Coin a Craze: This is how Overnight Millionaires are born

It’s the hottest trade of the decade.

It’s already outperformed stocks, bonds, gold and real estate. And to be perfectly honest with
you, there’s no end in sight.

In January 2013, it priced at just $13.36.

Four and a half years later, it was up to $4,012 – a gain of 29,930%.

Every $100 invested was now worth just under $30,000. Every $1,000 was now worth just
under $300,000. Every $5,000 was now worth $1.5 million.

Every $10,000 was now worth just under $30 million.

In fact, it’s all any one can talk about these days.

I’m talking about Bitcoin – the cryptocurrency that’s taken the world by storm, creating
overnight multi-millionaires along the way.

Even billionaires are jumping on board with one predicting that cryptocurrencies could be
valued at more than $5 trillion by 2021, such as billionaire Michael Novogratz.

“Ten percent of my net worth is in this space. It’s the ‘best investment of my life,’” he
says, as quoted by Coin Telegraph. “The Nasdaq got to $5.4 trillion in 1999, why
couldn’t it be as big? There’s so much human capital and real money being poured
into the space and we’re at a takeoff point.”

Former PayPal COO David Sacks recently tweeted that such currency is the “best candidate
we’ve had in awhile for Web 3.0.”
“Bitcoin in 2017 is as real as Amazon or Priceline was in 1999,” says CNBC.

Of course, critics exist, too.

Oaktree Capital’s Howard Marks sounded the alarm not long ago, telling clients that
cryptocurrencies are overvalued, as noted by CNBC. In fact, Marks noted that they’re “not
real” and nothing but an unfounded fad (or perhaps even a pyramid scheme).”
JP Morgan CEO Jamie Dimon said, “If we have a trader that trades bitcoin, I would fire them in a
second, for two reasons: It is against our rules and they are stupid, and both are dangerous.”

That’s even as JP Morgan continues to handle bitcoin-related trades for clients.

Cryptocurrency in Plain English

In its simplest terms, cryptocurrency is an encrypted decentralized digit currency

transferred between peers and confirmed in a ledger, a process referred to as mining. As a
peer-to-peer system, transactions are carried out between other users, eliminating any cost
incurred by the intermediary.

In short, transactions are made with no middlemen.

There is no bank or government involvement. There are no transaction fees and no real
reason to give your actual name. Better yet, merchants around the world are just beginning
to accept them, including web hosting to pizza and manicures.

It’s just about revolutionized transactions.

So much so that the number of businesses accepting cryptocurrency is growing by leaps and
bounces. Microsoft, Intuit, PayPay, Dish Network, and Overstock.com are some of the
biggest. At Microsoft for example, you can buy content in the Windows and Xbox stories.
The company was even behind the launch of Azure Block Chain as a platform that allowed
larger-scale businesses to use block chain to facilitate settlements.

Here are just a few more businesses that accept it, according to Zero Hedge.
Nearly 260,000 stores accepted it in Japan, too.

Even Fidelity Investments rolled out a program in August 2017 that allows investors to track
their cryptocurrency holdings right alongside traditional assets.

At this pace, there’s a good chance that such currency could become a global digital reserve.

Clearly, it’s popular. We’re even just beginning to see Bitcoin ATMs popping up.

In fact, according to Coin ATM Radar, there are now 1,001 Bitcoin ATMs just in the U.S.
Plus, right now, there are 1,121 coins in existence. Everything from the Morning Star
currency at less than two cents to Bitcoin at $4,012 is available with exploding values.

• In August 2015, Ethereum priced at $1.78. It’s now up to $290.50.

• In January 2013, Litecoin traded at seven cents. It’s now up to $53.35.
• In August 2013, Ripple traded at $0.0004. It would hit a high of 34 cents.
• In February 2014, Dash traded at 21 cents. It’s now up to $340.56.
• In July 2016, Ethereum Classic traded at 75 cents. It’s now up to $11.46.

It’s even getting support from the likes of Japan and Russia.

Japan for example just legalized crypto currency as a payment method. In fact, Japan became
accepting Bitcoin as legal currency with major retailers backing the law. Russia is seeking to
recognize it, too as a legal financial instrument in 2018, as a way to tackle money laundering.

Canada, the United Kingdom and the U.S. are on board, too.

Two U.S. congressional members just introduced The Cryptocurrency Tax Fairness Act of 2017 in
an attempt to reduce any regulatory burdens on folks that use such currency to make small,
everyday transactions. “With this simple legislative change, anyone can make digital payments to
buy a newspaper or a bike without worrying about tax code challenges,” notes Crypto Coin News.

Even the Australian government is removing double taxation on such transactions.

According to Crypto Coin News:

For years, digital currency adopters in Australia were taxed twice for transactions, once for
the goods and services tax (GST) on the product and again for the GST levied on the digital
currency used for the payment. “If you pay $4 in bitcoin for a coffee, you will pay 40c
 GST for the coffee, and 40c again for the bitcoin you used to pay for the coffee,” explained
Daniel Alexiuc, CEO of Australian bitcoin startup Living Room of Satoshi, speaking to
CCN in 2016.

In short, it’s an exciting time to be long the digital currency. But don’t take our word for it.

The Huffington Post noted, “Crypto-currency is now starting to challenge gold as the
investment of choice.”

Startup Book notes that, “A number of Reddit users and Bitcoin forum members have
claimed that with the digital currency’s recent spikes, they are officially millionaires.”

“The latest online investing craze has shades of dotcom exuberance,” says The
Financial Times.

CNN reported, “We estimate 5 to 10 million unique active users of crypto currencies,
and in my opinion that’s nothing short of a minor economic miracle.”

Crypto Basics 101

We already know it’s a decentralized currency transferred between peers.

But you’ll hear the term “coins” tossed around as well. Coins are nothing more than publicly
agreed upon records of ownership, though.

You’ll also hear about miners, which generate the “coins” in a ledger (also known as a block
chain, which applies to most but not all crypto currencies). In order to spend or receive the
currency, a user must first create a transaction and broadcast it to the entire network, which
then stores the information in a ledger. For that transaction to be successful, it must be
added to the public digital ledger.

This is where “miners” come into play.

Miners are those in the network that compete to collect transaction data, verify transactions
against the existing ledger and then solve a cryptographic puzzle that allows them to add a
block of transactions to the chain.

As a reward in this “competition,” the miner receives new coins.

Once the block is added to the chain, the transaction becomes public record. All without the
use of a financial institution to govern the transaction…

Other crypto currencies such as ethereum are designed to support “smart contract
applications,” or a computer program that automatically executes the terms of a crypto
currency contract when specific conditions are met.
You’ll also hear about your “wallet.”

“People who wish to hold and spend bitcoins must create a bitcoin "wallet," which stores the
information needed to complete bitcoin transactions. The bitcoins themselves remain a part of the
blockchain, but your wallet contains the information necessary to access and use your own
bitcoins,” according to Motley Fool.

It may sound confusing, but give it time.

The biggest thing to understand here is the risk, though.

No one can tell you what the price of this currency will be tomorrow, in a month, or even if
it’ll be here in a year. And at the moment, it’s clearly in bubble territory.

And as we know from history, markets are littered with popped bubbles from the tulips in
the 1600s to the Internet boom and the U.S. housing market fiasco.

For a currency to rise as fast as crypto currency has defies all logic for many.

The crypto market is already showing signs of frothiness we must be aware of, including the
frothiness of the initial coin offerings (ICOs) market.

To begin, an ICO involves selling a new digital currency at a discount as part of a way for a
company to raise money. If that crypto currency does well and begins to appreciate in value
(often based on nothing more than speculation), an investor has made a profit.

They’re cryptocurrency startups.

And while it may sound exciting, consider this. According to Coin Schedule, we’ve seen 147
new ICOs this year raising $2,194,846,239. That’s a bit frothy.
Also, it’s our responsibility to be aware of the potential for downside, too or we could very
well repeat the mistakes of the past. In fact, not too long ago, a market correction sent coin
prices plummeting, reminding us of the obscene volatility that will always exist.

In June 2017 for example, the price of ethereum crashed from $319 to 10 cents in only a
second on multi-million dollar sell orders being filled at $317.81 to $224.48. As the price fell
out of the sky, 800 stop loss orders and margin funding liquidations sent the currency as low
as 10 cents. Some folks lost as much as $9,000.

Also in June 2017, Bitcoin prices fell more than $200 between June 25 and June 26. Any one
that conducted any transactions would have seen a 7% to 10% decline in deal value wiped
out. While a lack of government backing made such a transaction attractive, the absence of
any backing can be an issue as well.

In September 2017, Bitcoin plunged from a record high of $4,921 on the first of the month to
$2,957 by the 15th on concerns of increased scrutiny from Chinese officials and a host of
expert that have slammed the currency as a fraud.

Money can be wiped out in seconds. You have to be aware of that.

Then again, crypto currency traders are a crafty bunch at the moment. Prices of the currency
sharply rebounded from September 15 lows on news that traders in China would switch to
alternative exchanges or seek loopholes in any regulation, as noted by Bloomberg.

Plus, we have to worry that Big Brother may come for the currency, too at some point.

We’re slowly seeing governments, regulators, and tax collectors beginning to make their
move, or attempting to take control. The fear is that one-day, they could take full control of
the “block chain” and tell us when and how we’re allowed to use it.

Right now, though, the crypto currency mega-trend is here to stay, and likely grow. With far-
reaching adoption rates and commercial use, it’s finding its way into nearly every industry.

And while it’s catching on quickly, creating overnight multi-millionaires along the way, there
are dangers that could wipe out riches in a matter of seconds, too.

To coin a phrase, be smart with how you trade it.