoin is in very limited supply and it serves as a store of value similar to gold. To understand why bitcoin serves as a store of value, read bitcoin’s white paper: “I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party…” – Satoshi Nakamoto’s White Paper published on October 31, 2008.

While Bitcoin is notorious in the news media for it’s ‘dark’ illegal usage in Darknets and in ransom-ware demands, the underlying technology of blockchain is now being developed and used on an enterprise level with the invention of Ethereum and similar blockchain platforms creating business applications. Keep in mind that all currencies both fiat (USD, Euro, etc.) and digital currencies can be used for good and bad (as in illegal activities); in years past, most people learned of bitcoin through media coverage focusing on sensational news such as the use of bitcoin in Darknets, however, since March of 2017 the trend is changing with massive institutional investments into bitcoin signaling the verge of mainstream adoption of bitcoin as a store of value akin to gold.

A bit of advice:

“Emerging Bitcoin market is volatile. But in volatility, that’s how people have opportunities to make money.” – Sir Richard Branson in a 2010 Street Smart Interview on Bloomberg when the price of one bitcoin was 7 cents; fast forward to January 3, 2018, one bitcoin is valued at $15,058 at 3:00 PM PST.

Seeing an investment opportunity? Investing in Bitcoin and other cryptocurrencies provide an exciting opportunity to invest in an entirely new digital asset class (Initial Coin Offering also known as ICO) with its inherent nature of high volatility, high returns; high risk especially for those who start investing in these assets without learning and understanding the function and value of a specific crypto coin of investment interest.

Learn More About Digital Investing In Blockchain Technology And Digital Assets

Blockchain Technology Explained – The real value of blockchains and crypto currency technology.

You will find in the above link not only explanations for blockchain technology and crypto currencies but also up-to-date new developments, market conditions as well a governments’ regulations.

To keep updated on breaking developments in blockchain innovations and the expanding universe of digital currency, bookmark my blog and check back for updates.

*Legal Disclaimer:

Information on my blog/website is not financial investment advice. It is intended for general informational purposes only and I am not a qualified financial advisor. By using and consuming information and advice from my website/blog, you agree to the Terms & Conditions specified herein and to future revisions of it.

Just like any investment opportunities, the basic rule of fundamental investing applies – higher risk (higher volatility) typically goes hand in hand with higher returns; that’s why those who want low risk, buy US treasury notes or put their money in a certificate of deposits, etc.

Any mention of corporations, ICOs, crypto coins, altcoins (also known as cryptocurrency) is not an endorsement and there’s no expressed or implied assurance or promised a return on investment.

Frequently Asked Question: what are my bitcoin / cryptocurrency tax implications?

Answer: review the following key resources for information on how to pay IRS taxes on  bitcoin / crypto currency investments: Coinbase’s 1099-K Tax Form, IRS Sales and Dispositions of Capital Assets Form 8949 and  how to report taxes – 1. [Business Insider Guide To How Paying Taxes On Bitcoin Work – 2]  [New 2018 IRS Notice 2014-21 bitcoin tax reporting rules – 3] [Overview of crypto currency tax reporting information from a tax attorney – 4] [Bitcoin Taxes Frequently Asked Questions- 5] [ Latest U.S. Tax News Pertaining to Bitcoin and Crypto Currency – 6].

If you are using TurboTax or whichever company is filing your taxes for you will need to submit all the relevant Bitcoin / Crypto Coins transaction information. Each transaction you made will need its own information, unless you bought and sold multiple times at the same exact prices and costs.

Here are the pieces of information you’ll need:

+ The date you bought your Bitcoin / Crypto Coins
+ The date you sold your Bitcoin
+ How much money you earned from selling the Bitcoin for USD
+ The cost of the Bitcoin at time of purchase
+ Number of Bitcoin involved in the transaction

Also, be aware of recent rules by the SEC.

About the Author:

A former EPA member, Tim is currently teaching in the San Francisco Bay Area. With his experience in computer engineering Tim tracks emerging blockchain technology developments in the crypto currency space. He became a digital cash enthusiast after seeing the rapid growth of the Ethereum blockchain enterprise in banking and trade. Tim has a successful record of selecting digital assets for exceptional return on investment.

During the winter months, you will likely find Tim skiing down the slopes of Squaw Alpine ski resort in Tahoe. If you are a skier or rider, you should check out SnowPals.org and join his San Francisco Bay Area based club to socialize and network with skiers and boarders who want to find like minded folks for ski trips to Lake Tahoe and to other popular ski destinations. Submit a question, suggestion or comment.

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