Don’t Fear Crypto Chaos

Cryptocurrencies may be the most talked about, but least invested in, story that we cover in Money Morning.

It’s easy to understand why. Investing in crypto requires you to learn a whole new set of terminology and skills. And in a sector that’s still so new and changing so quickly, even knowledgeable players have been burned.

In February 2014, Mt Gox — one of the largest bitcoin exchanges at the time — suspended trading without warning. It’s still not clear exactly what happened. ‘Technical problems’ were blamed. But accusations of fraud — and elaborate conspiracy theories — exploded across the internet.

What we do know is that over 850,000 bitcoins disappeared. Only 200,000 of which were ever recovered.

Today there are a large number of exchanges online. But just three years ago there were relatively few options. This saw Mt Gox controlling roughly 70% of bitcoin traffic. There are very few veterans of the crypto world without a horror story of how much they lost in the Mt Gox fiasco.

Mt Gox wasn’t the first stumbling block…nor the last. A quick Google search will bring you all the stories you need about stolen coins, Ponzi scheme miners, and even users losing track of physical hard drives packed with precious crypto.

So, if you feel a little hesitant to take the plunge, I don’t blame you. But that doesn’t mean you should dismiss crypto as untenable or as the playground of scammers and criminals.

Enthusiasts even argue that crypto is no more dangerous than physical cash. It’s simply that there’s a whole different set of risks than transacting in Aussie dollars.

So is it worth learning a whole new set of skills, just for a speculative investment like bitcoin?

You may choose not to take part in the cryptocurrency revolution. But that won’t stop it happening. If the current trend continues, we may see cryptocurrencies like bitcoin as globally accepted currencies, on par with national currencies like our own or the US dollar.

The fact that bitcoin and other cryptos have survived disasters like Mt Gox, and continued on their volatile path to greater heights every year, shows that it could be the case.

Even if you ignore cryptocurrencies today, you’ll still probably end up owning some one day. But you’ll be one of the latecomers. You’ll transact in crypto, and enjoy the revolutionary benefits that cryptos will offer. But it will be too late to enjoy the incredible potential gains from having got in early.

That’s the real debate here. Not whether cryptocurrencies and the blockchain technology behind them will eventually become a huge part of our financial system. In our view, that’s inevitable.

No, the question is whether it’s worth the risk and volatility of getting in early, in the first days of this revolution.

Sam Volkering and Ryan Dinse, our in-house cryptocurrency experts, would answer that question with a resounding ‘yes’. That’s why they’ve set out to map your route to becoming a cryptocurrency investor. And to understanding this exciting new world well enough to get involved with confidence.

Sam and Ryan have been following cryptocurrency since the early days of bitcoin. Sam lost a small amount of bitcoin in the infamous Mt Gox incident — and learned how to avoid getting burnt the same way again. They’ve been through it all, so that you don’t have to.

To find out more about how you can get these two experts in your corner, click here.

This week in Money Morning

Greg opened the week with a protest against the oversaturation of ‘Trump’ headlines in the press, especially the financial news. As he pointed out, markets have and will continue to carry on, regardless of who is in the White House.

There are other, more important factors to worry about. A key one of those is interest rates. Another key factor is inflation. And as Greg argued in his article, we’re currently seeing those two affect one another in a far more important way for financial markets than anything a politician has to say. To read why, you can find Monday’s Money Morning here.

On Tuesday Greg explained why the Aussie market is trading ‘nervously’, and why you shouldn’t panic if we see another leg down from here. Greg believes that such a fall wouldn’t mean the end of the bull market, but instead be a natural part of it. But it can be hard to focus on the big picture when you’ve been watching the daily moves. That’s why you sometimes need to step back, and see how those day to day results fit into the bigger trend. For Greg’s take, click here.

On Wednesday Matt brought us an unlikely defence of the RBA. You won’t find many fans of central bankers around the Port Phillip Publishing office. But Matt argued that, for all the imbalances and problems the RBA may have created, they were simply working with the blunt tool they have to avert an even worse disaster.

It’s not possible to manage an economy with only one lever, interest rates. But Matt argued that a desperate lack of leadership or consensus from government has left the RBA with no choice but to act, repeatedly. And, judging by Australia’s current political discourse, that’s unlikely to change. Meaning more blunt interest rate manipulation, and more of the problems it creates. To read what that could mean for your investments, check out Matt’s article here.

With that delightful time of year when we all get to do our tax returns having just passed, Sam explained on Thursday how cryptocurrencies could help you legally reduce your tax burden. Obviously, Sam isn’t talking about personal tax advice. Instead, he looked at how a decision by the ATO could affect all cryptocurrency holders in Australia. And with cryptocurrencies continuing to shoot upward (and often down, and then up again), there may be no better time to start learning about cryptocurrency, and how you can invest. Read the details in Thursday’s Money Morning, here.

Finally, on Friday Sam explained why bitcoin could change forever, early next week. All cryptocurrencies are volatile in these early days of their existence. But this decision from the bitcoin community, coming on Tuesday, could double the value of your bitcoins. Or halve it. For Sam’s explanation, click here.


Tyler Jefferson,
Editor, Money Weekend

Tyler Jefferson joined Fat Tail Investment Research in 2012. With a background in publishing, he started out as part of the team working behind the scenes with your Editors to bring you Money Morning each day.

When he joined, Tyler was Fat Tail Investment Research’s 12th employee. Today that number has grown to over 50, as more and more readers turn to Money Morning as their source for independent financial analysis and ideas.

Today as Managing Editor, Tyler still edits the articles you read each day. Along with that, he occasionally contributes to Money Morning with his own irreverent take on the most interesting news and opportunities for you.

Money Morning Australia