Hey everyone, it’s Finance Fridays and I was all set to continue my “Let’s Gamble” segment in regards to Cryptocurrency. However, I ran into some problems, and so I’ll take some time here to discuss them today in my post “No Bitcoin for Hawaii”.
Edit: For those who are more interested in “How To Buy Bitcoin in Hawaii”, I wrote a follow-up post.
The TL;DR is that the two ways to get bitcoin from Hawaii are using kraken.com or bitstamp.net — however, they are not considered as user-friendly or as good as coinbase.
So after some deliberation, I decided I was going to buy $1000 worth of cryptocurrency and then just let it sit for 20 years and just watch how it did. I thought it would be a fun experiment….
So what happened?
Well, in order to buy the cryptocurrency I was interested in buying, Waves and BAT, you can’t just “buy it” with money. The normal procedure is that you buy Bitcoin and then exchange it at whatever the going rate is for the other currency. Currently, the two major currencies which can be relatively easily exchanged for US Dollars are Bitcoin and Ethereum.
So, I looked into how to buy Bitcoin. From what I was able to gather, the normal/easiest way to buy Bitcoin is from Coinbase or Kraken. However, I ran into a problem as soon as I tried to make an account on Coinbase. I actually realized two separate emails from Coinbase when I tried to make an account:
You can’t buy Bitcoin from Coinbase if you live in the state of Hawaii.
Apparently, some legislation was recently passed in Hawaii which essentially prevents the sale of Bitcoin. The Department of Commerce and Consumer Affairs (DCCA) of Hawaii stated:
“licensees who hold virtual currency on behalf of customers must maintain redundant fiat currency reserves in an amount equal to the aggregate face value of all digital currency funds held on behalf of customers.”
It would require that any Bitcoin purchased from people living in Hawaii would require the seller to hold in reserve the equivalent amount of money. Basically, you can consider this as redundant collateral for every sale. For this reason, Coinbase stopped selling Bitcoin to Hawaii residents. As you would expect, Kraken also does not sell Bitcoin to Hawaii residents either.
So how do Hawaii residents purchase Bitcoin then?
Well, I’ve found people saying the other sites, such as Xcoins.io, Bitstamp, Localbitcoins, and Uphold will still sell Bitcoin to Hawaii residents. However, these are smaller players and don’t have the best of reputations, as well as have pretty significant surcharges.
Overall, I haven’t really had the time to search for the best/safest way to purchase Bitcoin for Hawaii residents, but I’ll look into it some more.
However, I am hopeful that Hawaii will eventually ease this restriction:
House Bill 1481 wants to establish a ‘working group’ to evaluate cryptocurrency and states “Digital currencies such as bitcoin have broad benefits for Hawaii. A large portion of Hawaii’s tourism market comes from Asia where the use of bitcoin as a virtual currency is expanding.”
Well, let’s say you could get Bitcoin, how would you convert it?
Well, you move your Bitcoin over to a Cryptocurrency Exchange.
For example, if I bought $1000 worth of Bitcoin right now, it would be worth ~0.24 Bitcoin (Bitcoin trades for $4177 at the moment). Then I would transfer it from wherever I bought it to my account on a Cryptocurrency Exchange, such as Bittrex. I am mentioning them specifically because they allow the exchange of Bitcoin to the currencies I am interested in.
So then I take my 0.24 Bitcoin on Bittrex and exchange them for the currencies I want.
So what does that mean for the “Let’s Gamble” segment?
Well, it’s on hold for now. However, I did want to share that I was going to change which currencies I was going to buy:
In my prior post I was going to buy 40/40/20 of Ethereum/Waves/BAT. However, I found another currency that I found interesting:
“Ripple connects banks, payment providers, digital asset exchanges and corporates via RippleNet to provide one frictionless experience to send money globally.”
Their playbook appears to be targeting how slow currency transactions can be. By adding more “players” (banks) to their network, you can imagine that it’s almost like having currency being moved around in “the same house” and therefore frictionless as their motto above states.
It’s an interesting preposition, and highly ambitious.
Of all the 4 I’ve talked about Ethereum/Waves/BAT/Ripple, I think Waves and Ripple are the most interesting.
What about BAT (Basic Attention Token)?
I think that BAT is a Dark Horse. My concern about BAT is the necessity of the use of a separate browser, Brave. Browser marketshare is currently still heavily controlled by Google Chrome, with its market share hanging around 58-60%. Safari is next at around 15%. Internet Explorer/Edge and Firefox are around 8-9%. Opera is around 5%.
Brave, even if faster, will have a hard time seizing considerable marketshare from Chrome/Safari/Explorer/Edge/Firefox.
You can imagine that if Google ever decided to create it owns browser based attention token that it would annihilate BAT. However, Google could also just buy BAT if all the work is already done for them. In that case if Google just bought BAT and implemented BAT into Google Chrome… well then BAT’s returns would be ridiculous if it was purchased before it was bought by Google. It’s a long shot, but not impossible.
So after looking at all these again. I think I’d want to do a 45/45/10 Split of Waves/Ripple/BAT.
Isn’t speculation fun?
It IS fun… because it’s basically just gambling. However, I think Waves and Ripple have good platforms that could move upwards into the realm of Ethereum, and trade at like $300-400 someday, which would be a ~60x-70x return (they currently are trading at around $5). However, they also both go up in smoke. I doubt they will ever get to the realm of Bitcoin, which currently trades at ~$4500. That said, I still believe that Bitcoin has room to grow in value to around $10000.
Now that, if BAT becomes the currency that runs people’s attention, then it could potentially also grow into the realm of Ethereum $300-400. It currently hangs out around $0.20, which would be a 1500x return. However, it also has the highest chance of going belly up.
No Risk – No Reward…. right?
Wait… what about Ethereum?
Ethereum is a good cryptocurrency overall. It started out being worth around ~$1 and peaked around $400 or so, now hovering around $300. Interestingly, it saw some drops recently. However, overall, I still think it has room to grow as well. That said, I don’t think it will ever reach Bitcoin levels of value – although I could be wrong of course.
I think it’s a reasonable buy if you plan to sit on it, with it being relatively stable.
However, this is supposed to be a “Let’s Gamble” segment… so Let’s Gamble!
I think it would be more exciting to put money on the young upstarts (Wave/Ripples) and the dark horse (BAT) than the front runners (Bitcoin and Ethereum).
Unfortunately, you can’t buy bitcoin in Hawaii very easily right now.
I will look into how to buy it.
I think Ripple is also an interesting currency.
My new “bet” will be 45/45/10 of Waves/Ripple/BAT if I am somehow able to buy Bitcoin and exchange it.
Just remember everyone… cryptocurrency is straight up gambling – even more so than stocks, in my opinion.
Agree? Disagree? Questions, Comments and Suggestions are welcome.
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did ya ever get around to finding a way to buy in hawaii
Currently, there is still no great (safe) way to buy Bitcoin in Hawaii. When I tried to sign up for Coinbase a few months ago, they asked for my home address at that point and denied me even creating an account.
If you go to their sign up page today (https://www.coinbase.com/signup) and select “Hawaii” on the page it says this:
“Although we strive to provide continuous access to Coinbase services, Coinbase has indefinitely suspended its business in Hawaii. If you’re a resident of another state, please select it.”
I have heard of people using non-Hawaii addresses and having success. However, I am unsure if this may cause problems with taxes and/or be considered securities fraud later on. It’s important to understand that it’s not impossible to own Bitcoin if you live in Hawaii. However, as far as I know it’s very difficult to buy it.
The current ways around this are:
1) Use Coinbase using an alternate address (this could be considered lying/fraud at some point with potential tax/legal implications, unlikely but not impossible)
2) Use a different seller (usually less trust-worthy with significantly higher fees)
3) Have someone buy it for you and have them transfer it to your wallet (requires someone you trust a lot, such as a family member, but might raise some eyebrows if it’s a significant amount of money come tax time as well)
I had considered doing #3 back when I originally wrote that post when Bitcoin was around $3k and was planning to buy like 0.5 Bitcoin, but that time has passed. However, I recommend that everybody exercise caution with Bitcoin… this is very, very high stakes gambling.
I may dedicate a whole post to this eventually since there seems to be a lot of interest.
Thanks for your comment!
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Don’t know what you guys are talking about, I’ve been on Kraken for three months… I’m in Honolulu. No problems using my real address and everything. Kraken has a workaround apparently…
Hmm… that’s good to know!