Dec 132017
 

How high can it go?

Back in Sept I blogged about buying some cryptocurrencies, and posted my Ethereum purchase transaction. At that time ETH was trading at $230 US. Today the price is over $700 US. Sweet mother of mammaries! 🙂 And just last month when Bitcoin was trading at $7,300 US I tweeted that the price would climb to $10,000 US, which would be a 37% increase.

Within a month Bitcoin had hit $10,000 US, lol. 😀 Unlike NASA, Bitcoin may not return back to earth once it reaches the moon. 😎 As I’ve written in the past I started to buy Bitcoin, Ethereum, and Litecoin earlier this fall and have been regularly accumulating them. My biggest winner appears to be Litecoin. For example I purchased some when it was $80 CAD. And now each Litecoin is worth over $400 CAD.

However, after the dramatic rise of the cryptocurrency market capitalization during the last 30 days I believe this asset class may be overvalued now. So I have decided to lower my financial risk by moving some money from cryptocurrencies to the stock market.

 

Why I’m Taking Some Profits

Since we are nearing the start of a new year, I want to collect some cash to fund my retirement account. When January comes I will have additional contribution room in both my RRSP and TFSA.  This is why I have decided to divest my cryptocurrency investment. Earlier this week I took some profits by selling roughly a third of my digital currency holdings. Doing this has freed up a few thousand dollars of capital. I can use this new cash (minus capital gains tax) to begin funding my registered investment accounts in the new year. 🙂 As far as I know there is no way to hold cryptocurrencies inside an RRSP.

I’ve used this effective investment method before with my marijuana stock, Canopy Growth Corp (WEED), where I bought 300 shares at $2.55 and sold at $12.10.  But instead of selling all my WEED stocks I kept 200 shares and continue to hold them today. A partial sell of a position like this accomplishes 2 things:

  1. First, it reduces the risk of my initial investment. I’ve already recouped all my money back, plus a tidy gain. Thus, it is now impossible to lose money on this investment as a whole, even if the future value of the stock drops to $0.
  2. And second, if the pot stock continues to climb in price then I stand to make additional money due to my continued long exposure to it. 😉

In other words, there are no bad outcomes here. That’s why I have used the same strategy with my cryptocurrency holdings.

Continue reading »

Sep 182017
 

What is a Blockchain?

A blockchain is basically a digital and decentralized ledger that can record virtually any type of transaction between 2 parties in an efficient, verifiable, permanent, and secure way. The first blockchain was conceptualised by Satoshi Nakamoto in 2008 and implemented in 2009 as a core component of the digital currency Bitcoin, where it serves as the public ledger for all transactions. 🙂 Since the creation of Bitcoin, the tech community has found other potential uses for blockchain technology. It can also assign title rights by providing a record that compels offer and acceptance.

The Rise of Blockchain Technology

Each of the Big Four accounting firms is testing blockchain technologies in various formats. Ernst & Young has provided cryptocurrency wallets to all (Swiss) employees, installed a Bitcoin ATM in their Switzerland office, and accepts Bitcoin as payment for all its consulting services. The CEO of Ernst & Young Switzerland stated, “We don’t only want to talk about digitalization, but also actively drive this process together with our employees and our clients. It is important to us that everybody gets on board and prepares themselves for the revolution set to take place in the business world through blockchains, [to] smart contracts and digital currencies.” PricewaterhouseCoopers (PwC), Deloitte, and KPMG are all currently testing private blockchains.

Buying Cryptocurrency

One way to ride the blockchain train is to invest in cryptocurrencies that use this technology. There are many to choose from, but the most popular ones are Bitcoin, Bitcoin Cash, Ethereum, Ripple, Litecoin, and Dash. They are all a little different. Bitcoin, for instance, is mostly used as a payment platform and may not be particularly scalable beyond being used for payments. However, Ethereum may have considerably larger aspirations because it’s an entire platform that enables savvy developers to build and deploy decentralized applications and smart contracts. With no central point of failure and secured using cryptography, applications are well protected against hacking attacks and fraudulent activities. The digital token used to buy for services on the Ethereum network is called Ether. There’s a saying that Ether is to Bitcoin as silver is to gold.

So last week I decided to buy 4 Ether. 🙂 I think the Ethereum platform has a lot of potential, but speculating in the nascent cryptocurrency market is akin to gambling due to its high risk nature. This is why I didn’t buy much.

Continue reading »