[Exclusivity]

Several years ago I asked in these forums about how I could buy several hundred thousand dollars worth of bitcoin.   It became obvious, back then, that it would be a nearly impossible task.   I would have faced sanctions by my bank, I would have moved the price and I would have had to deal with a mysterious Japanese company called MtGox.

In the end, I sadly took no action.

Everything has changed.  It is now 5X easier to buy bitcoin.   I am now a regular buyer of bitcoins.  I don’t care that the price is 10X or 100X what I could have had them for.

So why am I buying now?

Exclusivity
Firstly, there will never be more than 21 million bitcoins.   There are more millionaires than that.   I like to own something that not every millionaire will be able to own.  It’s exclusivity.   I own something that has a limited supply, so not everyone can own one, but I’ve got lots of them.

I don’t need to ask permission to spend them
Secondly, I like the fact that bitcoin is “permission-less”.   I won’t ever have to ask permission to spend or use my bitcoins - not that I plan to use them. Everything else I own (in the form of financial assets) is in the hands of a bank or a custodian.  I can’t spend my money without permission from my bank or credit card company.  

Bitcoin can’t be “frozen”
If a business deal goes wrong, if someone sues me, if a future wife divorces me and says “I get everything”, if I am friends with a sanctioned political leader - because you survive by being on the side of those in power, - if, if, if, if....... so many things might go wrong.  I could wake up one morning, and find my bank accounts frozen, and my credit cards don’t work.   They can’t ever freeze my bitcoin.   The code is in my head.

What’s wrong with cash or gold bars?
The most obvious disadvantage with cash is that it is being de-valued all the time. It’s great to own for a year or two, but in the long run it’s going towards zero.   Secondly, they change the colour and design of the bank notes every few years.  You have a limited time to change old for new.  Then, if you are changing more than a small amount, you have to start answering questions and providing documents.   Lastly, you can’t cross the border with more than 10’000 dollars or euros in cash without filling in forms, which could lead to another line of questioning.

As for gold, it also is difficult to transport without customs declarations.  Gold bars or coins are not easily divisible into smaller sizes.

Today’s announcement by the CME that it will start trading cash settled bitcoin will push the price substantially higher for two reasons:

Acceptance

Technical

The first point is obvious.  Having bitcoin trade alongside mainstream investments like eurodollar, S&P, gold, etc will bring millions of new investors to bitcoin.

The technical point is that professionals will short the future, as the forward months will have higher prices than spot.   To cover themselves they need to own the spot = more buyers.

The second technical point will happen, but down the line could lead to a problem.

These futures are cash settled.  There is no actual delivery of bitcoin.   If volume on the futures becomes larger than the bitcoin exchanges, market manipulation will be a risk.   Example: I buy 10000 January 2018 bitcoin futures.   Minutes before expiry, I see that the market depth on one of the reference  exchanges is thin.   I hit the exchange with “buy at market” orders for 3000 bitcoin.   The price shoots up from $10’000 to $1 million.  Now the sellers of the future will need to pay me out in CASH, based on the photograph of that price.

Of course the market-makers will screw me over if I do that.  They will say it’s a repetition of what the Hunt brothers did.  They were the “Silver Bulls” who bought up all the physical supply of silver while being long the futures.  The price of silver crashed after new rules were brought in to stop them rolling all their contracts.  They became forced sellers.

I am interested in buying around $100k of Bitcoin.

Is the best way to buy in small quantities on an exchange?

I read that some banks won't let you transfer money to a BTC exchange, and worse, may close your account.

I worry that the exchange may fail and I would lose all my Bitcoin

I worry that Bitcoins anonymity is not going to work, after all, my bank will know that I transferred funds to a particular BTC exchange, or to a block chain account.

I worry that if I manage to get money into Bitcoin, I may have trouble getting it back due to financial regulations.

I worry that I will lose my Bitcoin wallet due to an Internet problem.

I worry that my Bitcoin will be lost if I die.

By the way I have no worries about price changes.  I can take the financial loss if there is one.

Please tell me if there are solutions to these problems.