Six months ago, when Bitcoin was trading at US$2,150 or thereabouts, I was attending a conference in Seoul when an economist/fund manager named Mark Yusko made a bullish statement in an otherwise bearish sea of predictions around global asset values - he said "Bitcoin has the potential to rise in value significantly". He even hinted that it might get to US$20,000 by the end of the year.
This elicited quite a bit of head-scratching in the audience - I'm sure that more than a couple of the Korean fund managers assumed their translators had simply nodded off for a moment. But when he explained his rationale - that almost no one outside of a small subset of the "insider" population was buying crypto (he estimated that maybe 4% of the total population were buying and holding crypto-currencies), that rang a bell with me - and I'm sure quite a few others as well.
Over the next few months, I started asking groups of individuals whether or not they were holding any crypto. With only a handful a exceptions, no one was. Maybe 4 out of the 100 people I asked were holding it - Mark Yusko's 4% was validated. And so a few weeks ago, I decided to jump in and buy some Ethereum - no real reason for Ethereum over Bitcoin except that I think the underlying standard is going to prove more useful in the long run. And I like the name. :-)
So I bought in. What follows is the five minute guide that I wish I'd had when I made the decision - if you want to follow my lead and jump in as well, you're just a few sentences away from joining the club.
The first thing you need to know is buying crypto is affordable - as affordable (or unaffordable) as you want it to be. You don't need to spend ten grand to jump in (unlike tulip bulbs or houses, which cannot be fractionalized - at least, without serious help from bankers) you can buy a small fractional "slice" of Ethereum or Bitcoin for a small amount of money. Got US$200? Today you can buy around 0.203456 Ethereum for that (BTW, this reference is going to seem pretty lame six months from now - one way or the other!)
The second thing you need to know is how to store your crypto when you buy it. For this, you'll need a wallet attached to a reputable exchange.
Example of the type of exchange to avoid: Way back in 2012, I created an account at the now-infamous Mt Gox, with the objective of buying US$1,000 worth of Bitcoins. Bitcoins were worth a princely US$17.00 apiece at the time. I set it up, was all ready to make the transfer - then two days later, it got hacked, sending Bitcoin all the way down to US$0.17... Mt Gox melted away, and so did my interest in buying crypto. Which is a bit of a shame, because if I'd bought US$1,000 worth of Bitcoin when it was at US$17.00, I would own 58.8 Bitcoins - which my Opios app tells me would be worth almost exactly 1,000x that amount today. I'd be up a million bucks.
If I'd had large enough cohones to set up at a different exchange and buy in at US$0.17, I'd be holding US$ 100,000,000. Except I wouldn't be holding that of course, because I would have sold everything at US$17.00... :-)
The moral of this story is: when it comes to choosing an exchange, brand matters, security matters, jurisdiction matters - and time in business without getting hacked matters (at least to me.)
What else matters? Some exchanges only take credit cards (and some place relatively small limits on how much you can buy) - and some only support wire transfers. If you care about being able to navigate seamlessly between the iPhone app and the web site, or about user experience in general, half of the top ten exchanges are not going to do it for you - some are far too dense, others are far too simplistic. One common feature: great charting. Almost every site I went to had awesome analytics.
I'm not going to name names/crap on some of the (really) bad user experiences (and brands) I encountered - instead, I'm going to single out the exchange I chose, and walk you through the signup, so you'll be prepared for the twists and turns. The exchange I ended up choosing is consistently one of the top-rated: Coinbase. I don't have any money invested with them (other than in Ethereum), and have no hooks into the management. I just liked the UX a lot, and felt like five years in business was a whole lot better than two and counting. So if you're interested in going the same route, here's what you do.
1. Get out your passport (or driver's license)
2. Go to the AppStore and download the Coinbase App
3. Sign up using a mobile phone number related to the country of your passport or your driver's license
4. Scan your passport (or driver's license) and wait for it to be validated
5. Add your credit card
6. Log into your back account and retrieve the two small amounts credited from "Coinbase"
7. Plug those amounts into the interface
8. Press the "Buy" button...
There you have it - not terribly difficult, especially if you are prepared and have everything ready (and understand the nuances (like the fact that your mobile number needs to match the country your mobile phone is in, etc.) All the normal disclaimers apply - I'm not suggesting you do this, just laying out what you need to do if you feel like jumping in.
A parting thought - as I mentioned above, I've come to agree with Mr. Yusko's comments about the small size of the current population of crypto buyers/holders. Many, many smart, relatively wealthy people that I know don't yet hold any crypto at all - not even a small fractional holding. Which means there's potentially quite a long way to go before crypto runs out of buyers.
John is a serial entrepreneur and investor, and the co-founding Partner of Hatcher+, a data-driven, globally-focused venture investment platform based in Singapore. In addition to leading capital raising and deal syndication, he is the visionary and architect behind the Hatcher Stack, the company's venture-oriented business process automation platform.
Over the past five years, John has led numerous venture investments in early-stage companies, including ASYX, DocDoc, Dropsuite, Invit, Inzen Studio, SocialCops, ThoughtRiver, and Telr - and syndicated over US$100Mn of additional debt and equity co-investment. IPOs and trade sales in which he was acted for the majority shareholder include Dropsuite (ASX:DSE) and Inzen Studio (ASX:ICI). His M&A work includes the merger of payment leader Telr with Dubai-based Innovate Payments, and the merger of Singapore-based companies DocDoc, and DoctorPage.
Prior to co-founding Hatcher, John founded cybersecurity technology leader Authentium (acquired by CYREN in 2010), and acted as a director for global payments aggregator Mozido, and an advisor to Africa-based Gateway Communications, satellite technology developer MDS America, Kuwait-based Internet marketplace Sheeel.com, and Orion Partners, a $2B private equity fund manager based in Hong Kong.