Bitcoin: How Investing in Cryptocurrency Paid for My Senior Year of College
Hi, my name is Malcolm and I’m a recent graduate from a leading university in the Pacific Northwest. I would like to share some fool hearty financial advice that turned out to work great for me. It started out when I read a story about the Venezuelan government where their currency became so volatile that it was practically worthless. Venezuelans had become so distrustful in the government that they had turned to bitcoin as a substitute for their currency which then lead me towards taking a risk and investing in crypto currencies (Forbes recently came out with a really good case study of the incident). After noticing the bitcoin users in Venezuela jump from 450 in August 2014 to more than 85,000 in November 2016, I quickly became intrigued by the possibilities.
I decided to take some of the living expense money my parents gave me, and invested it in Bitcoin. Although it was scary at first, I soon began realizing significant profits which I then used to start paying my rent, mobile phone bill and other monthly living expenses.
Eventually, I made enough money to not only pay all my living expenses for the semester — which my parents would certainly be happy about — but I also ended the semester with more money than when I started. Word of the wise going forward though, don’t invest money that you’re not willing to lose.
Intro to Cryptocurrencies
Now before you decide to jump in and invest your life savings into this blossoming asset class, it’s important to understand what exactly you’re getting into. One of the first things I stumbled into was this image of the crypto currency market valuation.
It should go without saying that whenever you see something hockey stick or significantly outpace its competitors, you’re not the only person who wants to get involved with it. To get more of an edge on my fellow risk takers, I decided to try and sharpen my crypto skills by spending the next couple days watching YouTube videos, reading white papers, and especially trying to understand blockchain.
The technology was difficult to understand but I knew that I had to get a better grasp on it before I could be effective at investing my money.
To ensure that I would take the time to research and really try to understand the industry, I decided to buy some Bitcoin through a site called CoinBase. Making an account on this site not only allowed me to invest in the most popular crypto currencies securely, but also allowed me to liquidate those investments on demand.
Before making a more risky financial decision, I decided to dive deeper into the background of crypto currencies and learned that they started back in 2010 with the invention of Bitcoin. Unlike the U.S. government which is relatively stable, there are countries like Venezuela who have highly volatile currencies. The creators of Bitcoin saw this volatility as an opportunity to invent a decentralized currency that could take monetary autonomy away from governments and place it into the hands of the people. They accomplished this by inventing a technology known as blockchain which is a series of super complicated math problems that a computer must solve before it (the miner) is awarded a bitcoin. As the number of computers that attempt to solve the math problems increases, the difficulty in getting (mining) the currency increases with it. Blockchain was truly a game changer that made it so that people in underdeveloped countries would no longer have to worry about their currency turning into monopoly money by the next day, it was genius. Bitcoin, as a currency, was so revolutionary that it started an entirely new industry of other crypto currencies that began to compete for the title of the ultimate global currency.
As I began researching more into the crypto currencies, I soon noticed that the real value behind them was the blockchain rather than the currency itself.
This was especially evident in a currency known as Ethereum who’s price jumped over 1000% from the beginning of March 2017 to the beginning of June in the same year. After studying the cause of such a drastic increase, it became apparent that investors were more excited about its unique blockchain characteristics than they were about the currency itself. I decided to take a small position in Ethereum and even though I bought it at a high price, it doubled within a week of my initial purchase. Needless to say, I was absolutely hooked after that which is when I quickly realized that the most difficult part of trading cryptos is keeping up with all the latest technology.
The biggest problem with crypto currencies is that its complexity creates a substantial information gap that makes investing in crypto currencies extremely risky. Because of the complexity of the technology, a lot of people are uncomfortable in investing in cryptocurrencies directly, as they should be. Unless you’re like me and spend several hours a day reading about the newest blockchain technology, you’re likely to lose if you try to game the market.
If you aren’t absolutely fascinated by the blockchain and crypto world like I am, I would suggest giving your investment money to someone who is.
There aren’t many crypto investment platforms on the market right now, but here’s a list of the most credible ones thus far.