So you decided to host the big Fourth of July BBQ…

The coolers are packed, corn-hole is set up, and you fire up the new Weber Grill as your friends and family start to arrive. All the usual suspects are there and curious about your rumored “bitcoin investments” that helped you afford the new Green Egg that the brisket is smoking in and that new Tesla you bought back in December. (Those were the days, huh?)

Here are some of the top questions we got while stuck manning the grill:

“Where do you even buy a bitcoin?” — Aunt Karen

This is a relatively easy opening question to field. A good warm up. You quickly explain to Aunt Karen that bitcoin is not a physical object but instead a peer-to-peer digital currency that exists as code within a decentralized network. You do a brief overview of blockchain technology and bitcoin miners but realize you’re burning the first round of hotdogs. You almost forget the original question, but tell your aunt that she can buy bitcoin from an exchange like Coinbase.

[Aunt Karen could easily diversify her bitcoin by investing in our Coinbase Crypto Bundle, but I digress]

Trending Cryptocurrency Hub Articles:

“Warren Buffet said bitcoin is rat poison and its a bubble that’s going to burst. Isn’t it used to buy drugs?! Why are you investing in such a risky thing?!” — Dad

Dad is two scotch ‘n sodas deep and giving out investing advice to anyone who will listen. He corners you at the grill while you’re discussing recent STOs and EOS v.s. ETH with some crypto buddies. Luckily you have some backup, and explain to the ‘ol man the real use-cases of bitcoin:

Actually owning your money — With bitcoin, you own the digital asset. There is no bank that holds your coins. You hold your own bitcoin in a wallet that can either be online or offline (a.k.a “cold storage”). You want to send $5,000,000 across the globe? Its done with one simple encrypted address, only costs pennies, and done in a few hours. Look Dad, you shouldn’t be paying Chase Bank all these fees just to hold and transfer your own money — its yours — and can be accessed anywhere in the world with bitcoin.

— With bitcoin, you own the digital asset. There is no bank that holds your coins. You hold your own bitcoin in a wallet that can either be online or offline (a.k.a “cold storage”). You want to send $5,000,000 across the globe? Its done with one simple encrypted address, only costs pennies, and done in a few hours. Look Dad, you shouldn’t be paying Chase Bank all these fees just to hold and transfer your own money — its yours — and can be accessed anywhere in the world with bitcoin. Blockchain technology — Bitcoin exists on the blockchain, which means each transaction is verified by a decentralized network of computers racing to complete a difficult algorithm. The blockchain is difficult to hack because of the decentralized nature of Proof of Work.

— Bitcoin exists on the blockchain, which means each transaction is verified by a decentralized network of computers racing to complete a difficult algorithm. The blockchain is difficult to hack because of the decentralized nature of Proof of Work. Censorship Resistance and Store of Value— Remember what happened in Greece in 2015, Dad? Banks locked the doors and ATMs dried up as an entire country lost liquidity. What about 14,000% inflation in Venezuela recently? With bitcoin, there is no government controlling the currency so it is free from censorship and can act as a store of value in times of wild inflation and other government unrest.

BTC volume in Venezuelan currency increases do to government inflating the country’s currency

“Bitcoin is one of the most tightly regulated currencies on the planet. Fortunately, Bitcoin is regulated by algorithms, which are pure; fiat currency is regulated by politicians, who are corruptible”. — Nick Szabos

Warren Buffet is an incredible investor that believes in long-term value investing. Given that bitcoin and the cryptocurrency industry is not even 10 years old, bitcoin has no discounted cash flow models to reference, and bitcoin is disrupting the very banking industry that Buffet is heavily invested in, it makes sense why he is not comfortable with cryptocurrency.

“Did you actually buy that Tesla with bitcoin?” — The neighbor’s 16 year old son

Yes, yes I did. Bitcoin is going to the moon, kid. 🚀

“I get bitcoin, but what is up with all these altcoins and ICOs? Aren’t they all trash?”— Your bitcoin maximalist buddy that works in IT

You’ve been kicking back Miller Lites all day waiting for an intriguing question. Two bacon cheeseburgers down and finally an intelligent argument. This is the American Dream people.

Against Altcoins

There have been many ridiculous altcoins issued that do not need to be on a blockchain. Think BananaCoin, WhooperCoin, and PutinCoin. These coins are nothing but a gimmick, and should be treated as such.

ICOs (or initial coin offerings) can be a fantastic way to raise money for a blockchain or crypto-based startup. In an ICO, only accredited investors can purchase utility tokens that are to be used in the entity’s platform. Things get murky when the utility token is invested into with the perceived notion that it will increase in value. Crypto investors and traders then have an incentive to HODL (“hold on for dear life”) to the token instead of using it in the issuing entity’s system. The SEC is not a fan of that, which is why STOs (Security Token Offerings) are becoming more popular. In an STO, the tokens are registered and compliant securities with the SEC. Don’t forget an estimated 80% of ICOs have been scams used to raise outrageous sums of money, while the organizers run off with millions. Do your own research and only invest with money you can afford to lose.

For Altcoins

Altcoins are an evolution upon blockchain technology and the principles of bitcoin. Most focus on niche use-cases of blockchain technology like privacy, smart contracts, mirco-payments, decentralized storage, and other fascinating propositions.

Top altcoins like ETH, EOS, LTC, XLM, NEO, and VEN have raised millions of dollars to create infrastructure for digital assets to operate on. Its like being in the Dot Com Bubble — thousands of companies are trying to invent the future of digital assets and blockchain tech and only the best will shake out to be the industry leading names like Amazon, eBay and Intuit.

From an investing standpoint, altcoins allow crypto investors to diversify their portfolio and relieve unsystematic risk. While most coins are correlated to the price of bitcoin, bitcoin itself has a correlation to the S&P 500 of -0.24. The correlation chart below shows that the top altcoins have a negative correlation to the S&P 500, proving a diversified bundle of cryptos hedges traditional equities market risk. Where’s my ‘ol man — he needs to hear this — cryptos actually decrease the risk of an overall portfolio of assets like equities and bonds. Someone get Buffet on the line.

Correlations of cryptos to traditional investments.

Diversified crypto bundles is what we specialize in at CoinPlan. In fact, here is our deep-dive into crypto as an asset class.

“How did Monero’s hard fork to RingTC improved its security and privacy? Is Korvi going to improve I2P? Also, how many lightning nodes are on the mainnet now?” — Mom

Lets just enjoy the fireworks, Mom.