Why I Finally Invested In Bitcoin
Yes, I joined the herd of many who have invested in Bitcoin. And right off the bat, I think the biggest reason is so I can force myself to learn more and more about Bitcoin and how it can help world-wide commerce in the future.
Additionally, it’s crystal clear that this crypto-currency market has become a huge topic for 2017. In terms of gains, Motley Fool reported that the value of virtual currencies went past $225 billion – a 1,200% increase!
So you might say that I missed the boat and bitcoin has reached its peak, maybe but maybe not. Look at TSLA for example, I thought about investing in it back in winter of 2013 when it was hovering around $150. And at that time, I thought that it was over-valued, but even more so I didn’t know enough about the business or the electric car industry to make an informed decision. In terms of the peak point, these days TSLA trading at over $300, more than double!
I guess with so many other things in personal finance and investing, it’s better to dive into savings and investing later rather than too late.
How Bitcoin Works – I Kind of Don’t Know
So, what is bitcoin and how does it work? I don’t have a great answer to that. All I can say is that many call it a virtual currency and it takes quite a bit of research to learn How to buy Bitcoin instantly. So there are no physical coins. There is a public record available on the web that tracks how much you own in bitcoin. I also know that some merchants accept Bitcoin as a form of payment. Some of these include Overstock, Intuit, Microsoft, Expedia and Subway!
I like to test things out myself I went over to Overstock and added something to my cart and signed on with my credentials. Right before submitting the order, which I didn’t do anyway since I was testing, the Payment Information section had an option for Bitcoin:
And so I nervously clicked Submit Order. Then I realized it didn’t actually submit the order, but took me to another screen where Overstock waits for payment thru the submission of the appropriate bitcoin amount – not to mention I went back to my profile and orders to make sure it didn’t go through 🙂
So that is my hypothetical usage of bitcoin. For many of us consumers, it’s just a means of payment.
Bitcoin Potential Is Huge
You can trade Bitcoin with anyone in the world. That’s the first time something like this has been introduced, at least to my knowledge. Also, it’s the first currency form that is not regulated by any bank. This can also be seen as a risk of course.
It’s been around since 2009 and I haven’t heard of any major issues with the usage of bitcoin from other participants.
My Exposure To Bitcoin Is Low
I’ve invested about .004% of my net worth in bitcoin. So if I lose all of it, at least I won’t lose my sleep along with it. And actually, part of me is expecting to lose it all. If it does it happen, well life will go on and it won’t affect my overall financial plan. If Bitcoin surges and it pays off, I’ll treat that as a bonus or something pleasantly unexpected. If you are a newbie like I am, you might want to go to this site to know more about how you can buy sell your Bitcoin!
Additionally, I’ve followed the top 5 tips outlined by Forbes for new Bitcoin investors like myself.
And to add to this, the most important would be to start small and make sure you have your core bases in personal finance covered. Your core bases in my opinion and BEFORE investing in Bitcoin should be:
- Are you contributing a healthy or ideally maximum amount to your 401k?
- Are you contributing to an IRA?
- Do you have an emergency account established and funded?
- Do you have most or all of your debt paid off (especially high interest credit card debt)?
- Are you invested in an after-tax account? Is the account diversified across the market?
Still, There’s Risk in Bitcoin Investing
Maybe this trend will lose steam. Maybe someone will find a major flaw in the software used to track Bitcoin. Maybe this can lead to a cyber-attack resulting in lost or stolen information. These and others are the risks are clear and deserve an investor’s attention.
There’s also the risk of the unknown. I don’t claim to know much about Bitcoin at all. There are all these terms like terminal, mining, block chain, verification key, public ledger, open source code that I don’t fully understand. And unless you’re a computer geek, you may not either. So before you decide to invest in this domain, you might want to learn about the nitty-gritty of the crypto mining rig and how it works, along with the risk to income ratio that comes with any cryptocurrency. It is this presence of the unknown that often in itself presents an inherent risk and deters many from investing in the same. As this is a high-risk investment, it should be treated as such and the word use by Forbes says it all – with caution. But if you tread carefully with full knowledge, it is less likely that you will be disappointed.
How to Buy Bitcoin
The easiest way to buy bitcoin is through Coinbase – a medium used to buy and exchange bitcoin with other investors. I signed up (which is very easy to do through the Coinbase smart phone app) and used my credit card to make an investment so I can get points in the process.
How do you all feel about bitcoin? Is it the future of currency? Do you own bitcoin or would you not touch it with a ten-foot pole?
______________________________________________________________________________
I use Personal Capital because (1) it’s free, (2) it tracks all of my accounts and overall net worth, (3) my account balances automatically update, (4) it shows how my investments are diversified and allocated in various sectors, and (5) can use built-in tools like “Investment Checkup” to get….wait for it…free personalized advice!
Hi SMM, Bitcoin is not an area I have invested in or plan to in the near future. I look forward to following your progress. I think you have a good approach. Start small and learn as you go. Tom
Tom at Dividends Diversify recently posted…6 Steps to Create Your Passive Income Machine (Part 2)
Thanks, Tom. Yes, I’m finding that there is a lot of difference in the personal finance world regarding this, so called, speculative investment. Hopefully in the future I can post a positive review on this investment decision; we’ll see how it plays out 🙂
I signed up with coin base about three months ago but could not seem to pull the trigger to buy bitcoin. I always felt like I needed more time to do some research and learn more about it. I may try to just purchase a couple and take it from there. Usually, a good learning process starts by actually doing it.
That’s one of the main reasons why I decided to go in on it. And it’s a very small stake because I realize the risks involved.
Wow, huge step! I am getting a BIT of FOMO but not enough for me to take the plunge into Bitcoin 🙂
It’s everywhere, just everywhere.
GYM recently posted…GYM Net Worth Update: January 2018 (+$57,800/ +8.8%)
It is everywhere and hard to ignore. Hopefully, if it’s not the future of currency, it is a step in the right direction. New technology always comes with risks and those risks are especially real with cyber-attacks and such becoming so notorious. Right now, I’m just dipping my toes in and don’t plan to go in more anytime soon either 🙂
Hey SMM,
Welcome to the crypto world! I myself am an investor in Ethereum (with big paper gains thus far). I do agree that it’s risky and speculative, and should make up only a small part of a portfolio.
Just a suggestion, if you want to watch some YouTube videos on crypto, my favorite YouTubers are Ameer Rosic and, a little more on the technical side, Ivan on Tech and Boxmining.
Cheers,
Miguel
Thank you so much for the suggestion Miguel! YouTube videos are a great way to learn about sometimes complex areas and I’ve already watched a couple. I will make a note of these YouTubers as well. 🙂
Hey SMM,
Must read on your list now that you are an investor. American Kingpin, black market loves this stuff.
Thanks DM; I’ll check it out.
I’m glad you included some suggestions for managing your money BEFORE investing in cryptocurrencies! I wholeheartedly agree with #1-4 and 99% agree with #5. I kind of fudged things when it comes to the fifth item on your list. I’ve maxed out my tax advantaged accounts (401k, HSA, IRA) but decided to bump crypto investments ahead of taxed brokerage account contributions for the moment. I figure that further diversifies my portfolio and I’d prefer to throw some cash at that market now rather than waiting as prices continue to surge. Plus, I know I’ll contribute to my after-tax account too! Many ways to skin a cat, but like you said the important thing is to appropriately prioritize your investments to build for the future!
Cheers,
Cato
You’re still diversified though so that is fine. I like how you used the prioritize. It’s kind of like which investments are reliable, are the veterans (low-risk) as opposed to the rookies (high-risk). But of course if someone has a big risk appetite, or maybe is paying an exorbitant amount in credit card interest, they may want to re-prioritize too.
I like Litecoin personally 🙂
Great article. Hope this continues!
Thank you! I hope so too; keeping my fingers crossed while still being able to sleep at night. Let’s see how this technology plays out 🙂
Great article. I personally moved into Bitcoin in 2016, but still was diversified. I think a lot of people are getting a rude awakening over the last couple of weeks. This is the reason I suggest people really research into blockchain technology in general, before throwing their hard-earned money into Bitcoin and other altcoins. Really research into a company and make sure you’re not getting scammed. Again, great article.
Lane recently posted…Cryptocurrency Investing for TOTAL BEGINNERS
Thank you. It seems blockchain is no doubt a big up and coming thing; I even heard it being mentioned in a recent IBM commercial. I’ll admit the past couple of weeks have been tough. As much as we say not to monitor the market every day, it’s easier said than done. 🙂
I’ve invested in BTC, ETH, and NEO. I plan on holding them rather than trading. I’ll see what happens too. Hopefully, it pays off. If not….oh well
ERC20TokensGuide recently posted…IOStoken (IOST): How & Where To Buy
Excellent explanation of cryptocurrency, one more reason to keep in mind to invest in this currency, I think it is the future of online markets.
Investing on bitcoin is a great idea.
Really nice to read about investment ideas.
“There is no denying that the internet has changed the world we live
in. It has dramatically revolutionized many different fields and is
affecting both human relationships and commerce, giving rise to a number
of technologies that alters how the society works. Among these
technologies, we can find the cryptocurrencies.
This technology has innovated how payment systems work. It has made
it possible to perform international transactions with a very low
operational cost, but also imposes a series of regulation related
challenges since the system is not governed by any kind of governmental
agency, whereas its users are solely responsible for its operation.
Some countries have issued information and regulations on the use of
cryptocurrencies, but these initiatives, most of the time, do not
provide definitive answers regarding how this instrument should be
treated, and how companies interested in their use should do so.
A cryptocurrency is a digital or virtual currency that uses
cryptography for security. All currencies need some way to control
supply and enforce various security properties to prevent cheating. In
fiat currencies, organizations like central banks control the money
supply and add anticounterfeiting features to physical currency. These
security features raise the bar for an attacker, but they don’t make
money impossible to counterfeit. Cryptocurrencies too have security
measures that prevent people from tampering with the state of the system
and from equivocating (that is, making mutually inconsistent statements
to different people). But unlike fiat currencies, the security rules of
cryptocurrencies are enforced purely technologically and without
relying on a central authority.
Moses Brodin recently posted…BitWhisk Review – Alternatives Crypto Mixing Service
Thank you for your detailed comment! Despite how the market has treated cryptocurrencies I still believe technology will shape the medium we use for payments and it’s only a matter of time until this or something similar catches on and the kinks are worked out! 🙂
BTC or, bitcoins, are primarily used for purchases on Dark Net Markets(DNM). For this reason alone it will always cost a bit and usually be somewhat of a pain in the ass. I’ve used Localbitcoins in the past and have been using Virwox without incident for the past 6 months. Both of these sites will cost you in fees, that’s just how it is. I’m not aware of any BTC sellers who take less than 15% on orders of under $300. Many won’t even accept under$100, which I normally don’t need to buy. Given that, Virwox let’s you deposit much smaller amounts, but they’re fees end up close to 20%. That’s basically a convenience fee. After 2 deposits are made you get your BTC within 2 hrs, the first 2 are 48 hrs. Also, you must use the same method of purchase ex.(PayPal) each time to get your BTC within 2 hrs. If you suddenly change from PayPal to a CC or something similar, chances are that you’ll have to again wait the 48 hrs. This is due to an automatic security feature of the site. It happened to me. I brought it to their attention, letting them know that it wasn’t in their FAQ or anywhere else on the site. They responded quickly and I had my BTC within 3 hrs. Basically, for convenience both localbitcoins and Virwox are good choices. Just make sure that you read the FAQ and educate yourself or you could end up in a shitty situation. If you want complete anonymity, pay with cash at the seller’s bank or in person(both of which are risky) You’re much more likely to get scammed and/or waiting a while for your BTC when you’re dealing with an individual instead of Virwox. Just make sure to check out the seller’s feedback and hopefully it all works out. There will ALWAYS be fees and other obstacles when dealing with an unregulated currency. If it’s too much to deal with maybe you should just buy your goods IRL instead. In the end, It’s all about convenience.
Alisha Ross recently posted…Telegram Groups for Dark Web Users (Active Onion Links, CP, Invitation Sites, Scam Reports)
“fantastic post, very informative. I wonder why the other experts of this sector do not notice
this. You should proceed your writing. I am confident, you’ve a huge readers’ base already!”
Rose Martine recently posted…Poloniex Review – Crypto Exchange for Day Trading