You probably shouldn’t buy bitcoin
Seriously, think twice.
It’s hard to spend a day on the internet without reading something about cryptocurrencies. The hype is real — ever since the value of bitcoin started skyrocketing, it’s been attracting interest from every corner. Today, you don’t need specialized communities like /r/bitcoin to get your fix of BTC news — you’ll often find it in the New York Times.
Having officially broken into mainstream media coverage, cryptocurrencies are now reaching a lot of people — including those without a background in tech or finance. But there’s a problem — the most appealing stories often revolve around people getting very rich, very fast.
Take the story of Erik Finman, a high school dropout who became a millionaire by investing in bitcoin at age 12. It’s an incredibly appealing read: a young guy seeing the potential of crypto early on, investing a gift he got from his grandparents, and ending up with loads of money. It almost sounds too good to be true.
Finman is far from the only one getting media attention over their bitcoin riches. Forbes recently wrote up the life of ‘Mr. Smith’, an anonymous bitcoin millionaire who has been travelling the world in extremely luxurious style for the last few years. Ever since his bitcoin wallet hit $2.3 million, he quit his job and left on a first-class flight. Incredible, right?
Get money, fast
It makes sense that these stories are incredibly popular — they have a rags-to-riches sort of quality to them that speaks to the imagination. But they also make crypto look like an easy way to quickly make some money— and it’s definitely not.
Because I write about technology, some of my friends see me as their go-to ‘tech expert’. The amount of people who have asked me about cryptocurrencies is staggering, and they’re from all walks of life — young, old, rich, poor, everyone wants to get in on it.
Lucky for them, getting started buying bitcoin or any other cryptocurrency is now pretty easy, thanks to beginners’ guides and easy-to-use crypto webshops that have been popping up across the internet. Within minutes, you can set up a wallet using an exchange like Coinbase or Bitstamp.
The problem is that it’s just as easy to lose all of your investments in under 24 hours.
Seriously, watch out
If you’re looking to invest in crypto, chances are you came across an exciting bitcoin story, or your little cousin explained why it’s about to the next big thing. Maybe you have a couple hundreds to spend, and feel like making some easy money.
It doesn’t work like this. Those stories are about some extremely lucky people, who were reckless enough to spend a considerable amount of cash on something which was completely worthless at the time. Then, for some reason, they didn’t touch it for multiple years — not even when their coins were worth 10, 50 or 100 times the original value. Lots of people would’ve sold their BTC after making a nice return — and many did — but they held on to it, hoping for even higher numbers while risking a sudden decrease in value.
That’s another thing people don’t like to talk about — crypto can be extremely volatile. Bitcoin’s value might spike one day, but have a terrifying 20 percent drop the next. Any money you put in can be gone in the blink of an eye. If you want to try being an amateur day trader, go ahead — but realise there’s people out there who have much more experience, access to sophisticated trend forecasting and tons of money to play with. Good luck beating them.
The recent explosion of new, young cryptocurrencies doesn’t help either. There is an insane amount of ICOs (Initial Coin Offerings) lined up all the way into 2018, most of which are trying to persuade people to be an early investor. It’s easy to feel like you’ve missed the crypto boat — Ethereum and Bitcoin have been around for long and chances to make a big return are slim. These new coins can feel like being there when bitcoin started — only this time, there’s a new contender every single day.
The future of money
Bitcoin, Ethereum and crypto in general are well on their way to change the way we think about, trade and use money. It’s going to take a long time before we’ll see any kind of mainstream adoption — if it’ll ever happen.
If you’re a first-time trader with little or no background in finance and tech, you need to seriously watch out with investing in any cryptocurrency. The single most important rule is this: only invest what you can afford to lose.
Do you want to be part of the future of money, and have you done enough research on the subject? Go ahead! Do you want to make a quick buck? Be smart, and steer clear from crypto. Your wallet will thank you.