A few weeks back, my wife and I were vacationing in Cabo San Lucas, on the southern tip of Mexico’s Baja California Peninsula.
While we were lounging around the pool one day, I overheard a group talking about Bitcoin.
Naturally, I joined in – and offered up a few of my “credentials.”
Next thing I knew, I was getting peppered with questions about Bitcoin, the blockchain, and cryptocurrencies. These fellow tourists were smart folks, but they hadn’t yet been able to fully grasp all the ins and outs of this new world.
But by the time the conversation ended, they were thanking me for clearing up a lot of their confusion.
I was happy to help.
There’s little I like to do more than introduce people to new investing ideas – especially profitable ones.
In fact, this kind of thing happens all the time.
During the long Presidents’ Day weekend, I found myself in three Bitcoin/crypto conversations among three entirely different groups of people.
I bet the same thing happens to you – at the golf course, at cocktail parties, around the pool, everywhere.
That’s why I want to arm you with three key points – I call them “Insider’s Edges” – that will make you your crowd’s top Bitcoin expert.
After this quick lesson, not only will you be the smartest guy or gal in the room… you’ll be all the better positioned to make big profits on cryptos.
Be the Star of Your Next Barbecue
It’s no surprise, of course, that everyone is talking about Bitcoin.
After all, the media is having a field day with the world’s leading cryptocurrency. That’s because – as I suggested might happen back on Dec. 19 – the bottom recently fell out of the market.
From a high of more than $19,500, Bitcoin fell to a recent low of roughly $6,840, a 65% decline. And then it came roaring back to trade as high as $11,140 for a roughly 62.8% gain.
With so much volatility and media attention, Bitcoin and other leading cryptocurrencies are fodder for lots of conversations – at airports, in doctor’s waiting rooms, around the watercooler. Like I said, everywhere.
I’ve actually lost count of the number of times I’ve had virtual money chats.
The one thread in all of these talks is that investors are clamoring to understand this new and highly profitable sector.
Now then, I hope I don’t sound immodest when I refer to myself as a “crypto expert.” But the fact is that I was one of the first tech “gurus” to recommend Bitcoin.
I began telling investors about it in June 2013, when it was selling for roughly $90.
Bitcoin went on to a peak price of just about $20,000 a few weeks ago. We’re talking peak gains of an astounding 22,122%.
However, it’s been a bit of a bumpy ride of late with wild price swings. And that’s just added to the confusion many investors have about Bitcoin and other cryptos.
With that in mind, I’m going to share with you today four ways to gain the Crypto Insider’s Edge that will help you profit from this new high-tech form of money.
And make you the star the next time you find yourself at a barbecue and Bitcoin comes up.
Crypto Insider’s Edge No. 1: Volatility Is Essential
It may sound like I’m contradicting myself here.
And so will you if you use this Crypto Insider’s Edge the next time you hit the links.
But that’s OK – because you’ll be right.
On the one hand, I warned investors to be careful about Bitcoin before the recent volatility hit – and I still think we’re in “wait-and-see” mode when it comes to that digital coin.
On the other hand, I think the crypto chaos we’re seeing is actually good for the long-term future of the field.
Here’s the thing. We saw the price of Bitcoin rise nearly 1,000% in roughly a year. A rapid advance like that – driven in no small measure by short-term speculators – is simply not sustainable.
Moreover, countries like China and South Korea have been cracking down on Bitcoin as U.S. investors and large firms have been embracing it.
Asian traders accounted for roughly 25% of Bitcoin trading. As they began unwinding their positions, the price naturally fell.
So right now we’re seeing the market sort out rumors versus true news (signals versus noise), adoption rates among enterprise firms, and government crackdowns. We’re also seeing new, professionalized Bitcoin miners coming online to increase the supply.
As that all gets worked out, we’ll see the Bitcoin market become stable before its next big upswing.
Crypto Insider’s Edge No. 2: All Money Is Virtual
This is an area that many people have a hard time wrapping their minds around. I’ve heard savvy investors and tech “experts” who should know better say that cryptos like Bitcoin have “no value.”
Nothing could be further from the truth. The value of these coins depends on their ability to do things like undergird smart contracts in an encrypted format or solving complex algorithms that require massive computing power.
This is the fundamental truth about money today: All major currencies are de facto virtual ones.
Just take a look at the U.S. dollar. It isn’t backed by any hard assets. We have no idea how much gold the government is storing at Fort Knox. Nonetheless, the dollar thrives as fiat currency the government controls and that we all agree is worth more than the value of the paper it’s written on.
And the dollar is rapidly becoming a digital currency in its own right. Fact is, millions of us now receive our paychecks online and buy goods the same way.
We’re basically just debiting and crediting our accounts with digits that run through a computer network. Same thing holds for all the major currencies, from the euro to the yuan.
If that doesn’t convince your cohorts that all money is virtual, I don’t what will.
Crypto Insider’s Edge No. 3: It’s All About the Blockchain
It never ceases to amaze me how the mainstream financial media focuses only on the ebbs and flows of Bitcoin prices.
You almost never hear them talking about the underlying platform known as the blockchain. This is where all the magic takes place.
The blockchain is a massive global computing system that’s becoming popular with large firms. They want to use it to settle contracts in a secure manner without fear of government intervention or the risk of having a client cancel the transaction.
Simply stated, the blockchain provides a permanent record of every transaction that occurs on the network. If you want to make a change in your contract, the original one lives online forever and the new one gets logged into the system.
Unlike with the dollar or the euro, you can actually go online and monitor the network in near real time. Check it out for yourself at Blockhain.info, where you can see the market value, number of transactions, and the latest blocks to enter the system, among many other things.
And then send your friends. They’ll be impressed.
*This has been a guest post by Money Morning*