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  • - All right, let's talk about crypto.

  • Now, you've probably heard the word Bitcoin floating around.

  • You might have seen the price

  • has been skyrocketing recently.

  • You might've seen that Tesla has bought $1.5 billion worth

  • of Bitcoin and is gonna start accepting it as payment.

  • And you might have heard

  • of all these weird things called a Dogecoin

  • which are apparently going to the moon.

  • As such, this video is my personal guide

  • to the world of Bitcoin and cryptocurrencies.

  • It's the introduction that I wish I would have

  • had when I started investing in crypto about four years ago.

  • And it's the video that I wanna be able to send

  • to my friends whenever they ask me,

  • Hey are you investing in Bitcoin?

  • Why are you investing in Bitcoin?

  • How does it work?

  • Is it safe?

  • Are you gonna lose your money?

  • Isn't it illegal?

  • All of this sort of stuff.

  • So this video, which is for informational purposes only

  • and should absolutely not be construed as financial advice.

  • In the slightest, we're gonna split it up into four parts.

  • Firstly, I'll talk about what Bitcoin is

  • and how cryptocurrencies in general work

  • and why they work and why they're legit.

  • Secondly, we'll talk about why Bitcoin

  • and crypto is so controversial

  • and I'll share my hot takes about that.

  • Thirdly, we'll talk about,

  • why I personally do invest in Bitcoin

  • and crypto and I will share my portfolio allocation

  • and the reasons behind that.

  • And fourthly, we'll talk about

  • how you can get started investing in crypto.

  • If that's the sort of thing you want to do

  • with lots and lots of caveats

  • and cautionary tales along the way.

  • As always timestamps in the video description,

  • so you can jump around if you feel like it.

  • And if you new to the channel, hello, nice to meet you.

  • My name is Ali, I'm a doctor based in Cambridge in the UK.

  • And on the channel, we normally explore the tools

  • and strategies that help us live healthier,

  • happier more productive lives.

  • But I have a personal pension for the topic of money

  • and I think more people should learn

  • about money and investing and finance

  • and how it works and be open about that sort of stuff.

  • So here we are talking about this video.

  • Anyway, let's get into section number one.

  • All right, so let's take things back to basics to try

  • and build up our understanding of Bitcoin

  • from the ground up.

  • Now, Bitcoin is a cryptocurrency.

  • There are hundreds of other cryptocurrencies out there

  • but Bitcoin is like the original, the OG.

  • And it's by far the biggest cryptocurrency around,

  • which makes the question, what is a cryptocurrency?

  • So here's my definition of a cryptocurrency

  • based on four central concepts.

  • A cryptocurrency is a virtual currency based on a ledger

  • which is decentralized and secured by cryptography.

  • All right, so firstly, Bitcoin is a virtual currency.

  • Now what is a currency?

  • A currency is just a medium of exchange.

  • It's what replaces the old school bartering system

  • we used to have, when it would be like,

  • I will give you this bushel of wheat

  • in return for the shoe that you have kindly made me

  • because you are a, I don't know, leather worker.

  • Obviously, that system of bartering is quite inefficient

  • because you have to store

  • a lot of stuff that other people want

  • and that's just a bit of a pain.

  • And so we invented currency in the form of coins

  • usually as a system that everyone recognized

  • to be able to exchange stuff

  • without having the physical goods.

  • So I could sell my bushel of wheat for two copper coins

  • and then I could save up my copper coins

  • and I could buy your shoes for 10 copper coins, for example.

  • Back in the day currency itself

  • was tied to metals like gold

  • and silver and copper, which had like different values.

  • And so the actual metal of the coins

  • was worth something because everyone agreed

  • that these metals were somewhat precious

  • but in modern times, most of our currency takes the form

  • of paper notes and paper notes

  • aren't inherently worth anything

  • because the paper is just worth paper

  • but currency is worth something

  • because everyone agrees that it's worth something.

  • If I take $100 dollars almost anywhere in the world

  • most people, I mean most places in the world

  • will recognize that $100 is worth $100

  • and I'd be able to buy $100 worth of stuff from it.

  • If hypothetically the whole world were to tomorrow decide

  • that the U S dollar is a meaningless currency

  • and they're not gonna accept it for anything at all.

  • Then the U S dollar would be worthless.

  • So really when it comes to currency

  • it doesn't mean anything real.

  • Currency is kind of just an abstract way

  • that we've all agreed to value things in a certain way.

  • So coming back to Bitcoin, Bitcoin is virtual currency.

  • It is a digital form of currency,

  • i.e. a digital form of paying for goods and services

  • and exchanging money over the internet.

  • Way back in 2009 when Bitcoin was first invented,

  • most people didn't believe that it would be a viable

  • form of currency, but over the last decade plus,

  • as Bitcoin has become more and more popular,

  • people are starting to say

  • that maybe Bitcoin could be the currency of the future.

  • Maybe in the future, maybe a few years,

  • few decades from now, we'll be paying for goods

  • and services using Bitcoin over the internet,

  • rather than by using these old school,

  • old fashioned centralized banking

  • and government institutions to exchange U S dollars

  • and our actual local currencies.

  • Okay, so that was the currency part of it.

  • We can think of Bitcoin or crypto as like "Internet Money"

  • or like "Virtual Money" or "Virtual Currency".

  • Let's now talk about the ledger system

  • that holds it all together.

  • And the thing to understand here

  • is that Bitcoin is effectively one giant huge spreadsheet.

  • This spreadsheet is called a ledger and in the spreadsheet

  • we've got a record of every single Bitcoin transaction

  • that has ever happened since January, 2009,

  • when Bitcoin was, was first invented.

  • And the way that I think of it in my head,

  • it's like, let's say you're going on holiday

  • with a group of friends and you don't wanna

  • kind of keep on splitting the bill

  • and handing over cash because that's a total nightmare.

  • Therefore, someone makes a spreadsheet

  • to keep track of who owes what.

  • And so line one in the spreadsheet might be

  • Ali owes Sheen 12 pounds,

  • line two might be Jake owes Molly, 18 pounds.

  • And the idea is that as our holiday goes on,

  • we would keep on adding stuff

  • to our spreadsheet or a ledger.

  • And at the end of the holiday, we would all settle up

  • and then actual money would exchange hands.

  • Now, assuming you trust your friends, to be honest

  • this spreadsheet actually works reasonably well.

  • You can basically treat this whole spreadsheet

  • as virtual money.

  • I am giving my friend virtual 10 pounds

  • in exchange for them paying for dinner.

  • Other friend is giving me virtual 20 pounds

  • in exchange for me paying for the boat ride.

  • Now that's fine for a group of a few people on holiday

  • but imagine hypothetically, if the whole world were to run

  • on a similar spreadsheet, where instead

  • of money ever exchanging hands like physically

  • it would just be a line item in the spreadsheet.

  • Now imagine a world in which everyone trusted

  • the spreadsheet and everyone was being honest

  • and good and nice and friendly,

  • and only adding legitimate things

  • to the spreadsheet that everyone agreed on.

  • That's basically what Bitcoin is.

  • It's this giant spreadsheet that keeps track

  • of absolutely every single transaction

  • that's ever happened regarding Bitcoin

  • since the start of Bitcoin.

  • And so that means that this spreadsheet

  • has a record of everyone in the world

  • who has ever bought and sold Bitcoin

  • and it tells you how much Bitcoin

  • they've bought and sold, so you can work out

  • how much Bitcoin each person has in their account.

  • Now let's say I have two Bitcoins in my account

  • which is quite a lot of money these days.

  • And I were to give one Bitcoin

  • a friend we could add to this spreadsheet.

  • Ali gives one Bitcoin to Jake.

  • And because it's all in one spreadsheet

  • the spreadsheet knows that my Bitcoin account

  • has now one Bitcoin and Jake's Bitcoin account now

  • has one Bitcoin in it as well.

  • Now, fundamentally, this is all Bitcoin really is.

  • It's just a giant spreadsheet

  • but it's got some other fancy features

  • that make it really really clever,

  • and that make it a potential candidate

  • for the currency of the future.

  • See, the problem with our ledger system

  • is that if it's on a spreadsheet

  • usually it's one person who's maintaining the spreadsheet.

  • So let's say I'm on holiday with friends

  • and everyone trusts me to do this, to be the spreadsheet guy

  • because I'm a massive nerd.

  • And therefore, anytime they want to post a transaction

  • they would say, Hey, Ali,

  • Catherine has given Lucia 10 pounds

  • and therefore I will add it to the spreadsheet.

  • This is fine because my friends trust me

  • and I'm a massive nerd,

  • but we don't want a entire system

  • of financial stuff based on this centralized model

  • because that's kind of what we have already.

  • Like every bank financial institution,

  • government in the world is some sort

  • of centralized authority that handles money.

  • And so the us dollar is tied

  • to the federal reserve and the U S government,

  • the UK pound is tied to the bank of England

  • and then it's all somewhat related

  • to like the international monetary fund.

  • And then like the government has something to do with it.

  • But essentially it's a small group of actors

  • like governments and banks that manage the financial system

  • for basically every country in the world.

  • And so the third part of our definition

  • of a cryptocurrency is that it needs

  • to be decentralized and the way that Bitcoin

  • and all these other cryptocurrencies work

  • is that there is no central person in charge of them.

  • There is no one person or one company saying, Hey,

  • I have got the master spreadsheet.

  • Instead, what happens is that every single person

  • in the world can have a copy

  • of that master spreadsheet if they want.

  • And so with Bitcoin, for example,

  • there are millions of people around the world

  • on their computers who each have a copy

  • of the master spreadsheet.

  • And each of those computers are running software

  • that's constantly checking to make sure

  • that master spreadsheet is legit.

  • And it's the same as every other copy

  • of the master spreadsheet on the network.

  • And that means that if you wanna hack a Bitcoin

  • it's quite hard to do because there's like millions

  • of people all around the world

  • who are helping to maintain it.

  • And it means that if you want to unduly influence stuff

  • like if you're a bank or a government

  • or some other evil person, it's quite hard to do

  • because again, it's decentralized.

  • It means that it's being maintained and managed by millions

  • of people all around the world, from their computers.

  • And now we get to the final part of our definition

  • which is that this whole system is built

  • and secured using cryptography.

  • So cryptography is a branch of maths and computer science

  • that's associated whether with like code making

  • and code breaking and cryptography

  • is how all of our communications are encrypted.

  • So for example, when you send a WhatsApp message

  • there is no way that WhatsApp

  • or Facebook can read the message

  • because it's encrypted by cryptography on either end.

  • And so only the sender and the recipient

  • can see what the message is.

  • No one in the middle can see what the messages is,

  • it's become encrypted, it's just like a bunch

  • of numbers that no one can interpret.

  • And the really clever thing about Bitcoin

  • and these other cryptocurrencies

  • is that they use cryptography to solve the problem

  • of trust and to solve the problem of centralization.

  • The problem of trust is that, you know, when I'm

  • on holiday with my friends, we all trust each other

  • and we know that no one's gonna screw anyone over

  • but in real life, that doesn't necessarily happen.

  • So your system needs to be secure enough

  • so as not to rely on trusting individuals.

  • And secondly, the problem of centralization,

  • i.e. it can't just be Google owning a Google sheet

  • that everyone gets a copy of

  • because Google controls it.

  • It can't just be Amazon, it can't be the U S government,

  • it can't be the bank of England.

  • It needs to be truly decentralized

  • in a way that everyone maintains and manages the system.

  • All right, now it's time for a little basic introduction

  • to the world of cryptography.

  • This is a little bit complicated.

  • If you don't want to hear it

  • you can skip to this timestamp down below

  • and that will take you to the next section

  • but essentially it cryptography is really, really cool.

  • And I am just now kind of dabbling

  • in the world of cryptography and trying to understand it.

  • So here are a few concepts and how I've kind of explained it

  • to myself in my head.

  • Essentially, a cryptography is based around the use

  • of one way functions called hash functions.

  • And the idea behind there is that you can put any message

  • or anything through a hash function

  • and it will spit out a totally random combination

  • of letters and numbers on the other end

  • in such a way that you can then reverse the function.

  • And so if we were to take my name and put it

  • through a hash function called SHA-256

  • which is the one that Bitcoin uses

  • but explaining it is a bit too hard.

  • We'll come out with this random string

  • of letters and numbers.

  • And now, if you were to just look

  • at that random string of letters and numbers

  • there is no way you can reverse the chain to go back

  • to what the original message was.

  • Now, Bitcoin uses these hash functions

  • to solve both those problems.

  • It solves the problem of trust

  • by using digital signatures based around,

  • secret keys and public keys

  • in this thing called "Public Key Cryptography".

  • And essentially it means that you as an individual

  • can have a secret key,

  • a password that no one else knows,

  • but then you have a public key

  • which is sort of related to your password

  • which other people do know, but that's fine

  • because they can never find out your true password.

  • And as long as you use your true password

  • to sign your messages, it's 100%,

  • basically 100% guaranteed that those messages are legit.

  • So that kind of solves the trust problem.

  • And we solved the decentralization problem

  • by using this concept called "Proof of Work"

  • where all of the different people on the network,

  • on the Bitcoin network

  • who are maintaining the system,

  • are called "Bitcoin Miners"

  • and what these guys try and do

  • is they essentially try and solve

  • a "Hash Puzzle", which just requires

  • lots and lots and lots of computing power

  • effectively involves guessing multiple numbers,

  • multiple, multiple times.

  • And this is a sort of lottery between everyone

  • on the network, so that if you are the lucky person,

  • who's plucked the random number out of thin air

  • that solves the "Hash Puzzle"

  • then your spreadsheet kind of gets saved

  • and then that saved state is permanent,

  • and then you get rewarded with some Bitcoin

  • for giving up your computing power

  • to help kind of maintain the whole thing.

  • And I'm using a lot of jargon

  • and this is actually very hard

  • to break down in like an easy way.

  • There are two sources I'd recommend

  • and I would recommend these, if you are actually interested

  • in learning how cryptography works.

  • Firstly, it's a video from one

  • of my favorite YouTube channels, 3Blue1Brown called

  • "But How Does Bitcoin Work?",

  • where he explains the basics

  • of hash functions and cryptography

  • and like SHA-256 and this sort of stuff.

  • And secondly, is actually an online course

  • from Brilliant who are very kindly sponsoring this video.

  • Now bear with me here.

  • So Brilliant is an online platform for courses

  • in math, science and computer science

  • and their most recent course

  • is all about cryptocurrencies and cryptography.

  • And it's got like tons of different bits in it

  • that really help you understand crypto from the ground up.

  • And I've been working through this course

  • on Brilliant for last few weeks,

  • and it's really helped improve my own understanding

  • of crypto and in fact, when preparing for this video,

  • I was just like redoing that course,

  • cause it's just so good.

  • And it like really nails it down

  • from first principles to explain how Bitcoin works

  • and the way they do it is they sort of create a Bitcoin

  • from the ground up and kind of explain

  • all of the maths behind it in a way

  • that's interactive and engaging and fun.

  • So if this stuff seems interesting to you,

  • if you want to understand how public key cryptography works

  • secret keys, private keys, decentralization,

  • hash functions, Merkel nodes, this sort of cool stuff.

  • You should definitely check out

  • that course over at Brilliant.

  • If you're one of the first 200 people

  • to hit the link in the video description

  • or head over to brilliant.org/Ali

  • then you will get 20% of the annual premium subscription.

  • And along with that, you'll get access

  • to all the other courses on math,

  • science and computer science as well.

  • I particularly like the course on Python fundamentals

  • and advanced Python.

  • Python is the world's most popular programming language.

  • So that's what I'm gonna say about the cryptography part

  • of like what are cryptocurrencies.

  • Definitely check out the course on Brilliant,

  • if you want to learn more about it

  • let's now move on to topic number two.

  • Why is Bitcoin and crypto so controversial?

  • So there's broadly four reasons

  • as to why Bitcoin is controversial.

  • Number one, the speculation bubble, number two,

  • the environmental impact, number three security issues

  • and number four, the threat of illegal activity.

  • Firstly, a lot of people say

  • that Bitcoin is a speculative bubble.

  • The price of Bitcoin is not based.

  • People say on any intrinsic value behind Bitcoin.

  • It is in fact based on people

  • like you and me thinking, Oh my God, Bitcoin's a big deal.

  • Therefore we buy it and therefore supply

  • and demand means that the price goes up.

  • People have been saying this since like 2011

  • when the price of Bitcoin was absolutely nothing compared

  • to the like the $50,000 that it is now.

  • And yes there is an extent to which Bitcoin

  • is a speculative bubble.

  • And in fact, when I invest in Bitcoin

  • I don't really think of it as investing,

  • I do in fact, think of it as gambling

  • which I'm gonna talk a little bit more about later.

  • And people would say that, for example,

  • when Elon Musk tweets that he's about to buy a Bitcoin

  • suddenly the price sores really, really, really high

  • that is not the sign of how a market would respond

  • to an underlying value increase.

  • It is in fact how the market would respond to speculation.

  • Elon Musk is buying Bitcoin

  • therefore, every one of the world is like,

  • Oh my God Elon Musk is buying Bitcoin

  • therefore they buy Bitcoin,

  • therefore the price goes up.

  • It's not like Bitcoin has fundamentally changed

  • because of Elon Musk's tweet.

  • It's just that people are speculating at it

  • which is why it's this sort of speculative bubble.

  • Secondly, Bitcoin is controversial

  • because of the energy consumption

  • and alleged environmental impact of the technology.

  • So because it is kind of decentralized and run by zillions

  • of computers, zillions of nodes, all around the world

  • people would say that those nodes use lots and lots

  • of energy use lots of computing power, therefore lots

  • of electricity in order to solve the hash puzzles

  • that the whole Bitcoin system is based around.

  • Now, the anti Bitcoin people would say that this use

  • of energy is not very good because it's bad

  • for the environment and it's causing carbon

  • to go into the atmosphere, et cetera, et cetera

  • just to maintain a system.

  • Whereas the pro Bitcoin people would say,

  • yeah, that's true but like we need

  • to use energy to maintain any system

  • and the actual banking industry uses far more energy

  • than Bitcoin does or will in the near future.

  • And they would say that these kinds

  • of Bitcoin mining farms are in countries

  • like Iceland and Greenland, where it's very cold

  • and where there's very like lots of cold air.

  • And therefore the cooling of it becomes more efficient.

  • And they would say that China does a lot

  • of Bitcoin mining and energy is cheap in China.

  • And then the anti Bitcoin people would say,

  • yeah, but China still produces a load

  • of environmentally bad stuff because of their excessive use

  • of energy in maintaining the Bitcoin network.

  • Ultimately, I don't know what the answer is,

  • there are pros and cons.

  • Everything kind of uses energy.

  • People say Bitcoin is bad

  • because it uses more energy than it should.

  • I don't know, I'm just, you know, don't shoot the messenger.

  • That is just one of the reasons

  • as to why people think Bitcoin is a bit controversial.

  • Thirdly, Bitcoin is controversial

  • because people are sometimes worried

  • about security issues.

  • Now, theoretically, the whole system is

  • sort of decentralized and trustless and like,

  • you know, maintained by these millions

  • of nodes all around the world.

  • In practice, there are these things called

  • "Crypto Exchanges", now these are big companies

  • sort of like the London stock exchange

  • and the New York stock exchange.

  • They're an exchange that connects buyers to sellers.

  • And because a lot of people who have accounts

  • on these exchanges also use the exchange

  • to store their Bitcoin.

  • Like the exchange also stores Bitcoin for you.

  • Like I have all my Bitcoin and Coinbase.

  • If Coinbase were to get hacked for whatever reason

  • then I might lose my Bitcoin.

  • And in the past kind of decade

  • there've been quite a few high profile hacking instances

  • where the exchange has been targeted

  • and users have lost their crypto.

  • In practice, this is not something

  • that I am personally particularly worried about.

  • If you're worried about it, you can do lots

  • and lots of other things to secure your Bitcoin

  • like use a hardware wallet.

  • There's loads of YouTube videos explaining that

  • kind of outside the scope of this one.

  • But security issues is reason number three,

  • why Bitcoin is controversial.

  • And reason number four, is the fact that Bitcoin

  • is sometimes used as a form of payment

  • for illegal activities.

  • Like let's say you wanna buy drugs

  • or you wanna buy bad things on the dark web

  • or whatever that means.

  • You can pay in Bitcoin and you can receive Bitcoin

  • and theoretically, your Bitcoin username

  • is like a random string of letters and numbers

  • that is not directly tied to you as an individual.

  • And therefore Bitcoin is a way that unscrupulous people

  • across the internet can facilitate payments

  • without needing to verify their identity with anyone.

  • In fairness, people can also do illegal things

  • with us dollars and every other form

  • of currency in the world.

  • But people would say like the anti Bitcoin people would say,

  • Bitcoin is bad because it's fundamentally anonymous.

  • And therefore, you never know who the actual person is

  • on the other end, unless you kind of trust them initially.

  • And therefore, because this even more facilitates

  • the use of illegal activities, this is therefore bad.

  • I don't buy that argument personally.

  • I mean the internet itself can be a good or bad thing

  • depending on the context in which it's used.

  • I personally think Bitcoin could be the future

  • and it is broadly a good thing,

  • but of course it could be a bad thing depending

  • on how it's used.

  • And so that brings us onto section three,

  • having said all of that about

  • the potential issues with Bitcoin.

  • Why do I personally invest in it?

  • And again, let's break this down into four parts.

  • Number one is FOMO, number two, gambling,

  • number three, fun and number four, diversification.

  • So firstly, I've got to be honest.

  • The primary reason I invest in crypto

  • is because I have a fear of missing out.

  • Like I first heard about Bitcoin in 2011

  • like everyone else did.

  • And then I'm thinking damn,

  • if only had bought Bitcoin in 2011

  • I'd be a multi-millionaire by now.

  • And I'd never have to work a day in my life.

  • And then for me, like every few years

  • I'd hear about Bitcoin and be like, Oh, it's, you know,

  • Bitcoin's now $100, but you know

  • if only I had invested two years ago,

  • Oh, but I can't possibly get it now

  • because it's $100 and that's way too expensive.

  • If I'd gotten at $100, Bitcoin is now worth $50,000

  • therefore I'd make a lot of money.

  • But like, you know, it's the sense of fear of missing out

  • which is why I personally do invest in crypto.

  • Secondly, crypto feels like a socially acceptable form

  • of gambling.

  • I don't really consider it an investment

  • anyway, I consider it gambling.

  • And I'm not a fan of gambling normally, but it's like,

  • it's kind of fun to gamble on Bitcoin.

  • And in fact, in 2017, the last time Bitcoin

  • had like a real heyday, I'd put in about 60,000 pounds

  • of my own money into Bitcoin

  • and I was plus 40K at one point.

  • Like my portfolio was worth 100 grand

  • and I'd only put in 60 grand.

  • So I'd made 40,000 in the space of a few weeks.

  • And that was like a very addictive feeling

  • because it was like within the space of a few weeks,

  • I've made more money than I would have made

  • in a whole year as working as a doctor.

  • Then I subsequently lost lots of money

  • in the December, 2017 crash,

  • and I ended up with like negative 35,000

  • or something like that.

  • And so that's a bit of a cautionary tale

  • but ultimately I do consider it a form

  • of gambling that I'm happy to engage in

  • with some amount of my money.

  • Thirdly, it's just kind of fun.

  • It's fun to be a part of the future,

  • it's fun to keep up to the news

  • like with the news about Bitcoin,

  • it's fun to look at the portfolio occasionally

  • and be like, Oh, are we up?

  • Are we down?

  • How are things going?

  • And it's fun to feel as if yeah,

  • to feel like part of this like revolution.

  • And I genuinely do think that Bitcoin could be the future

  • of money and I want to be a part of that

  • and that just feels kind of fun.

  • And fourthly, if I do think of it as an investment,

  • it's like I've got some percentage of my portfolio in crypto

  • and that theoretically helps me diversify my portfolio

  • which is otherwise mostly in stocks and shares.

  • And the way I think of it is that like

  • this is not generally true, but like assuming crypto

  • is not correlated with the broader U S stock market.

  • It means that if I invest in crypto,

  • if I gamble my money on crypto, cryptocurrencies,

  • it means that I hedge (chuckles)

  • kind of the risk of stock market going down

  • and losing money in that kind of way.

  • Not really legit because I do consider it gambling

  • and just like a bit of fun

  • but I'm throwing that in there to make this a list of four.

  • So what is my strategy

  • for investing slash gambling in crypto?

  • Well, these days I have about 20%

  • of my overall investment portfolio

  • in crypto in a combination of Bitcoin and Ethereum.

  • Mostly Ethereum because I actually bought loads

  • of Ethereum like four years ago and just held onto it.

  • So I think my allocation is about 80% Ethereum, 20% Bitcoin.

  • 20% of my overall portfolio in crypto

  • is quite a high number.

  • Someone like Graham Stephan, who is far more pro

  • at personal finance than I am, and also has far more money

  • than I do has like one to 2% of his portfolio in crypto

  • as he talks about on his YouTube channel.

  • I have 20% of mine in crypto

  • and that's quite a high allocation.

  • Like the main thing with crypto

  • is that you only want to put in money

  • that you can 100% afford to lose

  • because it's quite a high risk speculative investment.

  • I don't think of it as an investment.

  • I think of it as gambling.

  • So it's like I'm gambling

  • with 20% of my overall investment portfolio.

  • That for me is a number that I'm happy with.

  • Like, I am happy with, like if tomorrow I lost that 20%.

  • I wouldn't care in the slightest.

  • I like to think it wouldn't affect

  • my mental wellbeing at all.

  • And I know this because when I lost 35,000 pounds in 2017,

  • which at the time was like half my net worth (chuckles)

  • it didn't affect me at all.

  • So I've kind of been through that losing large amounts

  • of money and realizing, okay, this is not too bad.

  • Therefore I've sort of put my arbitrary risk profile

  • that I'm happy with to be 20% of my portfolios in crypto.

  • The other 80% of my portfolio is in stocks and shares.

  • And that's sort of fairly standard, but 20% crypto,

  • 80% stocks and stocks and shares.

  • This is probably a bit too high.

  • If I were talking to a friend,

  • again, not financial advice and you're not my friend.

  • So I'm not giving you financial advice purely

  • for entertainment and informational purposes only.

  • But if I were talking to a friend and they were like,

  • Hey I wanna put some money in crypto,

  • I'd probably say that 20% is probably a bit high.

  • Like you probably don't want to run the risk

  • of losing 20% of your money overnight.

  • If Bitcoin goes to zero, you might want it

  • to start with maybe 2% or 3% or 5%.

  • You know, something that you're a little bit more

  • comfortable with than a 20%.

  • So if you do want to get started,

  • firstly, you wanna understand the underlying technology.

  • So do that because over at Brilliant, you know

  • who are sponsoring this video,

  • that cryptography course that helps you understand

  • the underlying technology

  • and helps you understand why this works

  • and why I personally think it's legit.

  • Secondly, there are two things you need

  • you need a wallet to store your cryptocurrency

  • and you need an exchange where you can buy

  • and sell cryptocurrencies.

  • Now most big exchanges will also let you store currency

  • on the platform.

  • So I use Coinbase for everything.

  • Please don't try and hack my Coinbase account

  • but I use Coinbase for everything.

  • And so I have my Bitcoin

  • and Ethereum stored in Coinbase itself.

  • And I also use Coinbase as the exchange to buy and sell.

  • Coinbase is one of the biggest ones in the world.

  • There are a few others, you can always Google

  • like best crypto exchange USA

  • or best crypto exchange Pakistan or best crypto exchange UK.

  • I personally use Coinbase it's available in the UK.

  • It's very nice and easy, no affiliation with them

  • no affiliate links or anything like that.

  • But Coinbase, if you're watching this reach out

  • if you want to sponsor a video (mumbles).

  • In practice, you do wanna secure your account.

  • So obviously on my Coinbase account

  • I have two factor authentication enabled.

  • And if you really care about security, you can invest

  • in something like a physical wallets (chuckles),

  • which is like a hardware wallet

  • that stores your Bitcoin offline,

  • again, beyond the scope of this video,

  • to explain how that works.

  • But that is like a much more secure way

  • of storing your Bitcoin rather than having it stored

  • on the internet in an exchange like Coinbase.

  • So that was my beginner's introduction to crypto.

  • This has been a far longer video than I thought it would be.

  • If you're serious about investing

  • I recommend you don't start with crypto.

  • I recommend instead you start

  • with stocks and shares and that video over

  • there is my half an hour long introduction

  • to how to invest in stocks and shares for beginners.

  • I still have 80% plus of my portfolio

  • in stocks and shares and only 20% of it in crypto

  • that's a really high number.

  • For most friends, if I was talking to

  • and not giving financial advice,

  • I would recommend 95% stocks and shares and like 5% crypto.

  • So definitely check that video out.

  • Thanks for watching.

  • Hope you found it useful and I'll see you in the next video.

  • Bye-bye.

- All right, let's talk about crypto.

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