All week I was trying to decide between buying more silver or bitcoin, and I ended up going with bitcoin yesterday simply because of convenience - I can walk over to any Royal Bank in Canada, deposit cash, and within a couple of hours I have my coins ready to be deposited for interest generation.
Getting money in
reasonable sized quantities into Bitcoin is not terribly difficult, but if you want to try to do it with some grace and vis-a-vis timing the markets, you either have to make the money transfers in stages, or trust largish chunks of value to an exchange.
Getting money out
in reasonable quantities to use for things which are not available in the Bitcoin economy (like a house or car) can prove aggravating, time consuming, and expensive. I could see that becoming much
more of an issue more easily than it becoming less of an issue. My personal and relatively recent experience here with gold bullion was that it is not the case.
One practice that can help with this is to only maintain 1-2 months of expenses worth of Bitcoin & fiat at an exchange, split about evenly between the two asset types. This method, effectively hedging, allows you to shift between them relatively easily while not risking a significant amount - approximately half of the total amount deposited, whether Bitcoin is locked up by penal activity taken against exchanges, or sudden fiat collapse. It bears repeating that these exchange deposits should not
be savings for big-ticket items like tvbcof suggested, but monthly expenses - bills, groceries, etc.
It wouldn't be the easiest thing to do, but a good practice is to consistently deposit & withdraw at least once a month. A history of transactions can give the exchange a better sense of your reliability, including higher limits on request. You'll also notice pretty quickly whether any issues have arisen with transfers, at which point you can convert everything to Bitcoin and move to another exchange, or pull it all to your private wallet.
Whatever you decide, it's definitely a good idea to keep 1-3 months worth of domestic fiat on hand in case of bank holidays/runs and all that. What if you need to buy a plane ticket on the spot and banks are refusing transactions? If you have to flee, your Bitcoin balance will still be available.
Granted, I already have sufficient silver and gold stacks - if I was starting from scratch, I would certainly stack some metals first before delving into bitcoin.
In fact, I have a number of friends and family members asking me for advice now... this is the breakdown I am recommending for them:
I think that's a pretty good mix of safety and speculation - what do you guys think?
Sounds reasonable to me for someone who has the potential to absorb a fairly significant potential loss without going hungry. Like me.
Agreed - for simple savings, that's about as good as it gets.
My own holdings of gold/silver are reversed:
- 50% gold
- 30% silver
- 20% bitcoin
If working from an existing asset holding with 50% silver/30% gold ratio, silver can be sold for gold as the gold/silver ratio declines, exchanging 10% silver into gold every 10pt level (e.g. @ 40, 30, etc). A nicely tradeable gold/Bitcoin ratio should develop stronger than it exists now, as both become more widely adopted. Maintain a minimum 10% holding each of Bitcoin and silver.
- 40-80% gold
- 10-40% silver
- 10-30% bitcoin
Why? First, gold is the
metal that will be revalued and remonetised into the global financial system (Bitcoin hasn't made enough inroads yet). Second, gold is less expensive to store than silver. Third, although silver will rise with gold, there is no certainty as to when & how revaluation will occur, or whether silver will keep up during latter stages of revalutation (financial utility may boost gold for a some time, even though the natural ratio is below 20:1).
With those ratios in mind, I always try to buy a little bit of whatever is cheapest among them, using some of the other two to make purchases. Some clients (or employers) can even be persuaded to pay in BTC. In this manner, there is almost no need to interact with fiat whatsoever; it's liberating in more ways than one