Bitcoin Halvening and Crypto as Money

Does a cryptocurrency need to represent a store of value to be successful over several years? Crypto as Money and Bitcoin Halvening - Bitcoin Split Photo - 20200507

Bitcoin Halvening image from this original photo under license

Bitcoin Halvening

One aspect of money is as a store of value. Value can be created by scarcity, that is literally limiting supply of any currency. Assuming there is more demand than supply for the currency, then it’s price should rise (becoming a store of value). By design many cryptocurrencies have built in scarcity because they will only create new coins on predictable supply curve. One aspect of Bitcoin’s approach to this is the “Bitcoin Halvening” that occurs approximately every 4 years (every 210,000 blocks). On a specific Bitcoin Halvening date the amount of Bitcoin supply that can be awarded to a miner on each block is reduced by half. On average a miner can therefore except to receive half the amount of bitcoin for solving the same problem. After the Bitcoin Halvening date passes, this literally halves the supply of newly minted Bitcoin overnight. As a reminder the only way Bitcoin comes into existence is by being “mined”. Bitcoin mining is solving a complexity computer problem becomes progressively more difficult solve using existing computing hardware. If a bitcoin miner (a piece of computer hardware) solves the problem, they are entitled to keep a certain amount of bitcoin from latest block they solved. The scarcity comes from the fact that currently computing power is finite, so the “block solving” problem is hard to solve. If one miner’s computing power was somehow instantly improved by a huge magnitude for several months, then that miner would simply be able to mine the majority of available bitcoin. This is because the fast miner would be able to solve the computing problem before any other miners, so all other miners would not receive as many bitcoin rewards. Bitcoin scarcity therefore relies on finite computing power, essentially enforced by the current hardware speed.

Gold Cryptos

Both Bitcoin and Gold are a store of value because they are scarce. Bitcoin comes into existence via a computer hardware “mining” process, and is assigned market value because it takes lots of computing resources to create. Gold already exists in the ground, but becomes usable only after intensive exploration and physical mining operations. Gold is a hard to find metal that is first located through exploration. Gold then needs to be extracted with an energy intensive physical mining process to remove and refine the raw metal. Therefore Gold has value because it is hard to find and refine. With both Gold & Bitcoin the difficulty of their mining process helps maintain scarcity and is one reason that lets them act as a value store.

Recently there have been some new crypto tokens that have create a coin backed by real world assets. These “real asset” crypto tokens represent a true claim on a financial asset, not simply the tokenisation of a technology idea. For example PAX Gold is a very new product launched in Sept 2019 that combines advantages of blockchain and gold, with each PAXG token being backed by exactly 1oz gold. However “real asset” cryptos that represent a real world asset still come down to one word – trust. The entire system hinges on trust, specifically that you can provable verify that 1oz of gold in a London vault is actually really represented by the 1 token in your wallet. If you can have trust in the company auditing, it can be a very innovative way to store wealth on the blockchain.

Crypto Sectors

Bitcoin has been alive for over a decade, and many other crypto coins have been around for five years or more. “Long term” is relative – in crypto it is probably any coin or token that has been alive for more than five years. Widespread adoption is both a critical measure of success for a crypto to be considered currency like “medium of exchange”. Currently those who believe in Bitcoin Maximalism appear to have an edge as first mover in the currency space, as Bitcoin has the largest payment adoption and approximately 65% dominance of all crypto market cap in April 2020.

Crypto is notoriously hard to place into neat boxes. However if there is such as thing as crypto “sectors”, then some candidates would be “currency”, “privacy”, “tokenisation platforms”, “real assets” and “utility coins/tokens”. In currency, privacy and tokenisation platforms “sectors” there is nearly always the first mover that the advantage. For example Bitcoin (BTC) is considered the primary currency coin, Monero (XMR) the first mover for privacy and Etheruem (ETH) the first token platform. However due to the huge array of use cases it is hard to define one single “winner” from all the utility tokens/coins.

As a very general observation in 2020, currently crypto projects that act as money or enable tokenisation seem to be the main winners. Crypto needs to either be used as a store of value, be asset backed or provide a tokenisation platform (the plumbing) to allow the value tokenisations to occur. Crypto projects that only rely on a technology or business idea to “create value” do not appear to gain market cap long term, even if the project is succeeding with its technical objectives. Many crypto projects are finding it hard to build their own ecosystem, because investors tend to get focused on a few winning projects, while the rest die. Essentially there a few categories of use cases, with winner take all in each one. The losers die off slowly over several months and years. This is not necessarily because a project “failed” from a technical perspective, just that it failed to consistently attractive new capital to justify a higher price.
Increasingly crypto that have highest market capitalisation are maturing into money (for exchange), a real asset (that has real world value outside of crypto) or the tech platform that enables tokenisation. The next wave of cryptos with long term staying power could to be tokenising financial “real assets” in the real world, not simply to tokenise a whitepaper idea.

Below are some “sector” examples. Nearly all of the top 20 coins are currency, privacy or token platforms. There are few true utility coins/tokens with larger market caps, but some interesting use case projects are listed below. These are not exhaustive list, just an overview. For reference, here is the latest and greatest CoinMarketCap ranking list.

Currency : Bitcoin (BTC), Ripple (XRP), Litecoin (LTC), Decred (DCR)
Privacy: Monero (XMR), PIVX (PIVX), AEON (AEON)
Real Asset : Tether (USDT – USD stable coin), Pax Gold (PAXG – physical gold)
Token platform : Ethereum (ETH), EOS (EOS), Texos (XTZ), Neo (NEO)
Utility coins/tokens: Salt (SALT – Crypto Lending), Filecoin (FIL – Storage), Golem (GNT – Distributed Computing)

Crypto as Money

Currency and privacy are related aspects of money. Sometimes there is a somewhat artificial distinction made between “currency” coins that function as “money” and “privacy” coins do “private transactions”. However surely two main requirements of money are both privacy and fungibility? Cash banknotes traditionally have a high degree of privacy, even though they are sometimes tracked by law enforcement by serial numbers. Generally each banknote is interchangeable with another – one banknote of the same amount can be exchanged by two parties for another banknote with the amount. The specific banknote itself is not important, just the exact value it represents.

Confidence in the liquidity and fungibility of any currency is a crucial factor enabling adoption. However Bitcoin is clearly NOT fungible. Indeed any crypto “currency” coin (not just Bitcoin) with publicly visible blockchains allows positions and transactions on coin addresses to become fully traceable with more advanced analytics. As long as you can identifier a natural person (owner) of a bitcoin address via some method, you can see every transaction they make on the blockchain and their current address balance. This would be equivalent to your bank publicly showing on their website, all of their customers transactions and month end balances – just without any personally identifiable information. An alternative way to think about this, would be if every banknote in the world had a public list of every transaction it has ever been used in since it was created (just without the name of the from and to parties involved in the transaction). It is doubtful if consumer privacy advocates or customers would accept this with a “real world” bank.

This everyday reality for Bitcoin or any other publicly visible blockchain is becoming problem. It means that individual Bitcoins have a full history. If you can piece together all the owners of the addresses via social engineering or know your customer rules, then all of Bitcoins anonymity disappears. For example, most crypto exchanges (and any “on ramp” into the cryptosphere) require a large know your customer regulations (e.g. driving license, passport, proof of address etc).

This blockchain forensics is a problem because it basically breaks the fungibility of Bitcoin. This analysis allows identifying “good” bitcoins that have never been used for any thing questionable, and “bad” bitcoins that have (perhaps unwittingly) had some criminal use. For example, assume you open a small business selling coffee that can legitimating accept Bitcoin payments. If a dubious actor decides to use their “bad” bitcoin to buy your coffee, your legitimate coffee selling business could have it’s crypto exchange or bank accounts shutdown for dealing with a “bad” actor. This could occur even if the majority of your business was with “good” bitcoin. The issue is that the “good” and “bad” bitcoin decisions are not decided by yourself, they are decided by the crypto institutions (e.g. exchanges) you signed up with.
The “real world” cash equivalent would be something like being banned from your local coffee shop, because you used a bank note previously involved in a historical crime committed by different person.

Monero (XMR) is the only privacy coin to fully resolve this fungibilty issue by design. There are many technical features that ensure Monero fungibilty, but two features to highlight are 1) not having publicly viewable transactions on a blockchain and 2) having read only view keys.

Monero less transparent blockchain, where the specific transaction history of a coin cannot be viewed. Therefore 1 XMR will always be the same another 1 XMR – it doesn’t matter how the individual coin has been previously used. Monero is much more similar to cash (banknotes) because it is untraceable, whereas Bitcoin is trackable digital money.

As transactions are not viewable on Monero blockchain there needs to be some way for other parties to be able to verify holdings without controlling them. With Bitcoin the public blockchain does this because you can send anyone an address to look up. Monero has the concept of view keys give the ability to prove address balance to only interested parties (not the entire world).

Some other cryptos do have privacy features, but typically they are not enabled by default. Typically a privacy feature has to be “turned on” for a specific transaction. Some coins are therefore “private” (privacy enabled) and “public” (default), so these coins are by definition “different”. Therefore even in the same crypto coin since the “private” coins are not viewable on the public blockchain, as they are not identical to “public” coins. This means that coins are not truly fungible even within the same crypto. Monero is private on the actual protocol level with the option to be transparent, whereas with Bitcoin every transactions will by definition only every be “psuedo anonymous” because of the publicly viewable blockchain. Monero (XMR) is unique because the idea of privacy is built in by design.

If you are interested in learning more we have written an Amazon Kindle eBook Better than Bitcoin – A Beginners Guide to investing in Monero.

Run your own fixed income annuity

Fixed Income Annuity - 19th Century Book - 20200504

Sometimes you just want to make the guaranteed risk return with the possibility of some upside, but with a guaranteed return of principal. This is typically where fixed annuities come in, however they can be expensive with up front load or annual management fees. Fixed annuities can also be structured in an opaque way where it is not clear exactly what investments the product has bought and how they are managed (e.g. trade turnover etc) – in short they are not very transparent.

Please note: A fixed income annuity is a very complex contract between you and the insurance company. Therefore it is not perfectly compared with the actual investments described in this blog – but this is a starting point to see if the flexibility of doing it yourself might give you some more transparency.

So … is it even possible to run your own fixed income annuity style investment ? Preferably with minimal management, without all the fees and long lock up periods. This blog post is a look back at an annuity style strategy that has been executed for the last few months.

Lets assume we’d like to do this with a lump sum principal of $100,000 USD. It is pretty easy to create medium term US treasury portfolio which is close to the risk free return – lets assume we can construct an equal weighted multi year duration portfolio of treasuries up to 5 years out. Technically there is some duration risk on the longer dated treasuries, but it’s decent proxy for a stable risk free return portfolio. A few months ago in Feb 2019 this had a blended rate of approximately 2.5% – yielding about $2500 a year in interest. See this table for the basic treasury portfolio construction:

Price Date
US Treasury Duration
US Treasury Yield (annualised)
Principal Amount
Yield Amount (annualised)
TOTALS$100,000$2,528
13th-Feb-20196 months2.51$20,000$502
13th-Feb-20191 year2.55$20,000$510
13th-Feb-20192 years2.53$20,000$506
13th-Feb-20193 years2.52$20,000$504
13th-Feb-20195 years2.53$20,000$506
See prices from US Government Treasury website

Managing interest rate risk

However over the next few years, rates might go up or they could be cut. Ideally when each treasury expires we’d like to be able to roll into a new treasury bond with a similar or higher interest rate. However by the time that happens the interest rate market could have moved. So how to manage that interest rate risk without risking any principal?

Since Bond prices will increase when interest rates go down some hedge needs to be provided against falling rates. More simply – something that makes money when rates go down.

In March 2019 we started adding to the above treasury portfolio, by using limited risk bullish short put spread in TLT options. In theory TLT should go up if FED was to cut interest rates and go down if rates rise. TLT contains bonds that have an approximate 17.8 year bond duration, so it is not a perfect proxy for own mini fixed income portfolio that has an average duration of about 2.5 years – however it should be correlated at least. Plus TLT does have very liquid options market that is a couple of pennies wide and can often get filled at mid price, so we can be confident of getting liquid fills on the option trades.

This TLT “short interest rates” trade can be done fairly simply using an ATM bullish put spread, with a slight time decay in your favour on trade entry. There appears to nearly always be a small amount of extrinsic value in an ATM put spread appears to be consistently available, because TLT itself has an actual yield – so you would expect to get paid something for holding it for 90 days even if (all other things being equal) the price never moved. For example if the market is $125, you can sell 5 contracts of $126 put and buy 5 contracts $124 put 90 days out for a credit of $1.05. That would give approximately $0.05 of extrinsic value with $1.00 of instrinic value. If TLT rallies over $126 by expiration can make $550 for that quarter, if it closes below $124 lose $450 for that quarter. Obviously if rolling the put options is considered this becomes way more complex, but waiting to close until near expiration is the simplest case.

If you want to replicate a true fixed annuity with no risk to principal, you’d have to be careful size each trade to not risk too much on each TLT put spread. Lets assume we will do one put spread per quarter, and risk $500 per quarter per spread – that would mean in theory we could lose $2000 ($500 x 4 quarters) on the spreads. However since we gain $2500 in treasury interest, so we’d still be $500 ahead for the year. Not great obviously, but that is the theoretical worse case scenario and if we want guarantee to maintain principal then we have to be cautious with the risk. This is an annuity strategy where aim is to take some market risk but only with money gained from interest payments, never from the principal.
If you wanted to take equity risk as well, this could be applied using SPY option spreads, but recognize that is obviously not as tightly correlated to US treasury rates as TLT.
If you did lose money on the TLT spread, that would be an advantage to you when you come to re-invest any expiring fixed income, because the treasury rates would be higher.

To clarify the idea here are a couple of actual trades to show the principal. One is a simple bullish put spread. The second one was a combination of bullish put spread with a bearish short call spread sold against it.

TLT bullish put spread

This trade was entered into in March 2019, then exited closer to May 2019 expiration on 1st May. There was a $369 profit as TLT had traded up slightly. This took approximately 50% of available profit.

 
Trade Date
Category
Trans Type
Description
Symbol
Quantity
Price
Amount
21-March-2019
Hedging
Buy to Open Long Put
Put TLT 121.00  EXP 17-May-2019
TLT190517P121
5.0
0.88
$434.64

21-March-2019
Hedging
Sell to Open Short Put
Put TLT 124.00  EXP 17-May-2019
TLT190517P124
-5.0
2.36
-$1,182.24

TOTAL
-$ 747.60

 

TLT bullish put spread with bearish call spread

A couple of days later on 3rd May a similar bullish put spread trade was opened June options, but this had an overwrite with a call spread to give the trade some option premium to sell. Normally trades would be rolled the same day, but there was a couple days in between trades because the earlier trade was trigger by a limit order (and didn't notice position was exited).

 
Trade Date
Category
Trans Type
Description
Symbol
Quantity
Price
Amount
01-May-2019
Hedging
Buy to Open Long Put
Put TLT 121 EXP 21-Jun-2019
TLT190621P121
4.0
0.49
$194.24

01-May-2019
Hedging
Sell to Open Short Put
Put TLT 125 EXP 21-Jun-2019
TLT190621P125
-4.0
2.24
-$896.79

01-May-2019
Hedging
Sell to Open Short Call
Call TLT 126 EXP 21-Jun-2019
TLT190621C126
-4.0
0.60
-$241.75

01-May-2019
Hedging
Buy to Open Long Call
Call TLT 127 EXP 21-Jun-2019
TLT190621C127
4.0
0.45
$178.24

TOTAL
-$ 766.06

 

This trade was entered into on 1st May 2019, then exited closer to June 2019 expiration on 3rd June. This holding period fits with the 30 day rule. Unfortunately selling the call spread did not help the position here as it lost $345.97. If TLT had been flat to slightly down then the call spread would have made money. Fortunately the bullish short put spread made most of the profit ($694.02) because TLT had traded up significantly higher. Exiting the bullish short put spread and bearish short call spread together as a combination though made a total profit of $348 ($694.02 - $345.97).

For reference here is an interactive price chart for TLT that can be used to see the prices from Feb 2019 to June 2019. On chart use minus (-) zoom control to zoom out, then click, hold and move mouse to the right to navigate back to 2019.

Fixed Income Annuity - Summary

This blog post showed how it is possible to take small profits out of TLT to increase yield, but with limited risk if TLT goes down. In this real life example TLT went up, so the May and June spread trades added a few hundred dollars in yield. However if TLT did go down that would be an advantage to the main US treasury principal because new bonds could be bought with higher yield to expiration. This might need some tweaking to make into a better results, but it demonstrates the idea. There is approximately 30mins monthly effort required to analysis, enter, monitor and roll the TLT spreads. Running your own "annuity" product is potentially a lot cheaper than an traditional annuity that charges upfront load fees and annual fees.

Portfolio Principles

Portfolio Principles – Risk Management

Risk management is arguably more important than any actual trading strategy. Multiple traders can run the same strategy, but could get widely different results because of their risk management rules and whether or not they actually apply their rules properly under market stress.

Take risky positions with small amounts of capital that limit downside on trade entry

Use capital efficiently – for example use ETF option spreads or deep ITM ETF call options instead of buying ETFs outright.
Where possible with exchange listed products use option spreads on trade entry to limit downside risk.

For risky positions in small cap or alternative investments the stop loss is zero, so only enter with what can afford to lose (e.g. use maximum $10k per idea).
Visualise what to do if that $10k position is down 90% – should be nothing because the risk was sized on trade entry.

Risk is always sized on trade entry and never increased through the lifetime of the trade

Don’t reestablish the same trade immediately after exiting for a loss. That is effectively the same not having any stop loss risk management.

Everyone has their maximum risk limit tolerance, except for some very rare investors like some institutional traders who don’t feel emotion or pain on losses.

Investment Themes

Cash is a really bad long term investment, and should be thought of as a constantly decreasing asset due to inflation. However cash is very useful to have for short or medium term opportunity. 100% invested is likely missed opportunity cost for an investment theme not thought of yet. 100% invested all the time is only suggested by the fee based investment management so they can get paid.

Recognise the difference between “themed generation investments” and just a trade. Long SPY call spread $250/$255 for next month, is just a trade (so don’t leave one leg on and treat it like an investment). Long bitcoin or 3D printing stocks can be a multi year trade.

Trading and long term holding are both ok in a portfolio – just be clear which positions fit each category.

In volatile markets like crypto currency a month can feel like a year. Global stock markets are not truly as volatile because they are very mature market – the perceived volatility is often due to investors position sizing traditionally makes it a large part of their net worth.

Don’t attempt to follow investment theme advice from too many sources because it clouds your vision. but read as much as you can on different investment opinions and perspective. If you read something you don’t agree with – decide why you don’t agree with it and see if there is any thing it could add to your own rules. Always stay with your own rules. Importantly investment is about what you believe other market participants will do, not your personal opinion. Your personal opinion on market direction isn’t worth that much. e.g. if you think S & P 500 is on the biggest bubble since Dutch tulips, but you have noticed that many other people are comfortable with it – might be getting limited long exposure.

House Money

“A stock operator has to fight a lot of expensive enemies within himself.” Reminiscences of a Stock Operator by Edwin Lefèvre

After a large profit take the original risk out of the position, then let the rest run as “house money”. Always try and play long term with “house money” if you can because it removes some of the original fear of loss from the trade.

You are probably limited by what you believe is a lot of money. This type of scenario is directly applicable to the crypto market for the last year. Assume you invested $10k, then exited original $10k from position – so still have a position but no risk – and over time the “house money” position goes to $100k. If ultimately lose $100k of “house money” from the peak valuation of that investment – is that an acceptable risk ? If you make have unrealised gains of $100k do you want to exit immeadiately because you cant stand to give it back ? What if the unrealised $100k profit goes to $50k but they goes to $200k afterwards ? Can you handle the swings – even with house money ?

Do you assess the trade based on how much money you have in it ? Or it is based on the investment idea still being valid ?

If you lose on the trade do you anchor to that loss ? Or do you believe that opportunity always come along ?

There are never optimal trades in financial markets, only “good enough”. You will always leave something on the table. Does this achieve initial trade targets ? Whether is was a winner or a loser – was it a well managed trade ? Loser management is as important as winners.

The legendary investor Bernard Baruch who came through the 1929 crash mostly in tact was asked what made him such a successful investor. He replied: “I always buy ‘too late,’ and sell ‘too early.’”

Managing position trades through big swings

“It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I’ve known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine–that is, they made no real money out of it. Men who can both be right and sit tight are uncommon.” Reminiscences of a Stock Operator by Edwin Lefèvre

“Old man Partridge’s insistence on the vital importance of being continuously bullish in a bull market doubtless made my mind dwell on the need above all other things of determining the kind of market a man is trading in. I began to realize that the big money must necessarily be in the big swing. Whatever might seem to give a big swing, initial impulse, the fact is that its continuance is not the result of manipulation by pools or artifice by financiers, but depends upon basic conditions. And no matter who opposes it, the swing must inevitably run as far and as fast and as long as the impelling forces determine.” Reminiscences of a Stock Operator by Edwin Lefèvre

“Bill Gates got his money because he owned a stock, Microsoft, and it went up eight hundred times, and he stayed with the trend. He sat through one of the greatest bull runs in the history of civilization. He understood the pain of gain.
Paul Tudor Jones (Tudor Investment Corporation) in Tony Robbins “Money: Master the Game”

Personally I believe it is physiologically easier for me to trade a limited risk option spread strategy because I know how much I can lose every month – but the expected return is only 5% to 10% a year. However handling huge swings in a wild crypto bull market is much harder – yet infinitely more profitable – and after taking out the original stake to play with house money there is no money at risk. It is way more profitable to simply hold positions in a bull market, than trade around them.

Position Entry

This quote is from Paul Tudor Jones (Tudor Investment Corporation) in Tony Robbins “Money: Master the Game” – after showing a picture of rapidly sloping up chart with a “You are here” arrow at the top of it, this is the quote:

“How many people want to be long and stay long this chart?” And about 60% will raise their hands. And how many want to get off this investment and sell it ? Then 40% or so will say get out. And I say “You 40% should never ever invest your own money in your entire life! Because you’ve got this contrarian bug, and this the greatest way to ruin that there possibly is. It means you’re going to buy every brand – you’re going to buy things that go to zero and sell things that go to infinity.”

Do you have a temptation to buy cheap on the way down? Buying cheaper is good, but better done when potential is not yet released in new issues that have no overhead supply. Will make more money buying into a market rising off a low base, than trying to pick a bottom in a “race to the bottom”in multi month decline.

Which of these are you tempted to buy ?

Option 1 – uptrending market that is already 20% for the year moving to recent multi year highs, off a 1 year flat base
Option 2 – downtrending market that is already down 60%, and heading steadily lower over a number of months with some -10% months along the way

Its really hard for me to do 1 & very easy for me to 2, because of personality type. Don’t like to overpay for anything & like the idea of getting a “bargain” (cheapskate). Plus the implication that you are smarter than the market because you picked close to the bottom (ego).

Final quote from Paul Tudor Jones “Don’t be a hero. Don’t have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead.”

Download Portfolio Principles eBook for Kindle

Travel Hacking

Travel Hacking is defined as using credit card deals and loyalty points from various airlines or hotels to book highly discount flights or stays. This is also a great way to cut your expenses without comprising your ability to travel, and effectively save money so you make your money work harder for you. This is an overview of how our family went on many holidays and on average paid about one third of the full “cash” list price. This was the usual holiday stuff of flying, hiring cars and staying in hotels. The experience was also typically better than full price, due to hotel upgrades due to loyalty point membership.

Travel Hacking is not a secret as there are many active internet communities that can show you how use airlines and hotels points. There are many websites that will give you up to the minute offers and tips that change month to month.

This book is not trying to compete with these websites, it is simply one consolidated guide to glue it all together. This book outlines a high level overview and practical experience into a simple “how to” process guide. Importantly we explain what to think about first, and then where to start. This is simply an overview guide on how to begin getting good results.
The book has an accompanying Summary Spreadsheet that shares our real travel saving results from 2012 to 2014 – redeeming approximately 1.2 million loyalty points for total travel savings of more than $13,000. The Summary Spreadsheet can be downloaded and used to track your own annual travel summary, total travel savings, credit cards and fees.

If you do a few techniques in this book, you will save hundreds of dollars on travel (not an exaggeration). If you want one way to save $400 per adult right now, buy the eBook and skip to section on Spending. Also this not about attending time shares or shady 5 hour long presentations to get these prices – just a guide on learning how to travel hack. Just make sure that you are prepared to do the extra work up front, so you can simply check in, go on holiday and come back again – but for a lot less money!

Personally we find it very satisfying to be able to let our family have a great holiday without bankrupting our finances. We also enjoy “beating the system” to see how inexpensively we can do family holidays. Hopefully this is also inspiring that it can be done – even when you have kids ;-)

As always – your mileage may vary.

You can read all about it in the Amazon Kindle Ebook on Travel Hacking: How I saved $13k in 3 years on travel (with my wife and baby!)

Quick note on clarifying our ebook compensation : Some sites in the travel hacking area have a lot of credit card kick backs and affiliate links. To be clear, there are a lot of online resources referenced in the eBook, but importantly we do not get an affiliate kick backs or financial compensation if you click them (you can examine all the URLs yourself in the eBook to confirm this if you like ;-). We are only suggesting one simple ebook purchase (!) that you will easily back your money back on with material inside – we are not looking to use you indefinitely for marketing kick backs!

Investing in Monero Crypto Currency

Alternative currencies known as “coins” have received a lot of attention in the last few years, with the most well-known being Bitcoin. In the last 2 years there have been many such coins created for a diversity of purposes. Usability as a medium of exchange is one of the distinctive characteristics they have in common. These new coins are the brave new world for cryptographic currency (“cryptocurrency”, or even “crypto”), but are still in the early adoption phase.

Adoption is both a critical measure and a crucial means of success for a medium of exchange. Confidence in the liquidity and fungibility of a currency is a crucial factor enabling adoption. The US dollar, for example, has wide spread adoption. Many worldwide markets transact with it. Consequently, governments and banks around the world keep US dollar reserves. Since World War II it has taken the place of the dominant global reserve currency. The US dollar has popular confidence, because the US government promises never to default on their debts. This promise is respected in part because it is easy to keep, as the US government can always issue more currency to pay those debts, since the dollar has not been backed by gold (a commodity with stable and finite supply) since 1971. The US Dollar is also seen as a store of value, and typically maintains relative price stability compared to other currencies.

The example of the US Dollar illustrates what people what to see in a stable currency. This guide looks into one particular new crypto currency from this list of coins, and gives the investment case for investing in Monero (coin ticker symbol: XMR). We will consider how it may gain adoption, widespread confidence and become a store of value, potentially ultimately overtaking Bitcoin.

Please note the terms “Monero” (the coin name) and “XMR” (the coin ticker) are used interchangeably to refer to the coin.

A Brief History of Monero
Monero is one of the foremost alternative crypto currencies that has actually survived long enough to potentially become a replacement for the well known Bitcoin (BTC). Monero has been in continuous operation since 16 April 2014. Initial miners began to offer it for sale on the bitcointalk.org forum directly thereafter. As many as 10000 XMR traded for 1 BTC in those earliest days. Because of the differences between Bitcoin and Monero protocols and programming interfaces, exchange platforms designed for Bitcoin clones would not work for Monero without extensive modification. When poloniex.com offered a market denominated (as is typical) in Bitcoin, it became easy for Bitcoin holders to buy Monero, and that created an initial price bubble.

The following chart shows the price swings for Monero in its first 15 months of trading, from a high of approximately 0.011 BTC to a low of approximately 0.0009 BTC, rebounding to the current price in Aug 2015 of approximately 0.0023 BTC:
Monero Historical Price Chart Since Inception 20150810

One of the main selling points of Monero is that it can mathematically provable truly anonymous, unlike Bitcoin with can be traced via the Block Chain.

If you are interested in learning more we have written an Amazon Kindle eBook Better than Bitcoin – A Beginners Guide to investing in Monero.

Mortgage Acceleration

American consumer finances have got turned on their head in the last few years. High unemployment and falling house prices have all taken their toll on people’s net worth. Some people have underwater mortgages on their house where they owe more than the house is worth. The credit crisis has shown people cant rely on the traditional approaches if they want to be financially free sooner in life. Financial freedom for many people means ultimately paying off their mortgage and being debt free. But after the credit crisis, they now know that the existing financial systems are not going to help.
So what do you need to get financially free from your mortgage? You need some new thinking…

The traditional mortgage advice is to get a 30 year fixed mortgage, paying the fixed month on time every month. However this is exactly what the banks would like you to do. They get there fixed monthly payment every month for 30 years, and you end up paying more interest than principal on the loan. Go to work, pay the bank, work harder, pay the bank, repeat every month! We are not trying to be down on hard working people who can only afford to pay the standard mortgage payment every month – just recognize that the math is working in the bank’s favor not yours!

The traditional mortgage accelerator advice is to do the good old fashioned way of saving extra each month and overpaying on your mortgage. One technique is to overpay principal every year as you can afford it. Another technique suggests adding a small amount every month to your standard mortgage payment. Yet another suggests changing your mortgage payment to be biweekly (every 2 weeks). These are sound techniques as they will reduce principal faster earlier in the life of the loan, and ultimately greatly reduce the amount of interest you pay to the bank. This is great advice and it works well. But the main issue here is that you are always using your own savings! Once you have invested that saved money in the mortgage, you aren’t free to invest it for other things – you have lost opportunity cost.

Overpaying on your mortgage if you can afford to do it is obviously a very good thing over the longer term. However in the short term you still have to shovel your own extra hard earned cash at the mortgage. Once it’s in the mortgage you no longer have any access to it (you have lost the opportunity to invest it elsewhere).

We have developed a technique where you can borrow money incredibly cheaply at 1% to 2%, then use that money to pay your mortgage payments to the bank several months in advance. Effectively you are running your own bank – borrowing money at low rates to pay off your higher rate mortgage much earlier than normal.

This technique combines traditional mortgage over payments ideas with how to get the cheap loan, to save you hundreds of dollars a year and help you pay off your mortgage early.

You need good credit and discipline to execute these techniques successfully. However we have now proven that they work by testing it out for 2 years since 2012, and successfully applied this mortgage acceleration technique to over $30,000 in mortgage payments. We have christened the idea the “Float My Mortgage” method.

The “Float My Mortgage” method has these benefits that will work with your existing mortgage:

Pay less mortgage interest – Save mortgage interest payment by overpaying principal on your mortgage today. However don’t actually pay the principal payment out of your own pocket until many months in the future.

Invest – start making money today on the cash that you would have paid towards your mortgage payments and overpayments.

Beat inflation – postpone mortgage payments and overpayments. Make payments today, but don’t actually pay the mortgage provider until many months in the future. $1000 today is worth more than $1000 next year.

You can purchase the full method in the Amazon Kindle eBook called Float My Mortgage: Pay your mortgage many months in advance – without using your own money