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How Bitcoin Could Deliver 344% Gains – Again and Again

Editor's Note: Normally, only Bill's paid-up Private Briefing subscribers would have access to this interview, but we've spotted some potentially lucrative new developments in Bitcoin, the digital currency, and we wanted to give all our Members the chance to participate in this. Here's Bill…

Bitcoin is a lot more than a digital currency. It's one of the most fascinating and disruptive products available to you today.

Bitcoin is decentralized, so it's immune to interference from the world's central banks and highly resistant to politics. It's secure, too, using robust cryptography to maintain security and anonymity and, paradoxically, total transparency.

That decentralization, along with its limited supply, give Bitcoin a built-in value – and a mighty high one, at that. There will only ever be 21 million Bitcoin in existence, a milestone we're expected to hit in the year 2140. Unlike dollars or euro, bankers can't just print more to devalue it.

On the other side of the equation, demand for Bitcoin is surging with a momentum all its own. You see, it's become a bona fide asset class: Bitcoin owners can spend it in more places, on everything from a ride to space on Virgin Galactic to a pepperoni pizza. There are Bitcoin stocks, exchange-traded funds, and even derivatives available to investors, too, as you'll see shortly.

But what's even more exciting is the profit potential, both in Bitcoin and the "blockchain" technology that makes it work securely, for investors who play it correctly.

So I jumped at the chance to sit down with Dave Zeiler, a former Bitcoin "miner" and recognized expert. Miners are expert insiders, the closest Bitcoin will ever come to having bankers. They help oversee and execute the truly massive number-crunching needed to generate Bitcoin in very small increments – up to that 21 million mark, of course.

Now, Bitcoin owners have already seen gains of more than 1,000% – several times, in fact. But as you'll have the chance to see, that's just a bit of what's in store…

A One-on-One Interview with a Bitcoin Expert

digital currency William Patalon III: Dave, it's been a wild couple of years for Bitcoin. And as one of the early miners – indeed, a guy who operated back in an era when individuals could still "mine" the cryptocurrency in time frames short enough and quantities big enough to be meaningful – you bring the insight of a practitioner. And as one of the top Bitcoin writers in the country, if not the world, you also bring the insight of an analyst, expert and observer.

I mention this because I want folks reading this to understand what an opportunity this is for them to hear about a cutting-edge tech trend… directly from a person who truly has something to say.

In other words, Dave, I want folks to understand your bona fides before we started. And because I'm intending this to be a Q&A that gives newcomers an entry into this realm – as well as one that gives even experts a depth of insight they'll find valuable – let's start with a quick overview… with the basics.

What is Bitcoin? Why is it important – and why is it viewed as equal parts currency and technology?

David Zeiler: (laughing) That's a mouthful right there, Bill. Bitcoin – at its most basic level – is a digital currency. That is, it exists only on the Internet and not in the physical form most people think of as "money" – you know, paper bills and coins. If that seems odd, think about how much of your money you actually see in physical form. Today, most of us who earn a paycheck have direct deposit. We pay for things electronically with credit cards and debit cards. So Bitcoin is a logical extension of that trend.

WP: Okay, so we can see why it's been dubbed as a "cryptocurrency." Let's drill down a bit. What is the "blockchain"?

DZ: Great… Bitcoin is a currency. But at the same time, Bitcoin is also more than a currency. The technology that makes it all work – the blockchain you mentioned – makes Bitcoin an exciting new technology that's just starting to disrupt the financial industry.

The blockchain is an Internet-based public ledger of every Bitcoin transaction. People who run the Bitcoin software maintain an up-to-date copy of the blockchain on their computers. I run a Bitcoin "node" myself, as a matter of fact. This system is what makes Bitcoin trusted – each transaction, in addition to being public, is verified by the "nodes" on the network.

The "cryptocurrency" aspect comes from the very high level of encryption that protects the transactions and the mining of new Bitcoins.

WP: Okay, so we have a basic understanding of Bitcoin itself.

Here's what I would like to do: Let's divide our talk here today into four parts: The technology… the economics (including pricing)… the investments… and the future.

Digital Prospector: The Remarkable Economics of Bitcoin

WP: We'll get into the technology in a moment. And the investment angle. Let's first talk about the economics of Bitcoin. Including how these are "created."

Bitcoins are "mined." What does that mean? And what are its economics? There's a limit to how many of these can be made, right? How does that fact affect its pricing – indeed, the entire economics of this cryptocurrency?

Join the conversation. Click here to jump to comments…

About the Author

Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning. With his latest project, Private Briefing, Bill takes you "behind the scenes" of his established investment news website for a closer look at the action. Members get all the expert analysis and exclusive scoops he can't publish... and some of the most valuable picks that turn up in Bill's closed-door sessions with editors and experts.

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  1. George R. Gillespie | January 21, 2016

    Sounds interesting and could be very lucritive …

  2. Peter | January 23, 2016

    Hi there guys well I'm not that really up with bitcoin but because of the current real estate crash that I think isn't far away what would be the best way to get/invest in bitcoin!!

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