Reader Mail #36: My Thoughts on Bitcoin, Because Many Are Asking

Updated: February 7, 2022

Ever since I wrote that post about investing on Bitcoin, I have been flooded with questions regarding it.

I have to admit that I was not straightforward with my current opinion on Bitcoin, and cryptocurrencies in general, on that article.

The reason for that is because I wanted people to think for themselves. And the main purpose of writing that was to remind everyone that they should not invest in something that they don’t understand.

Today however, I will give you clear answers to all the common questions I’ve received. And my hope is that you’ll be able to eventually decide for yourself if you should invest on Bitcoin or not.

What is Bitcoin?

Okay, let’s start with the most basic question. However, please note that this is a highly simplified explanation.

Bitcoin is a digital currency. Do you play any online or mobile game? If so, then it’s similar to the in-game currency there — gold, gems, etc.

I used to play the massive multiplayer online role-playing game, Ragnarok. Zeny is the currency we have in the game. We get zeny by selling items, either to the in-game store or to other players. And those items we sell, we get it by killing monsters in the game.

If you want to make your game character strong in Ragnarok, then it’s important to acquire good weapons and armors. They’re rare and you’d usually need to kill a strong monster to get them.

If you want to have those weapons with less effort, then you can just play casually, sell common items and save up your zeny. Then you can later on buy those weapons from other players who have them.

Because they’re rare, it will of course, be expensive.

A few months after the launch of Ragnarok, some players got impatient, and instead of playing and saving up zeny. They began offering real cash to other players in exchange for zeny.

And thus, the Ragnarok economy began.

I had friends who would spend hours killing monsters so they can save up on zeny. Then they’d sell those zeny to rich kids, who would then use those zeny to buy the rare and strong weapons in-game.

As of writing, 1 million zeny is worth P60. I remember years ago, it used to be just P20 per 1 million zeny. But I also remember the time when it surged up to as high as P500 per 1 million zeny.

Now, back to Bitcoin.

Bitcoin is similar to zeny. You get Bitcoin by mining it, which is a complicated process that I don’t want to discuss. Just think of it like in Ragnarok, where you need to kill monsters to get items, which you then sell for zeny.

Zeny is used to buy and sell weapons, armors, etc. in Ragnarok. Bitcoin, during its early history, was used to buy and sell drugs, firearms, and other illegal items. It was also used for online gambling.

Bitcoins are sent to and received from an online wallet software. These wallets are not connected to your personal information. So in this way, Bitcoin transactions are anonymous, and thus the illegal activities.

People who would like to anonymously buy firearms online, for example, can convert their money to Bitcoin and use it to buy those items in the black market. This made the price of Bitcoin rise in value early on.

Then, a few years ago, Bitcoin penetrated mainstream economy. Merchants and stores began accepting them. And along with its rise in popularity, is its astronomical increase in its value.

The reason why it penetrated mainstream economy is because Bitcoin has other benefits. Among them, it’s efficiency and security as a currency. You can learn more about it here.

How do I get Bitcoin?

You can mine them, which will cost you hundreds of thousands of dollars because it will require a lot of powerful computers to do it today. Thus, it’s not really a good idea anymore.

The second, and easier alternative, is to buy from those who are selling them. As of writing, 1 BTC is worth PHP 512,890. If you have PHP 10,000 – you can convert it to 0.019497358 BTC.

Coins.Ph is one of the websites I know where you can set up your coin wallet and convert your PHP to BTC and vice versa.

Is Bitcoin legal?

This is dependent on jurisdiction, but to date, no government has passed any law that makes Bitcoin or cryptocurrency illegal.

Is it good to invest on Bitcoin?

For me, to “invest” means buying Bitcoin and holding it a few years to wait for its value to go up significantly. At which point, you will sell your Bitcoin and take profit.

However, at present, the way you can make good money from Bitcoin is by “trading” it. Or timing the market and profiting from the short-term fluctuations of its price.

I don’t recommend investing on Bitcoin, unless you are an aggressive investor who is willing to risk losing all your money. I am however, okay with trading Bitcoin, especially if you know how to do forex trading.

If you’re not an aggressive investor, and you don’t know how to trade currencies; then forget about making money from Bitcoin or other cryptocurrencies.

Someone is offering me Bitcoin investments with guaranteed returns, is that good?

NO! Turn around and run away. I am 99.99% sure that it is a scam.

What are your thoughts about Bitcoin?

I am neutral about Bitcoin. I don’t see it as good or bad.

Blockchain technology, on which Bitcoin was built, has a lot of potential innovative uses. And I am excited to see where that will take us.

However, I am not putting money on Bitcoin. Simply because I know other ways to make money that gives me more control, with less risk, and I am more competent with.

I have a friend who was able to turn P75,000 into P4 Million in a span of 1.5 years through the stock market. Another one, can consistently double his money every 3-4 months through forex trading.

Those two friends, like me, would rather focus on proven, time-tested ways that we know, to make money.

Lastly, my advise is to invest on knowledge first. Educate yourself about financial markets. Read economics and business news often. That is your key to spotting these types of opportunities early.

Remember, when people are already talking about it, you’re most probably too late to the party.

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