How I Got $17k In Free Bitcoin

I did the math. I did not become a Bitcoin millionaire, but I did a full accounting and so far I have generated $17k in free Bitcoin or .5 Bitcoin at the moment. But how? It was a long and windy path. I started buying Bitcoin in Robinhood back in August 2018. Here are the tricks I used.

Momentum

Bitcoin seems to go through this bull runs. When the bull runs take shape I would buy in and ride them for a while. But I never let myself get too starry eyed with the concept of lambos and swimming in piles of cash like scrooge McDuck. Sure, some have made fortunes, but I am a regular middle class guy dabbling.

Take profits

For active trading I always tell folks to take profits sometimes. I like the concept of taking them as the bull run roars.

Remove the initial capital

I regularly use the trick of removing the initial capital. That way you are playing with house money after that. This is a key trick of playing Bitcoin for me. If the money doubles, then take out the initial thousands. If it all crashes then you did not lose a thing and you had some entertainment. If it continues to grow then you can take out cash as needed.

Overall take on Bitcoin

  • We discuss why Bitcoin could continue it’s bull run.
  • Our personal approach to Bitcoin as part of an overall investment strategy.
  • Share some views from prominent investors.
We first started covering Bitcoin and other crypto currencies in early 2018. We spent hours at our local watering hole trying to wrap our brains around it, what was it? I commonly asked the question, what value does it add? In my opinion, an investment or currency has to ultimately add value or solve a human problem.

Did the Pandemic Change Things?

For me personally the pandemic changed my view on Bitcoin as a premier and efficient store of value, in other words digital gold. Central banks and governments had no good option but to print out and send more money. Otherwise we would have seen human pain and suffering that the modern world is not familiar with. But with this comes inflation and the devaluation of the dollar. Bitcoin sure seems like a hedge against this.

Bitcoin Bull Run

Most recently Bitcoin seems to have broken through some kind of psychological resistance to $30,000/coin. I recall when it was under $1,000 and I would ask, why would anyone pay a thousand for this line of code? Here is our take on Bitcoin and crypto in general from investors/traders that have owned the coin for years.
  • Bitcoin seems to defy the common logic of assets and currencies. It is and isn’t an investment, asset, currency, etc. It could be a store of value, a new technology expression and a new way of trading value.
  • Bitcoin is in the eye of the beholder. It is worth what the whole network of trades believe it is worth.
  • There may be winners and losers, like a pyramid scheme. So keep an eye out for how the traditional fiat money is transferred.
  • Major institutions are taking positions and anyone can access Bitcoin via the CashApp. (SEE RELATED: Robinhood Vs. CashApp)
  • One big draw of Bitcoin is that it is not manipulated by Governments. It is like the currency of the people of the world that believe in it and use it. in other words, there is a finite supply and more cannot be printed. Only 21 million can be “made.”
  • But can it be manipulated by “whales” or foreign government actors? The lack of transparency makes this hard to predict.
  • A historical example of perceived value was the great Tulip bulb craze of the 1600’s. At the peak of the mania, one Tulip (Hopefully quite perfect) sold for about the price of a house. This means that Bitcoin may have further to go. but a key difference is that in theory Bitcoin could be a store of value, whereas the Tulip was a thing of nature that eventually wilts away.

CEO of MicroStrategy Saylor sums it up:

“We find the global acceptance, brand recognition, ecosystem vitality, network dominance, architectural resilience, technical utility, and community ethos of bitcoin to be persuasive evidence of its superiority as an asset class for those seeking a long-term store of value,” Saylor said. “Bitcoin is digital gold — harder, stronger, faster, and smarter than any money that has preceded it.”

Dabbling but not going crazy

Our personal approach to crypto is to dabble but not lose our minds. Yes, this means holding some Bitcoin and alt coins as speculation. There is really no other use for them at the moment. With the exception of the CashApp, which to me has made Bitcoin a bit more useable. My personal rule of thumb is to hold some Bitcoin, but limit to 1-2% of total assets.

Free Lunch?

I have been playing a little game to get free meals using Bitcoin and CashApp. So I buy some Bitcoin on CashApp. Watch it go up and take the profits. It makes me like $30 so I can go buy my family lunch or dinner. Then I use a CashApp boost as well for a little extra savings. Ok, I know that is silly, but just trying to give a sense of how I am using crypto at this point.

Early Dot Com era?

Here is our take on crypto currencies.  I read somone comparing this time in history to the early dot com era.  There were hundreds of dot com companies in the early days that had no chance of surviving.  But as capitalist natural selection took its course, only the strong survived, creating major value to shareholders and society at large. I think this a good analogy for the current crypto period.  Some of these currencies may actually solve real world problems and create efficiencies we could only dream of before.  These currencies are ushering new constructs such as smart contracts and changing the way money is moved around an increasingly globalized world and economy.  An economy that also demands more and more efficiency and speed to pull as much value out of each transaction.  I personally think there is great potential value in under developed economies with a lack of banking infrasrtucture but everyone is walking around with a powerful computer (smart phone) in their hands.

Cathie Wood of Ark, she could see Bitcoin hit $500,000

If you own any shares of Ark Investments ARK Next Generation Internet (ARKW), then you already have exposure to Bitcoin. Many readers of Money Vikings know that we are big fans of Cathie Wood over at Ark exchange traded funds. She is long term bullish on Bitcoin for several reasons. She was previously famous for saying Tesla would skyrocket in value. The main stream media was skeptical, but she ended up being correct if you factor in the stock split. She sees several use cases for Bitcoin. Here is a synopsis from a Barron’s article on her point of view:

Some investors, she said, see Bitcoin as a digital alternative to gold or an insurance policy against inflation. With the Federal Reserve’s decision to keep interest rates low for the foreseeable future, that’s one reason Bitcoin’s price could be rising. And if institutional investors like hedge funds were to take a greater interest in Bitcoin, it could send prices even higher, Wood said. What’s more, Wood noted the supply of Bitcoin units tops out at 21 million. There are about 18.5 million currently in existence, she said.

Wood said institutions have been bumping up their exposure to the cryptocurrency recently, drawing a comparison to “the early days of institutions moving into real estate and emerging markets,” when allocations started small, then grew.

Tulip bulbs and bubble mentality

Many financial experts say Bitcoin is worthless and right up there with the notorious Tulip bulbs craze in old holland. For those that do not know, one of the most famous real life examples of a “bubble” was the great tulip bulb craze in holland in the 1630’s. On the open market for tulips, one tulip actually sold for like 6 cows, a house and a bunch of gold, until it all came crashing down and then tulips were worth $2 again.
“Many individuals grew suddenly rich. A golden bait hung temptingly out before the people, and, one after the other, they rushed to the tulip marts, like flies around a honey-pot. Every one imagined that the passion for tulips would last for ever, and that the wealthy from every part of the world would send to Holland, and pay whatever prices were asked for them. The riches of Europe would be concentrated on the shores of the Zuyder Zee, and poverty banished from the favoured clime of Holland. Nobles, citizens, farmers, mechanics, seamen, footmen, maidservants, even chimney sweeps and old clotheswomen, dabbled in tulips”
Sound familiar? Like any bubble craze, everyone is rushing in to get a piece of the action. Then it all came crashing down. It can be hard to resist putting $1,000 into Coinbase, and the following week it says it’s worth $1,600! On the other hand, it will be really depressing to put $50,000 into cryptocurrency and then the following week it is worth $3,000! A big difference is that Bitcoin does apparently solve a problem, whereas a tulip is simply a beautiful flower that eventually wilts. Bitcoin could push back against inflation as a store of value and could be used in cross border transactions in an increasingly digitized world. Tulips could never do these things.

How will this evolve?

I have no idea how this will all evolve or end.  But, there may be some technologies and concepts that create great value over time.  Just be careful out there! Several times these coins have plummeted in value in a matter of hours and days. That is not a stable store of value. Perhaps Bitcoin will or has established itself as the digital gold. An “asset” with a finite supply that is difficult to replicate. As opposed to fiat currencies that can be printed and manipulated by Governments and large institutions. Some folks in the investing and tech world that we really admire are all in on Bitcoin. People like Cathie Woods over at Ark and Mr. Jack Twitter himself. The thing is that they have tons of money as it is and can afford millions here and there on risky ventures such as crypto. I have to be more prudent in the approach. Other wise I may end up with a wilting tulip, when I would have much rather held a house.  

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