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Weve received a lot of feedback from our last few write-ups on the bitcoin and cryptocurrency market.

And because a many readers have said they are going to roll up their sleeves and enter the market themselves, we thought wed offer three simple pieces of advice to bitcoin beginners.

Speaking from personal experience, I highly recommend that folks looking to buy some bitcoin start with an extremely small amount no more than a bitcoins worth, which today is the equivalent of a couple thousand U.S. dollars. (You can use less money and buy a fraction of a bitcoin also if you prefer).The process of buying, moving and storing bitcoin is not like traditional online banking or investing. If you send bitcoin to the wrong location, for example, you cant just call up your bank and cancel your transaction. So its critical to familiarise yourself with the mechanics of buying and moving bitcoin around first with a relatively small sum, before moving on to larger dollar amounts.

The process of buying, moving and storing bitcoin is not like traditional online banking or investing. If you send bitcoin to the wrong location, for example, you cant just call up your bank and cancel your transaction. So its critical to familiarise yourself with the mechanics of buying and moving bitcoin around first with a relatively small sum, before moving on to larger dollar amounts.

Its ironic that whilst bitcoin is a highly modern technology, you must make sure you keep offline records of all your bitcoin information. That means a pen and paper, or at least using a Microsoft word document and printing it out as a back up.

Storing and sending/receiving bitcoin involves setting up a digital wallet. This is a where you keep your bitcoin.

Your wallet has a public key (which might look a bit like this: 1GwV7fPX97hmavc6iNrUZUogmjpLPrPFoE) which is where the bitcoin gets sent to. This is like an account name.

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Your wallet also has a private key. This will either be an alpha-numeric sequence that looks like the public key above, or a long sequence of random words generated by the wallet. This is the password you use to access your wallet.

Either way, secure wallets do not have an I forgot my password option.

If you lose or forget your private key, you lose access to your wallet. And you lose your investment. Period.

I write everything down, and I print out screen grabs (that is, printouts of what is shown on the screen).

In order to convert your cash into bitcoin, you need to open an account with an exchange.

This process will typically take a few days as the exchange will need to conduct KYC (know your customer) diligence on you. This means theyll do a standard identity verification so the exchange knows who you are, and that youre not a wanted criminal.

Once youve opened the account, youll be able to fund it with a bank transfer or by credit card in some cases before you buy bitcoin.

If the exchange where you bought bitcoin (and left it there) gets hacked ,then you can lose your money. This has happened in a couple of high-profile cases.

For example, in 2014 bitcoin exchange Mt. Gox, which at the tie was handling up to 70 percent of all bitcoin volume, filed for bankruptcy, saying that 750,000 of customer bitcoin was missing. Thats US$1.5 billion-worth at todays prices.

The safest place to store your bitcoin is in a wallet. Theres a good selection to choose from here.

Good investing,

Tama

P.S. I know weve been banging on about a particular stock recommendation from The Churchouse Letter for a few weeks now, but thats what we do when we find great ideas for our subscribers. Our recommendation is now up 32 percent since we recommended it at the end of April. Click here for your subscriptionand the full story.

Tama Churchouse spent nearly a decade creating and selling financial derivatives for a global investment bank in Hong Kong. As Lead Analyst he brings technical expertise across the entire asset class spectrum, from equities and index products, to interest rates and credit.

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Beginners buying bitcoins should do these three things - Stansberry Churchouse Research (registration) (blog)

On the up and up.

Bitcoin has been on an unbelievable run. The cryptocurrency is up around 124 percent for 2017. And thats after it gained 125 percent in 2016. In May alone, its up more than 60 percent. Its hard to know what the long-term impact or performance will be, but one things for sure -- investors are swept up in cryptocurrency mania.

One simple theory for Bitcoins vertiginous rise in recent weeks is that its turning into something of a self-fulfilling prophecy. Momentum begets momentum and buying begets buying when gains begin to come hard and fast.

Consider that Bitcoins price is up, on average, four out of every five days in May. Its up seven out of every 10 days in 2017. When you combine these types of batting averages with large gains, its sure to grab peoples attention and attract performance chasers and speculators who want to get in on the action. Seeing gains on top of gains increases investor confidence that those gains will last indefinitely. Confidence grows with each new high.

Contrast these results with the stock market. Since 1926, if you were to take the daily performance of the S&P 500 and break things down into gains and losses, the numbers show that its basically a coin flip between up and down days, with 54 percent of all days showing positive performance and 46 percent with negative returns.

Even during the huge bull market since early 2009, the daily returns have followed a similar pattern:

The positive days slightly outweigh the negative days, but its close enough that any time stocks begin to fall investors worry that the end is near for this lengthy rally.

The reason these types of statistics matter is that human nature makes it difficult for people to process losses in the same way they deal with gains. Research from the behavioral psychologist Daniel Kahneman shows that we regret losses twice as much as gains make us feel good. This bias is called loss aversion.

So the probability of seeing gains or losses can have a huge impact on our actions as investors.

Since the daily performance in the stock market is more or less a 50-50 proposition, loss aversion means that checking the value of your investments on a daily basis will make you feel terrible every single day. All those warm feelings you get from the winning days in the markets will be completely wiped out by the double dose of pain of the down days.

The simple solution to deal with this issue for stock market investors is to avoid evaluating your portfolio on a regular basis. The more you look, the more likely it is that youll see losses since stocks dont hit new highs every single day. While stocks alternate gains and losses, on average, if you lengthen your time horizon, the probabilities for a positive return are much higher.

Using the same data for the S&P 500 going back to 1926, all one-year periods showed gains roughly three out of every four years. Extend the time horizon to 10 years, and it was close to 95 percent of all periods with gains. Less frequent portfolio evaluations make it more likely that youll see gains, and, in effect, reduce the pain experienced through loss aversion.

Everyone seems to have an opinion about how high the price of Bitcoin can go or how quickly it will fall back down to Earth. Yet its impossible to forecast the emotions of other investors, and at a certain point thats all that ends up driving these types of price moves. But my guess would be that the current Bitcoin rally will start its downfall once the daily returns are more evenly balanced out between up and down days.

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It may be obvious to state that an increase in volatility will cause investors to bail, but its helpful to understand the reasons behind this type of price action. Once loss aversion begins to be felt again in the price of Bitcoin, that will likely spell the end of its relentless rally. Unfortunately, figuring out when this will happen is extremely difficult, as predicting a change in market direction has almost no rhyme or reason.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story: Ben Carlson at ben@ritholtzwealth.com

To contact the editor responsible for this story: Max Berley at mberley@bloomberg.net

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Bitcoin, Stocks and the Fear of Missing Out - Bloomberg

The bitcoin industry has had its fair share of problems and reputational damage. The digital currency has often had an image of being used for illegal means such as buying drugs online. The collapse of Mt.Gox in 2014, once the world's largest bitcoin exchange, is still fresh in the minds of users. Some members of the exchange are still waiting for compensation.

More recent issues include some exchanges not allowing people to withdraw their money in fiat currency. On top of this, the view of bitcoin as a currency for criminals is still prevalent after the major WannaCry ransomware cyberattack saw hackers lock peoples' files and ask for bitcoin in exchange to unlock them.

Still, Van-Petersen says that the industry is still extremely young and big improvements will come. A few factors will boost bitcoin adoption including better wallets, easier methods to buy the digital currency, use of it for money transfers in areas like remittances, as well as citizens of countries with volatile economies and currencies buying it.

"Volumes are going up, volatility is going down. A lot of people talk about the volatility, but if you are in Zimbabwe or Venezuela, this volatility is nothing. This is the interesting thing to me. I think in the West, a lot of people view it is as speculative, but emerging markets will get it, their needs will be different," Van-Petersen added.

While Van-Petersen is offering one way to value bitcoin in the future, others say that there are other factors to take into consideration.

"It's one way of slicing the pie to try and predict future prices which always relies on a lot of assumptions," Charlie Hayter, CEO of industry website CryptoCompare, told CNBC by email.

"Equating volumes to price value is one method of attempting a valuation, but it doesn't take into account the fundamentals of the ecosystem."

The fundamentals of what bitcoin is capable of from a technical point of view and how regulation is molded around its use will determine its value too, Hayter added.

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Bitcoin could hit $100000 in 10 years, says the analyst who correctly called its $2000 price - CNBC

Forbes

'Bitcoin Oracle' Vinny Lingham On Why Bitcoin Is Overpriced Forbes During the episode, he describes how his experience with fraud at his former company, gift card retailer Gyft (which he eventually sold to First Data) helped him understand the advantages of bitcoin and blockchain technology. (Here's how Gyft was using ...

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'Bitcoin Oracle' Vinny Lingham On Why Bitcoin Is Overpriced - Forbes

BITPoint Japan Co., the company behind Peach Aviation Ltd.s move to let travelers use bitcoin to pay for tickets, is planning to give hundreds of thousands of Japanese retail outlets the ability to accept the digital currency.

Were holding discussions with a retail-related company, Genki Oda, BITPointspresident, said in a recent interview. By going through a company providing payment terminal services to shops, we have the possibility of increasing its use at one stroke.Its easier than talking to lots of individual retailers.

Photographer: Akio Kon/Bloomberg

BITPoint is joining a flurry of companies embracing regulations, enacted in Japan last month, that recognize digital currencies as a form of payment. That has helped to make yen trades one of the worlds largest transaction pools, exceeding Chinas pole position at the end of 2016, according to Oda. Bic Camera Inc., one of the countrys biggest electronics retailers, began accepting bitcoin at two stores in Tokyo last month.

Were also talking to a big convenience store operator about using it, said Oda, 36, who also runs BITPoint parent Remixpoint Co., which had a market value of about 21 billion yen ($189 million) on Friday. He said hes aiming to make an announcement by early next year.

The shares of Remixpoint rose as much as 18 percent to their daily price limit. Last week, Remixpoint said it will convert debt issued to BITPoint into equity, raising its ownership in the subsidiary to 97.7 percent.

Bitcoin, which debuted eight years ago, is gaining wider use as a way to pay for goods and services, and lets people transact without oversight from governments, regulators or central banks. The virtual currency has been rallying against the dollar and other fiat currencies and was trading at $2,210 on Monday, near record highs.

While BITPoint operates as a bitcoin exchange, its pushing to promote the use of the cryptocurrency in stores and other retail outlets, instead of as a speculative instrument. The company currently has ties with tens of retailers and plans to expand that number, Oda said.

Photographer: Akio Kon/Bloomberg

A change in Japanese law on April 1 formalized rules around anti-money laundering and put in place standards for security and audits. Restaurant booking site Gurunavi Inc. will start letting diners pay with bitcoin later this year, the Nikkei newspaper reported last month.

Its funny how the whole narrative of bitcoin being risky or dangerous has changed, and it is now seen as a form of pride to regulate and embrace it, said Thomas Glucksmann, head of marketing at Hong Kong-based bitcoin exchange Gatecoin.

Asked about the recent climb in bitcoins value, Oda said hes wary of the sudden jump and doesnt think its sustainable. At the same time, Japanese investors and day traders are taking a serious look at bitcoin as an asset class, thanks to the new regulations, he said, adding that several large foreign exchange brokerages will begin bitcoin trading in the coming months, boosting volumes.

Still, its unclear whether bitcoin payments can become more than a marketing gimmick. The biggest hurdles include long network confirmation times and high transaction fees. While many bitcoin community members rallied around a new proposal last week to fix the problem, deep differences within the group have led to several similar solutions falling through since 2015.

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Japan's BITPoint to Add Bitcoin Payments to Retail Outlets ... - Bloomberg