INVISIBLE INVESTING: Taking the Mystery out of Cryptocurrency Investing

By Owen Weeks

INVISIBLE INVESTING

Taking the Mystery out of Cryptocurrency Investing

Author: Owen Weeks

Invisible Investing addresses the risks associated with this form of investment, and it highlights the practical steps that investors must take to protect their investments. There a

• Language: English
• Publisher: Lifestyle Matters Pty Ltd
• Release date: Aug 25, 2021
• ISBN: 9780646843551

Owen Weeks

Owen Weeks is a Fellow of the Institute of Public Accountants and a Fellow and Life Member of the Association of Superannuation Funds of Australia. He has been a partner in a stockbroking firm and a World Wide Partner At Mercer Australia and has built up and sold four businesses in the last thirty plus years.

Book preview

PREFACE

This book is designed to be a guide for Australian investors who have not yet made an investment in a cryptocurrency.

Bitcoin is the dominant cryptocurrency. It is a decentralised monetary settlement network and it is a digitally scarce asset. It is regarded as a potential hedge against inflation and some see Bitcoin as a potential replacement for gold. Bitcoin has a good track record and many investors have been rewarded with spectacular returns.

The second most popular cryptocurrency is Ethereum, which is the operating system for decentralised finance platforms. It can be thought of a totally new internet. Ethereum is not a currency and it is not money. Ethereum is a platform that allows for the development of digital applications and smart contracts. New developments are emerging almost daily, and many commentators suggest that there is limitless potential in Ethereum.

There are three overarching risks which make investing in a cryptocurrency worth considering. These are: global economic risks (massive debt and deficits, and Central Banks that continue to print money), systemic risks to the financial system, and the risk of geopolitical unrest (in the Middle East and the South China Sea).

Invisible Investing addresses the risks associated with this form of investment, and it highlights the practical steps that investors must take to protect their investments. There are chapters on taxation matters and superannuation. Practical information is provided on how to make your first investment, along with tips on record keeping. Useful tools and resources are also provided.

Readers do not need to understand all of the technical detail that underpins the operation of the various cryptocurrency investments. The book attempts to keep things simple while encouraging readers to do their own research before investing.

Two Broad Historical Observations

Firstly, a historical look at the meaning and value of money. Money is a store of value, a medium of exchange and a unit of account. Money is how we exchange the product of our labour, how we store wealth and how we measure our individual and collective inputs to society.

Money has always been the cornerstone of all civilisations and it is the largest segment of the global economic markets. In total, money is bigger than energy, food, transport, government, healthcare and entertainment. It is bigger because it represents all of these markets. Money can, and has been, manipulated by wealthy individuals, central banks, fund managers and governments, and it can be devalued by inflation and corruption.

The emergence of Bitcoin can be traced back to the Global Financial Crisis in 2008 when some very bright minds started to look for a new type of money. Bitcoin is now one of many alternative cryptocurrencies that all aim to provide a new type of money.

The second observation I want to comment on is the history of technical revolutions.

There have been five bursts of technological innovation that can be summarised as follows:

The Industrial Revolution (commenced 1771) that mechanised the cotton industry in Britain and then spread to the development of factories in a range of different industries.

The Age of Steam & Railways (commenced 1829) that saw the massive spread of railway infrastructure, ports, postal services and city gas supplies.

The Age of Steel, Electricity and Heavy Engineering