How my cryptocurrency/stocks/bonds/futures investment system – The Black Swan Hedge Fund – works.
- I open an account for you on the Interactive Brokers platform
- You transfer some money into that account
- I trade the funds for you while you watch
- I charge 6% per annum commission (on a 0.5% per month marked-to-market basis)
- When you draw money or close the account or at the end of each year invested my algorithms balance off the account and any profits they split 30% to me 70% to you
- When you no longer need my services because you’ve learned all that I can offer you take over the account from me and no longer pay me the 6% nor share any profits with me
Following is a document laying out how the bitcoin/ether portion of this fund works. It’s meant as an example of what you’ll be able to easily follow once you’re schooled yourself in these technologies. For now just use it as a sort of proof to yourself that what I’m talking about has real substance to it and is not some fly-by-night hare-brained scheme designed to fleece you of your money.
This is a document about investing in bitcoin. If instead you were looking for materials that will enable your understanding of the source code and thereby convince you of why so many of us are calling this the best thing since the invention of sliced bread you need this document here. Or alternatively you might decide you need to join one of my cryptocurrency hedge fund or programming students groups on Telegram to keep abreast of what we’re doing or to learn more about my teaching of programming. Of course you could always reach out to me and start a one-on-one conversation!
In early 2009 when Satoshi Nakamoto published his famous paper** I was struck by his words and fell headlong in love with the technology, his ideas, what he proposed and what he had invented. And I dreamed day and night about the possibilities bitcoin portended. Within a short time I had compiled the source code and setup a bitcoin mining rig in my then-new[ish] startup CyberColledge LTD in Westlands, Nairobi, Kenya. Those were the early days of bitcoin and there was very little mining going on so my servers were up to the task and quickly mined 10,000 bitcoins. Those coins were worth all of $1700 and I was soon patting myself on the shoulder. I sold 9,000 of the coins to help fund my startup and am regretting that sale to this day. I retained 1000 of these coins on a whim telling myself I’d keep them for the long, very long term. At its highest my 1000 coins (which had by then grown to 1110 coins as I continued to buy into the currency year over year were worth 21.96 million US$. Today these coins are worth about 3.7 million and I’m just smiling because this is a level of money I’ll never be able to burn through. Never mind that it was more than 20M and is now ‘only’ 3.7M. Never mind that predictions by Goldman Sachs, Barclays and the Bundesbank are that bitcoin will probably hit $175,000 when the next depression hits. I can sit here day after day enjoying my computer programming, surfing the internet, going out on camping trips, fishing in my lake and never again have to worry about money. Yes near the height of the bitcoin growth I did convert some BTC back into fiat US Dollars and some into gold and silver but that is a story of prudent savings management and I’ll get to that later in this document.
** – this video here explains Satoshi’s paper in a very nice way.
This is the first in a series of 13 videos explaining the paper.
So since those days in mid 2009, I have been investing for myself and my friends in bitcoin and maintaining a HODL principle trying to teach people that HODL is the way to go for the US dollar must, one day soon, lose its reserve currency status when the next secular downturn in world economies begins to unfold.
A short aside: In early 2011 I figured out that I could apply artificially intelligent algorithms to the bitcoin network and use them to predict where the price might go, to have them automatically invest for me based on results from sentiment analysis, clustering studies, blockchain analyses via convolutional neural networks, deep and machine learning and to remove mine and my investors emotions from the process. This worked so well that I felt I could make a real contribution to humanity by teaching this system to others. So I began to teach once again (I’d stopped teaching once I sold CyberCollege). I even went as far as to begin a PhD fellowship with a US college of much renown that I had always dreamed of attending in person but could never afford to. It took a lot of effort to extract this work from that PhD to get back my commercial rights to it. I finally succeeded in doing that and this is the system you find herein. Had I not managed to do that this system would have disappeared into the halls of academia and ownership of a university. It was a close call.
(Hodl is slang in the cryptocurrency community for holding the cryptocurrency rather than selling it. It originated in a December 2013 post on the Bitcoin Forum message board by a user who posted with a typo in the subject, “I AM HODLING.” In 2017, Quartz listed it as one of the essential slang terms in Bitcoin culture, and described it as a stance, “to stay invested in bitcoin and not to capitulate in the face of plunging prices.” TheStreet.com referred to it as the “favorite mantra” of Bitcoin holders. Though originally used in relation to holding Bitcoin, it is now also used to describe holding other cryptocurrencies and tokens such as Ethereum.)
The need for a ‘Crypto-plan’
The US dollar is going to lose its reserve status. This is a given. Invest some time in watching this 10-part documentary series to educate yourself about this. Gold and silver have been solid investments in times such as those in which we find ourselves today but many have not noticed the ‘digital gold’ that bitcoin has become. As a store of value it is unparalleled. Don’t fret about the ups and downs in its exchange traded price. All currencies, even gold, to through this. Do remember that as a store of value bitcoin is even more limited than gold and therefore will command a much higher price than gold ever did or will.
If you are currently holding your money in Kenya shillings, Sterling Pounds or US Dollar remember that the currency against which all these fiat currencies is valued is the US Dollar. No currency in the history of mankind has held its reserve status for more than 75 years. The US Dollar was made into the world’s reserve currency at the end of the second world war in 1945. Add 75 to that year and you get 2020 so at most the dollar is going to last only till 2020. What happens when the dollar crashes? A Zimbabwe happens. If you had $1,000,000 in savings/real estate/vehicles/machinery/plant you’ll suddenly wake up to that money being eroded to less than $50,000 equivalent value. How long will 50k keep you in your currently lifestyle – two years, one? Don’t believe me? Have a look at how much the US debt stands at, at this very minute. Just today (Friday, 14th December, 2018) the European Central Bank has admitted that it too has quantitatively eased or in other words PRINTED money to the tune of trillions of dollars (€ 2,000,000,000,000). Those $$ and €€ are coming home to roost and you better not get caught napping. Begin your bitcoin investment plan NOW. It’s going to take time to save up – I don’t advocate putting an entire lump sum into bitcoin all at once but getting in by …
Dollar Cost Averaging
This is the process of investing the same dollar amount every day/week/month so that when the bitcoin price is low you get more and when it’s high you get less but your average price is most favourable to you. You have about 2 years before the proverbial hits the fan. How much do you need to lead your current lifestyle or better when the crash hits? Now consider that 90% of all fiat value was wiped out in the Great Depression. So, if like me, you need $30k per annum to live comfortably (which means including some entertainment, eating out, the occasional iMAX movie, a few camping trips and one overseas trip requiring flights and accommodation as well as daily food, house help wages, internet, netflix, electricity and water) I’d need to put away around $300k to be able to withstand a 90% erosion of my value and continue to live as though nothing had happened). But if 300k is my savings and 90% of it is eroded I’ll be left with 27k or about a single year of living expense? What? Is this an exercise in futility?
Not if the 300k has been moved OUT of any link to the US Dollar. If my money is in BTC (Bitcoin) bitcoin will remain BTC even as the dollar crashes. Imagine you have a pea sized bead of gold and it’s able to buy nice suit. Now the world economies collapse. What happens to that gold pea? It still buys a suit doesn’t it? In fact doesn’t it buy a whole lot more than one suit as everyone is now willing to pay much more for the gold pea as it can buy food, water, electricity in much, much greater quantity than any paper money? Would the tailor be willing to make you TWO suits for the gold pea?
And do remember that it took until about 1947 for the world economy to recover and that in between those two dates, 1929 and 1947 there was a world war so take into account the protracted hardship period you have to cater for. 30K needed per annum might become 300k required as all prices sky-rocket. In normal civilian times bitcoin rose 20X; how might it rise in a depression like collapse? What better than to have a currency that you could take anywhere with you on a flash disk sized dongle or some printed pieces of paper, that will be accepted absolutely everywhere and that will be appreciating by the minute making your life better by the minute too while the rest of the world languishes in abject poverty.
So if you have 300k today that you are assigning to a crypto savings plan we have to invest that sum over the next 2 years at most. Given that there are about 720 days in two years I have been purchasing $420 per day for this level of investor. Of course there are those that put away 100k in a lump sum and then another 100k after 6 months and another 100k coming in in a months time from now. And then of course there are those that are investing only $100 per month. It’s all up to you and depends on your pain tolerance when the pain hits. You decide; BUT IF YOU FAIL TO PLAN YOU PLAN TO FAIL — remember that.
I’m here to help tailor the plan for your particular circumstances.
How a crypto investment plan works
- You send me money by:
- Giving me cash face to face
- Wire/telegraphic transfer/RTGS
- Bitcoin or ether
- I sell you some of my bitcoin. So effectively I am dollar cost averaging in the reverse direction; while you average in I average out getting some fiat to spend. I convert at the prevailing Barclays Bank Kenya Dollar rate for the particular fiat currency you are giving me and charge a 6% commission on each transaction to cover bitcoin charges. My benefit is that I get some buffering against the dollar conversion rate, get some spending money for me and my family and get a lot of feel-good factor for having shown my friends the way out of this mess we find fast approaching us.
- I send your bitcoin to a public key
- You can generate this key yourself via a hot or cold wallet and send it to me or
- I can generate the key via a cold (off-line) wallet. If you want me to send to a hardware wallet I need to purchase that for you. I recommend both Trezor and Ledger Nano S wallets. Both work well and I’ve never had any fail on me over all these years and dozens of hardware wallets in my care and at least 10 new unopened wallets in my safekeeping at all times. If one ‘client’ wallet does fail I have your seed in safekeeping and only need to pull a new wallet out of my store to restore your funds to it using the seed. To learn more about hardware wallets read this (Chapter 5 in Andreas’s book – Mastering Bitcoin).
- When sums in my safekeeping rise about $100,000 value (currently about 250 bitcoins) I move them off the hardware wallets into paper wallets. Don’t generate paper wallets yourself and go to sleep at night thinking your money is safe. It isn’t unless you do it 100% as below thinking about each step very carefully. It’s very easy to make a mistake and expose your money to hackers. Few people realize that there are many printers that store a copy of what you printed even after you switch them off. And please, please, please — NEVER EVER PRINT ANYTHING SENSITIVE (ID card, Passport, Paper Wallet, Seed!!!) in a print shop such as those you find in the Diamond Plaza.
- Repeat … I keep adding money to your wallet. If the wallet is in my care it will be a cold wallet (a combination of Trezor, Ledger Nano S and/or paper). I don’t hold more than $1000 per wallet up to $10,000 and larger sums per wallet above that but always spread across several wallets for security sake. This is where the workload arises and justifies my charging that small commission: For several accounts I am holding more than 100 wallets per account!
- Where I create paper wallets I use the bitaddress.org software that I have a copy of on an air-gapped machine running TAILS Operating System. That machine has never been and never will be connected to the internet. The wallet is printed using an HP Laserjet P1006 printer which has no on-board cache and no WiFi capability to access the internet.
- I send the public keys of all transactions done in your name to a google drive spreadsheet which I share with you and anyone you nominate.
- You are free to copy the spreadsheet to your computer/you google drive/a flash disk and check on the validity of the transactions at any time by using a blockchain explorer. I can teach you how to do this. This is your proof that I hold money for you that I sent to a particular public key. These public keys form an audit trail that is set in stone for all time. Your funds are assured this way. Control (spending) of those funds though is via the private key that is mathematically tied to the public key I send the funds to. For your security I hold the private keys of each transaction/wallet.
- I maintain the private keys and/or the seeds to a hardware wallet in a printed form. These printouts I store in two different locations in handwritten ledgers clearly marked with your name. The persons in charge of those ledgers are completely and fully trusted by me and know what they are doing. They have clearly written instructions on how to hand over those private keys if you ever come to them requesting the same. I also give you details of who those persons are, contact phone numbers etc. and keep in contact with them regularly verifying that the are capable of handing over any or all of our keys at a moments notice.
- For this degree and amount of technical work I charge 0.5% per month commission on the funds I’m looking after totalled up at the end of each month at current market rates. To do this I sweep one of your offline wallets extracting 0.5% commission and returning the remainder to a new paper wallet sending you the details of this transaction as in (3) above. Via this technique I am regularly cycling at least some of your wallets and verifying that they work OK.
- By doing all this I am mitigating loss of your funds in the event of fire, flood, earthquake, hacking, hardware failure, wetware (brain) failure to the absolute minimum possible.
- If you so wish I am quite able to give your private keys to you and management of the funds then passes to you and you have no 0.5% per month dues owing to me for looking after your money. However I advise against this as there are many pitfalls in this highly technical albeit highly lucrative investment modality. For example, failure to understand that you must never take out only some of the funds but sweep the entire lot from a paper wallet leads to loss of those funds that you do not spend. For example if you have a paper wallet holding $1000 and you take $100 out of it as spending money transferring that to your hot (mobile phone) wallet the other $900 disappears into a change address that you have no control over and is lost forever.
- An example of the full transparency I am promising via this system: Here is an actual address to which I sent some funds today (Friday, 14th, 2018): 3EadBK7bC3hxCNhGmzKWkAEFjCSAKVKv9Y
- Copy and paste this address into https://live.blockcypher.com/btc/
- Paste it into the address field at the top right of the webpage and click on the search (magnifying glass) icon. A QR code appears and you can now scan this to create a watching wallet or just scroll down the page and see what information you can glean on this transaction. You can see where the money came from (my public address), where it went (your public address), how much was sent, how much change came back, how much I paid in transaction fees and how many confirmations the transaction has had. Essentially after 6 confirmations the transaction is set in stone for all time in the public, worldwide bitcoin blockchain (which is why the number of confirmations will say 6+ if there are more than 6).
- See how you can verify this transaction? See how I am giving you full transparency of where your funds are?
- Do you realize this is going to be on the blockchain for all time; forever?
- See how this is my irrefutable proof of my money in my address and can be for your money in your address too? See how this differs from a bank which prints $9 out of thin air every time you deposit $,1 a system known as fractional reserve banking – a system that is going to bring the banking system crashing down just as it has done countless times before?
- Now go to https://www.blockchain.com/ and do the same thing. Click on the magnifying glass at the top of the page and paste that address (3EadBK7bC3hxCNhGmzKWkAEFjCSAKVKv9Y) in there and see what you get. In particular look at the amount of the transaction (is this what Dr Aggarwal said he’d transferred less fees?) and the number of confirmations (more than 6 and the transaction is in there for all time).
- Understand that NO ONE can spend this money without my private key and that is why the management of private keys is so critical and should be left to someone with the requisite knowledge if you don’t have that level of knowledge. Watch the Andreas Antonopolous video linked to in (7) below to let this really sink into your mind.
- I also am able to provide crypto estate planning securing your funds making sure they go to your heirs if and when the time for that arises. All you have to to is leave written instructions on this with me and I’ll take care of the rest. Here is a video to watch about estate planning with regard to cryptocurrencies. Watch from where I’ve linked to. We can come to a mutual agreement regarding what I’d charge for this service.
- Additionally if you’d like to learn more about cryptocurrencies or would like to sponsor a child or significant other to learn about these technologies I am able and willing to provide instruction in private or in a class setting for this once again under a mutually agreed upon fee structure.
- When or if conditions change – personal, market, bitcoin price rising or falling – and you need your funds I will convert those funds to fiat, gold/silver, real estate etc as per the amount we are converting. Please feel free to ask me about how I converted more than 7 million dollars for one of my friends into real estate in London. I won’t write more about that herein but we can talk about it over a cup of coffee.
- The final step in the 6/30 system is that when you draw money out of your holdings in the fund my algorithms effectively SWEEP your entire account out calculating its value at that moment in time and comparing to the value you initially invested. IF there is a profit in there then you share that profit with me 70:30. You keep 70% and give me 30%. After deduction of the 30% AND the amount you want to draw out of the account my algos reinvest the balance back into bitcoin (or other crypto as the algos determine is best for the time) and we go on our merry way letting your money work for you rather than you working for your money.
A worked example may help clarify this:
You invest $100 in the fund and it grows to $1000 at the end of a period of time. At that point you decide you’d like to draw out $100 as spending money. So the algos will sweep the entire $1000 out of the fund calculating a $900 profit figure. This is split and 30% ($270) shared to me with 70% ($630) remaining. From the $630, $100 is converted into fiat for you (at prevailing Barclays bank offer rate) and $530 is reinvested in the fund.
So note these salient points:
- If you don’t draw on your funds I don’t get the 30% share that you part with if you do draw your funds out.
- If you don’t draw on your funds I only get the 0.5% per month commission you pay me for doing all the work needed to keep your funds secure.
Crypto conversion in spending money
This is fairly easy to do even in today’s world where most merchants at which you shop daily are not yet accepting bitcoin or any other alternative currency. (Though that is set to change soon (we even have bitcoin ATMs here in Kenya now). One of the ways I’ve helped an investor in my group convert his bitcoin to hard assets is to have flown to London with him and bought two largish houses there that he has since rented out and lives off the rent that he receives in a Channel Islands account in Pounds Sterling that he then sends to his Barclays accounts here in Kenya. Another is to have used a online gold/silver vault that accepts crypto to convert his btc into gold bars that I’ve then taken delivery off for that investor in Zurich and brought back to Kenya for him. And for smaller amounts I’ve just set sold the bitcoin face-to-face to my own group giving the investor back his dollars by RTGS/MPESA systems.
Conversion to fiat is a no-brainer but of course I recommend HODL at all times!
So in conclusion I urge you: Invest in bitcoin NOW.
There is a saying that goes: There are those that thrived because of what happened, those that survived what happened and those that asked WHAT HAPPENED?
Don’t get caught in the latter group.