The Barber Goes ALL IN, Crypto Questions, & FREE E-book!

Mar 26, 2021

“You put your WHOLE LIFE SAVINGS into Bitcoin!? WHAT…??”

I had to get my haircut on Monday, and I was tired of getting butchered by the barber I’ve seen for years.

So, I tried a new place that had great reviews on Google…

And I have to say, I’m happy with the cut…

I also enjoyed the small talk. I get a great perspective talking to everyone I meet and enjoy getting to know people.

But our conversation started much further down the road than normal.

The first question I got was, “So, what do you do?”

Normally that happens a few haircuts down the road!

So, I give my typical response … “I’m a software engineer.”

Normally we move on … but the next question was, “What do you build?”

“Financial technology.”


This guy lit up. He was all over me. I was worried I was about to get a Mr. T-style cut with how excited he got.

He started asking me what I thought about the markets. I gladly told him…

I was really impressed. He seemed to be following along and asking great questions.

He then asked about my thesis on Bitcoin. I told him.

He said, “That’s great, I just put my WHOLE LIFE SAVINGS in Bitcoin!”

“You put your WHOLE LIFE SAVINGS into Bitcoin? WHAT … ??”

“Yeah, I put everything into Bitcoin.”

Yep, that’s more B-U-B-B-L-E talk!

So, I then paused myself for a moment and realized I must be missing something.

I dug deeper and found out he bought his first stock ever in April because he was bored and government-funded at the time.

He had amassed $500, and that’s what he put into Bitcoin.

I felt better that he didn’t work for 20 years and put $100,000 into Bitcoin — he only put $500 into it.

So, I gave him my best advice. Advice I hope you’re familiar with by now …

  1. Pay off debt.
  2. Build a year of savings to cover expenses.
  3. Invest for 10 to 15% gains a year.

The barber went all in, so let me remind you that while I think Bitcoin could go to $1 million in the next 20 years, it could also go to $1,000. “Invest” wisely.

Over the past several weeks, I’ve done my best to help you get started in the world of cryptos. I’ve explained why I think everyone should own at least a little Bitcoinshared some of the best ways to invest in Bitcoin and other cryptos… and even showed you how to make your first Bitcoin purchase.

And now today, as promised, I’m going to wrap up this series with answers to the most pressing crypto questions you’ve sent me over the past few weeks. (I promised you a FREE e-book, too. You can find that here.)

Money Talks readers sent a TON of great questions (thank you!), and I want to answer as many of them as possible… So rather than republish individual emails, my team and I summarized them into the 14 questions below.

Let’s get started!

1. Some countries have banned or outlawed Bitcoin and other cryptos. Could the U.S. or other major governments do the same?

Keith: It’s true that a small number of countries have imposed outright bans on cryptos. At last count, these include Algeria, Bolivia, Ecuador, Egypt, and Nepal. And India recently proposed doing the same. However, there are a couple of important points to understand.

First, it’s incredibly hard to actually enforce these bans. Bitcoin in particular exists on a global decentralized network. While governments can make it very difficult to buy and sell Bitcoin, there’s no way to “ban” it entirely without shutting down the Internet.

Reports show plenty of folks still own Bitcoin in the countries I just mentioned. And these bans arguably only strengthen Bitcoin’s use case (as a global “store of a value” to protect against government manipulation).

Second, as Bitcoin grows in value and becomes more entrenched in the financial system, the less likely these bans become. Countries that refuse to embrace this technology risk getting left behind while others prosper. We may have crossed the “point of no return” in the U.S., as Wall Street banks and large companies have already invested hundreds of billions in the space.

Still, it’s not impossible that desperate governments could try to enact some kind of coordinated ban on Bitcoin and cryptos down the line. This is just one of many reasons I still recommend investing no more into these assets than you can afford to lose.

I think this type of behavior brings Bitcoin even MORE demand!

2. Is it possible governments will launch their own digital currencies?

Keith: Yes, I do expect the U.S. and other major governments will introduce their own digital currencies in the years ahead. The benefits of an all-digital currency are simply too powerful to ignore. It would give them even more control over the money supply and how it is used.

But make no mistake… These digital currencies will not be “competitors” to Bitcoin. As I explained in the first part of this series, Bitcoin is valuable because it is scarce and decentralized. A fully digital dollar or euro would be no scarcer or decentralized than the blended digital and paper-money system we use today.

3. You suggested buying and holding Bitcoin for the next 10 years or more. Do you really think it will take that long for Bitcoin to become a global currency? They already have ATMs in the supermarket where you can get rid of your dollars and buy Bitcoin.

Keith: Anything is possible — and Bitcoin has certainly come a long way in the last few years — but I think we’re still several years away (at least) from using it as a currency.

Remember what I mentioned in a previous email… Money has historically moved through a few distinct phases. First, it functions as a “store of value.” Next, if enough people use it as a store of value, it can become a “medium of exchange.” And finally, if enough people use it as a medium of exchange for a long-enough period, it can become a “unit of account” in which goods are priced.

Again, Bitcoin has come a long way in the last few years. But we’re still relatively early in the “store of value” phase. We’ve only recently seen big investors and institutions getting involved.

But most people have never even considered buying Bitcoin at this point. And history tells us it is unlikely to become a viable currency until it is widely owned by a majority of people.

That will require time… and much higher prices. Until then, it makes no sense to spend your Bitcoin.

4. Which is the best crypto to own?

Keith: As I hope I’ve made clear in this series, I believe Bitcoin is unquestionably the best crypto to own if you’re only going to own one.

It has been around the longest. It has the biggest network. And it has the strongest and most developed use case. While it is still speculative, I believe it is the least speculative crypto out there.

That said, the larger Bitcoin gets, the slower its future growth is likely to be. While it could easily rise another 50x to 100x or more from today’s levels, these returns are likely to be dwarfed by those of some smaller cryptos.

Of course, the trick is choosing the right smaller cryptos… As I mentioned before, the vast majority of these assets are likely to fail.

Unless you have the expertise to separate the potential winners from the many likely losers — or you follow the advice of trusted analysts like my friends Teeka Tiwari, Eric Wade, Matt McCall, etc., or use our Crypto Ideas by TradeSmith program — you’ll probably do best by sticking to Bitcoin alone.

5. Which crypto exchange is best for purchasing and storing cryptos?

Keith: As I mentioned last week, a detailed explanation of all the different crypto exchanges would require more space than I have in this column. But the short answer is, “it depends.”

If you’re looking to keep things as simple and inexpensive as possible, it’s tough to beat Robinhood. Buying and selling Bitcoin there is as easy as buying or selling a stock, and there are no transaction fees.

However, the company doesn’t allow users to send or receive cryptos to or from other exchanges or wallets. And unlike most exchanges, your holdings are not insured by the Securities Investor Protection Corporation (SIPC) in the event of a business failure or security breach.

I think Coinbase is a good starting point for folks interested in more features. Gemini is another similar option.

Each of these offers a greater selection of crypto assets than Robinhood and the option to send and receive cryptos. But they’re still relatively easy to use for new investors.

The drawback to these exchanges is higher fees, especially for smaller transactions. If you’re not careful, you could end up paying 10% or more in fees on some trades.

If you’re looking for more features and significantly lower fees, I’d recommend checking out the more advanced exchange options offered by these same two companies: Coinbase Pro and Gemini ActiveTrader.

OKCoin is another option with many features, a decent selection of cryptos, and very low fees.

Just understand that each of these more advanced options is less user-friendly than the basic exchanges and apps, and they may not be suitable for new investors or those who aren’t tech savvy.

Finally, there are several popular “crypto-to-crypto” exchanges, like Binance (or Binance.US for U.S. investors) and KuCoin.

These exchanges offer trading in dozens or even hundreds of different cryptos, and generally charge relatively low fees.

However, they typically don’t allow investors to exchange U.S. dollars or other fiat currencies for cryptos directly. Instead, you’ll need to first buy Bitcoin or another cryptocurrency on an exchange like Coinbase and then transfer it to the exchange to trade. Some of these exchanges will allow you to buy cryptos with a credit or debit card, but this typically carries additional fees.

These exchanges can be difficult for new crypto investors to navigate as well.

In any case, I believe the risks of holding a small crypto position on any of the major U.S. exchanges is relatively low.

But if you’re buying and holding for the long term — or you’re investing a significant amount of money in cryptos — you’ll generally want to hold them in a dedicated wallet.

6. Which wallet is best for storing cryptos?

Keith: Again, it’s difficult to choose a “best” wallet for all investors in all situations. And like with exchanges, covering all the ins and outs of various wallets simply isn’t possible here.

In general, your choice is between two types of wallets: “hot” wallets (those that are connected to the internet) and “cold” wallets (those that are not connected to the internet).

Hot wallets are usually software-based and relatively easy to set up and use. They are generally more secure than keeping your cryptos on an exchange. But because they’re connected to the internet, they are less secure than a cold wallet.

Cold wallets are usually hardware-based. This means they could be on a USB drive, a card, or some other device. They’re generally considered the safest way to store cryptos for the long term. But they can often be tricky to set up and use.

If you’re a relatively new crypto investor interested in more security, it can make sense to start with a good software wallet. I encourage you to do your own research, but Electrum (for Bitcoin only) and Exodus are two I’ve personally used and can recommend.

If you’re interested in a hardware wallet, the offerings from Trezor, Ledger, and ColdCard are good places to start your research. Each has a loyal following among serious crypto investors.

7. Can you buy cryptos through a wallet?

Keith: Yes, some wallets do offer the option to buy cryptos. This is usually either via exchanging one crypto for another, or in some cases using a credit or debit card to buy. In either case, you’ll often pay higher fees or get a less favorable exchange rate than you would buying through a dedicated exchange.

8. I’ve heard stories about people who have lost or forgotten their passwords and lost their Bitcoin. What happens to lost Bitcoins? Can anyone eventually recover them?

Keith: This is a common concern among new crypto investors. And it’s a valid one… When investing in cryptos, you and you alone are responsible for the security of your holdings.

If you’re holding your cryptos on an exchange, you have a little more flexibility. You can usually reset a lost or forgotten password, so long as you still have access to the email, phone number, and/or “authenticator” app used to create the account. (Though as I mentioned last week, holding a large amount of crypto on an exchange comes with its own potential risks.)

If you’re holding your crypto in a more secure “wallet” — whether that’s a software or hardware wallet — the stakes are even higher. You must remember your private key (your wallet’s unique “password”) and/or your recovery phrase to access your holdings.

Now, if you’ve forgotten part of your private key or recovery phrase, there are companies that can help you try to recover them (with varying degrees of success). But if you lose them entirely, you’re out of luck. Your crypto is lost, and no one can get them back for you.

All the “lost crypto” stories we’ve heard are the result of the latter scenario. However, it’s important to understand these folks typically bought or received Bitcoin in its earliest days, when it traded for just pennies (or didn’t have a market price at all).

These folks didn’t lose their Bitcoin because it was too difficult to properly secure it. Rather, they lost it because Bitcoin wasn’t worth much at that time and they were careless.

While there’s certainly a learning curve with cryptos, there’s no reason any moderately intelligent investor can’t safely secure this information.

My best advice here is print screen shots of every part of your transactions. Make copies and store them in a fireproof safe. Tell family members what you’re doing and make sure you have everything you need to track and keep your crypto safe!

9. Are there any good options for those who want exposure to Bitcoin, but don’t want the hassle of buying it and keeping it safe? For example, would you recommend investing in the Grayscale Bitcoin Trust (GBTC) or in crypto mining stocks like Galaxy Digital (BRPHF) or Marathon Digital Holdings (MARA)?

Keith: Unfortunately, there are no perfect substitutes for buying Bitcoin directly today.

The Grayscale Bitcoin Trust (GBTC) does technically offer direct exposure to Bitcoin (for a small fee). However, unlike a true exchange-traded fund (ETF), GBTC can trade at premium or discount to the net asset value (NAV) of the Bitcoin it holds.

This means if you buy at the wrong time, you can actually lose money even when Bitcoin rises. In fact, I heard from one Money Talks reader who bought GBTC back in February. While Bitcoin had risen by more than 20%, his position in GBTC had actually fallen by more than 6%.

This is why I generally don’t recommend buying shares of GBTC or any of the other crypto trusts offered by Grayscale. But if you’re determined to do so anyway, please at least be sure to avoid buying when shares trade at a big premium to NAV. (You can find this information on Grayscale’s website here.)

Crypto mining stocks can also provide exposure to Bitcoin and other cryptos. But they introduce another layer of risk — much like owning a gold mining stock is riskier than owning physical gold — and may not be suitable for all investors.

I do suspect it’s just a matter of time before real crypto ETFs are approved for U.S. investors. But until then, I urge you to make the effort to buy Bitcoin and other cryptos directly.

10. Is it possible to buy cryptos without a mobile phone? Every exchange I’ve tried requires SMS/text message verification.

Keith: Unfortunately, I don’t know of any exchanges that don’t require text message verification at a minimum.

I looked into this and am at a loss. It stinks, but it IS for an elevated level of security and protection.

However, I have heard some folks have successfully used virtual phone numbers — like those available through programs like Google Voice — to buy crypto without a mobile phone.

11. How do you send cryptos from an exchange to a wallet or another exchange?

Keith: The exact process will vary depending on the exchange or wallet you’re using. But there are really only a few basic things you need to understand.

First, to send crypto from one account to another, you’ll need to know the “address” of the destination account.

You can usually find this address by clicking on the specific crypto you want to receive, and then clicking a button or tab labeled “Receive” (or something similar). It will often be displayed as both a string of letters and numbers and a black-and-white QR code.

The following screenshot shows what this step looks like in Coinbase. But it will look a little different depending on the exchange or wallet where you’re receiving your crypto.

public address for Bitcoin

Once you’ve located this address, you can copy it (by clicking the “copy” button I’ve highlighted with a red arrow above) or leave the QR code open to scan.

Next, you’ll return to the account where your crypto is currently being held, click the crypto you want to send, and then click the button or tab labeled “Send” (or something similar) to open up the appropriate window.

The following screenshots show what this step looks like in the Exodus wallet. But again, it will look a little different depending on the exchange or wallet you’re sending your crypto from.

Send function in Exodus
send form in Exodus

Finally, you’ll paste the destination address you copied earlier (or scan the QR code if using a mobile device), choose how much crypto you want to send, and hit send.

hitting the send button in Exodus

Once your transaction is verified and confirmed — which can take anywhere from a few seconds to several minutes — the crypto will show up in the destination account.

That’s really all there is to it.

Just remember that every type of crypto has its own unique address format that only works for that particular crypto. This means Bitcoin addresses can only receive Bitcoin. Other cryptos sent to Bitcoin addresses can be lost. So, you’ll always want to be careful to use the right address.

12. In your explanation of how to buy Bitcoin last week, I noticed your Coinbase account was approved for purchases of up to $25,000. However, Coinbase has never allowed me to buy more than $200 of crypto at a time, and they recently lowered my limit to just $20 per purchase. Do you have any suggestions?

Keith: You should be able to increase your limits by completing Coinbase’s identity-verification process. You can confirm your current status on Coinbase’s “Account Levels” page.

That said, if your account is already fully verified and Coinbase customer service is unable to help, I would encourage you to try a different exchange like Gemini or OKCoin. As I mentioned earlier, the fees on very small purchases on Coinbase can be as much as 10%, and it makes no sense to pay higher fees than necessary.

13. Are companies like BlockFi a good option to earn some yield on your cryptos?

Keith: BlockFi is one of a handful of interesting new companies in the crypto world. While it offers trading in a number of cryptos like an exchange, its primary business is crypto lending. You can think of it as a simple “crypto bank.”

Like a bank, BlockFi will pay you interest for “depositing” your crypto with them, which they then lend out to exchanges and other institutional and corporate borrowers. Currently, you can receive an annual percentage yield (APY) of up to 6% for Bitcoin and other cryptos, and up to 8.6% for U.S. dollar-backed “stable coins.”

BlockFi will also allow crypto investors to take out low-cost U.S. dollar loans against their crypto holdings.

Now, it should go without saying that lending your crypto out to other investors necessarily entails more risk than simply holding it on a traditional exchange or in a wallet. But I’ve been impressed with what I’ve learned about BlockFi so far.

For one, the company is backed by some of the biggest and most reputable companies in crypto. They also follow a relatively well-defined risk-management approach that includes lending only to “vetted” institutional borrowers and requiring over-collateralization of all loans (borrowers must put up at least $2 of assets for each $1 borrowed).

The company has only been around for a few years, but it’s also worth noting that its loan portfolio has had a perfect track record with no client losses to date. This includes the crypto market turmoil in March 2020, when Bitcoin plunged more than 40% in a single day.

In short, if you’d like to earn some interest on a portion of your long-term crypto holdings, I think BlockFi is worth considering. But I would certainly not risk my entire crypto account to earn an extra 6% to 8% a year.

14. Are there any good Bitcoin IRAs? Most I’ve seen charge very high startup or maintenance fees or offer unfavorable exchange rates.

Keith: In theory, diversifying a small portion of your tax-advantaged retirement account into Bitcoin makes good sense. Unfortunately, as you’ve seen, the options currently available to investors leave a lot to be desired.

Because the U.S. Internal Revenue Service considers cryptos to be a type of property, they can’t be bought through a regular IRA. Instead, you must set up a special self-directed IRA through one of a handful of custodians specializing in crypto investors. And these companies currently charge some OUTRAGEOUS fees to do so.

I hate excessive fees. They destroy future wealth!

For example, one of the leading crypto IRA companies charges an initial fee of 10% to 15% of your entire investment amount to set up the account, a 5% fee on all purchases, a 1% fee on all sell orders, an additional 1% “custodial fee” on all buys and sells, a $240 annual account fee, a 0.05% month “crypto wallet holding fee,” a $75 per asset transfer fee, and a $75 asset conversion fee.

For most folks interested in putting 1% or 2% of their retirement funds into cryptos, these fees would almost certainly negate any potential upfront tax savings gained by investing via the IRA.

Until there are lower-cost options available, I recommend buying Bitcoin in ordinary, taxable accounts.

Don’t be like the barber I mentioned. Be smart with your crypto investments…

And get started with Bitcoin. Just put $100 into it and see what happens.


P.S. Here’s that link again to the free e-book I mentioned: The Money Talks Guide to Crypto Basics.