So I bought me some bitcoin and ether – digital (fiat?) currency. Yes, I know I’m extremely late to the game. In fact, i’ve known about it for at least four years and considered purchasing some coins (is that even the right terminology?). In early 2015, I attended a conference where developers from Ethereum came and talked about how ether was going to blow bitcoin out of the water. After reading many articles I can still barely grasp the concept today.
By the way, this is NOT a recommendation to buy bitcoin or ether or any other digital currency. I AM DUMB. I MAKE MISTAKES. THIS IS PROBABLY A MISTAKE.
But I have to try it out. At work, my boss and I were talking about it and how it’s like catching a falling knife. I know I’m going to get burned at some point but I have to try. There’s a rumored story about a guy who put everything he had into bitcoin several years back and now he’s essentially retired a few years later.
Why I shouldn’t invest in Bitcoin/Ethereum
It’s so dumb for several reasons
- There’s little utility for bitcoin’s use outside of paying hackers for ransomware and for laundering money (being a little facetious on the latter assertion, but not too facetious).
- It seems like a dumb idea to order a pizza using bitcoin. It’s too hard to price goods and services consistently with bitcoin given it’s volatility.
- It’s not really used outside of silicon valley, i don’t know any store that accepts bitcoin in my home town.
- A lot of people are likening bitcoin’s rise to the dutch tulip mania’s rise and fall – i think they’re right. A rapid rise and an even harder fall. People are momentum investing.
- Still in early adopter mode and has a lot barriers to over come. My mom couldn’t even begin to understand what it is. I can barely explain it myself.
- It’s unregulated currency.
- It can be considered a threat to dollars which the US government is inclined not to let it be a threat.
- The coins and platforms are subject to attack. Mt Gox is a good example. Meaning a lot of people can lose money if hackers are successful doing their thing.
- It’s fiat money. All bitcoin is is an algorithm. It’s not even gold or even a paper dollar. You can’t make teeth or paper airplanes out of them.
- There are other competing digital currencies (e.g., ripple, litecoin, dogecoin) that make it hard to know which will be the dominant currency in the future, potentially negating the value of all others.
There’s probably many more reasons not to invest in bitcoin. Those are the ones i could think of.
Why I’m throwing in a few hundred bucks (and maybe more)
- Futurists have described the blockchain (digital currency’s underlying infrastructure) being a revolutionary technology
- I could use another speculative investment in my portfolio. At a $600 investment, this is less than .15% of my portfolio.
- Investing is always a learning experience. It gets you engaged when you have skin in the game which helps you understand various types of investments. This ultimately shapes and refines your gameplay for the future.
- What if it continues to explode? It would be a welcome increase to my net worth.
What was my Bitcoin/Ethereum investing process/experience?
- Opened an account on Coinbase
- Hooked up my Bank account. You can use a credit card; however, the commission for purchasing by credit card is more expensive (3.99% vs 1.49% through bank transfer)
- Made the purchase in about 10 minutes though it takes about a week for the coins to hit your account due to the bank transfer timing (credit card and wire transfers are more instantaneous). I bought one ether coin and a fraction of a bitcoin equivalent to about $300 each
- Watch the volatility of my newly acquired bits!
See below:
purchase experience
dashboard view
You’ll see this as a new line item in my net worth when I report October. FYI, since I’ve acquired the above bits for $593.66 last week, it’s grown almost $30 or 4.8%. Now that’s DUMB!
What has been your digital currency experience? Or are you on the fence?
-Max Out!
