Brewer's Droop #261
There are two major topics trending in Cape Town at the moment: Rainwater tanks and Bitcoin.
Although I’ve “invested” in one, I’m not really sure (yet) if it was a wise decision. The other I’m still following very carefully.
Let’s take the rainwater tank first. I installed a 2,500 litre tank and, last week, during the merciful storm we had, it’s now full to the brim.
Well that’s good I suppose but my problem is what do I do with it now – before the next drizzles arrive?
It’s hardly worth tapping off small watering cans (or even big ones for that matter) because it’ll take an absolute age to give my new lawn even a smattering of hope in the form of moisture. There isn’t enough gravity pressure to use a rose spray so if I wanted to properly hose the bone dry grass I’ll have to invest more money in a pump. Hmmm.
And then, how do I know how much I can afford to use in one watering before serious depletion on the levels occurs – will there be more rain before the “scorching summer” we’ve been promised?
So, at the moment, it seems to be a good enough investment (the water does look clean enough to drink I must say) but like any other type of saving, when’s the right time to pull out? If it rains within the next few days then I won’t catch a drop of that. On the other hand, if it doesn’t rain then I’m similarly buggered.
I’m sure I’ll figure something out.
Meanwhile, all dinner table conversations inevitably end at this Bitcoin phenomenon. It really is quite astonishing the way the price has gone wild – in an almost obscene inexorable rise.
Of course, people are starting to panic. “Am I too late?” or “when is this bubble going to burst?” The major underlying concern seems to be total uncertainty. A bit like my water tank dilemma really I suppose.
The fever pitch surrounding Bitcoin (should I, shouldn’t I?) has reached almost evangelical proportions. And that’s what worries me. This frenzy about Cryptocurrencies (and there are many, many of them) tends to lend credibility to the popular notion that it’s a scam. Maybe a pyramid type scheme even.
When people get excited about stuff like that and encourage me to part with my cash then all my defences go up.
However, friends of mine are making profits hand over fist. It’s crazy!
As far as I can see there are basically three ways to get into Bitcoin (or any of the other cryptos) and they are:
One: Simply buy a Bitcoin (or any fraction of one you can afford) through a reputable company and sell your investment whenever you think you’ve made enough.
Two: you can try “arbitrage” with a broker. Essentially he will buy and sell on your behalf. You have nothing to do. The advantage of this appears to me to be that the more volatile the price, the higher your broker will make your investment worth. So you don’t want a steady rise, you want a roller coaster!
Three: Mining. Now there’s a misused term if ever there was one. This is what it really means: transactions have to be recorded properly and all the systems synchronized all over the world. In the case of Bitcoin, this process is not done by people or companies, but by thousands of computers everywhere that are all connected to the internet. These computers are known as ‘miners’, but they should really simply be called ‘computers that process transactions’.
Mining costs more to get into but they tell me the rewards are staggering. It doesn’t much appeal to me but people I know appear to be doing exceptionally well.
The over-riding good news (especially for “miners” and those just “holding on”) is that I was told, back in August that the price of Bitcoin would reach $7,500 by the end of 2017 and $10,000 by the end of 2018. So far that foresight seems to be holding true.
However, I recently did a little comparison between the rising price of the coin and the alternative of investing with a trader (i.e Arbitrage).
It’s not a truly compelling comparison because of timing as traders operate on a monthly cycle but, nevertheless, had I invested in “Arbitrage” on 25 August (the coin price was then $4,672) and cashed-in on 25 October (at a price of $5,519) I would have made a profit of 44.2% (cumulative by trading).
On the other hand, if I’d just held on to the coin for the same period, it would have delivered a profit of 18.1% (both of which are hefty returns in any bankers parlance).
But since then the price of Bitcoin has shot past $7,000 so, as I’ve said, it’s difficult to compare.
However, it does seem that there is some glitter to this kind of investment.
For my part, as I sit looking at my brown (and all-but dead) lawn due to lack of water I’m wondering if that has been such a good investment. As far as Bitcoin is concerned I’m uncomfortable a little sceptical. I can’t help myself – I get a sense of deja vu about it. I seem to recollect similar promises and prognoses before.
Of course, I’m as jealous as hell of my mates who appear to be literally “coining it”.
Maybe I’ll buy a lottery ticket on Saturday?
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