One day back in 2013, one of my friends announced that he was going to work for a digital tech publisher reporting on cryptocurrencies. Bitcoin had been in the news a few times by then; the Winklevoss twins had just invested $11M in the digital currency, but it was trading well below $300 then and no one really knew what it was about. Last year, when Bitcoin started to take off, I thought of this friend and tried to look him up, only to find that he had deactivated all of this social media accounts. No huge surprise there. For the adventurous folks, and those that really understand the underlying value in crypto, investing can be a good thing. However, despite this huge opportunity, cryptocurrency investing isn’t for me.
My small encounters with the crypto world
When Ian and I were still in grad school, he spent $500 on a single Bitcoin, at the strong recommendation of a classmate. I didn’t know this until last fall when the value was closing in on $10K and still climbing. To me, this is like sports betting; the game is 10x more exciting when you have some skin in it. This is about as comfortable as I can get with cryptocurrency investing. Ian has a great attitude about Bitcoin. When he put down that $500 years ago, he recognized that there was a huge possibility that he would never see that money again. Plus, as long as the value stays above $500, he’s made money.
Crypto interest runs in Ian’s friend circle. Last month, I met a friend of his who works for a company creating their own digital currency; her job is to fly around the world seeking companies interested in investing. When we chatted, she had just come back from a trip to China and was leaving the next morning for Amsterdam. Her personal income goal is to reach a net worth of 50 million by the end of 2018. 😱 This isn’t a playing field I can even comprehend! I just hit the six-figure net worth mark, and my goal is to have $30K in an investment account by the end of the year. 🙈
Why I resist cryptocurrency investing
At the core of digital currency investing is this: you have to be willing to take huge risks. As someone who was raised with a conservative financial mindset, this is asking me to take my hard-earned money and give it away to someone who might run away with it. If I had a larger pool of savings to reach from, I would’ve tested the waters (diversification, baby), but the truth is, I don’t. The idea of buying Bitcoin or any other coin with credit is terrifying, but that’s exactly what people were doing when Bitcoin’s value started skyrocketing.
If I’m being honest, I think most of the money to be made with Bitcoin has already happened. Now that everyone has jumped aboard, there’s too much speculation and extremely high transactional fees that don’t make it worth it. I debated putting down a few hundred at the end of 2017 but found the process of doing so a huge hassle. Even then, my plan wasn’t to invest in Bitcoin; I had considered putting money in alternative currencies like Etherum and Litecoin, or the ‘Microsoft-backed’ IOTA. It almost happened.
So, what are my options?
I am not earning nearly as much as I need to reach my lofty goals in the timeline I have set. What I’d really love would be getting into real estate investing. Has anyone looked at the NYC market? A two-bedroom apartment costs more than my parents’ home outside D.C. That said, I’ve been doing some research. With a little help, NYC can be affordable for even me. Until then, I’m building up some liquidity, finding side hustles, and cutting back on big expenses. I don’t need to jump after cryptocurrency to gain traction towards my short-term goals.
If you don’t feel the same way as I do and want to get into cryptocurrency investing, Chris over at Debt Free Geek has a beginner’s guide over on his site (not an affiliate link!). Do your research, and be suspicious of anything that seems like an investor feeding frenzy. At the same time, be open to new opportunities. No one can predict what market will blow up next, but I believe significant gains are to be had early on, not in crypto’s current messy state.
Comments
My brother gifted me half of a Litecoin for Christmas and that’s probably all the crypto I will ever invest in. My savings trajectory graph looks a lot like yours in that my progress is WAY slower than I want it to be. And striking it rich in the crypto market could change that overnight! But I’m not wiling to take that risk, so slow and steady it is for now.
Yup, makes sense to me! I’m far more interested in creating a source of regular passive income than I am making it big overnight.
I completely agree, Jane. Crypto seems like a huge risk and investing in any form gives about as much anxiety as I can handle.
It is a huge risk! I think investing is incredibly important, but there are multiple paths to investing success that doesn’t have to include crypto.
I’m with you! There were wayyyy too many unknowns that I felt like for my situation, I would be “gambling”, not investing. I’m glad I have just focused on our own financial management than the noise and pressure of “you should be investing in X, Y, or Z!” recently 🙂
So true – the few people who have made a ton of money in crypto are the ones who really understood the value of the blockchain. I still don’t fully grasp the concept, and it doesn’t make sense to invest without doing due diligence.
It is more fun with skin in the game! But that’s as close as one should get at this time.
Wait wait, I want to hear about your friend with 50 million set for 2018…I mean what?!!?
I know… when she told me that, I just stared blankly and nodded like “yup. uh huh. makes sense.”
Over her China trip, she said that a friend just GAVE HER BITCOINS so she could stay in a nice hotel. This was back when Bitcoin was closing in on $20K… can you imagine knowing people so rich that they just give away money like that??
I’m not really into Bitcoin either. Even if it’s $5 today, I don’t think I’d take that risk. The same way I don’t believe in lotteries and have never bought any lottery tickets my whole life.