Investing in Ethereum: What can you handle for 30x returns?
Almost all of my investments are conventional: IRAs for me and my wife; 529 college savings accounts for each of my three children, and a small Wealthfront brokerage account.
But I’ve jumped the shark in one respect. I’ve made a non-small investment in cryptocurrency. To be specific I own Ether, the currency that powers the $1 Billion (as of this writing) Ethereum blockchain.
Ethereum is a new protocol, an improved platform that builds on the brilliant invention of blockchain, the technology behind Bitcoin. Ethereum is like Bitcoin 2.0. It can do more than Bitcoin without the baggage. It is featured extensively in the book Blockchain Revolution (currently #1 on Amazon bestseller, Internet & Telecommunications).
I’ve never before made a speculative investment. I’ve always been a broad based, let-the-market-do-its-work type of guy, focused on diversified investments and the magic of compound interest.
Yet here I am, on the other side of the rabbit hole, investing in something most people, even techie-friends of mine, associate with hackers, Silk Road and scams.
How did I get here? I started reading about the blockchain.
Marc Andreessen and others draw parallels between the state of blockchain and the World Wide Web in 1994–95. I would have liked to invest in the World Wide Web in 1994. If I had, I’d be putting the finishing touches on the ninth installment of my autobiography. I’d be in a Twitter war with Mark Cuban and hugging it out with Tim Ferriss.
As Marc Andreessen has also stated, getting in on the ground floor of new technology feels cultish, edgy and strange. I agree. I’m confident my investment in Ethereum will pay off 30x. (That’s right — I believe my investment will grow 3000% as the value of Ethereum grows from $1B to $30B in the next five years or sooner). I also know it is not the right investment for everyone.
If you are wondering if you have the right stuff, here is what you need to be willing to do:
Learn about Ethereum and make up your own mind.
I’ve come to the conclusion that the development team is brilliant, the product vision is right on, the partnerships in place (Microsoft, to name one) are highly undervalued, and the third parties working on hundreds of applications for the Ethereum blockchain will drive exponential growth.
I also believe bitcoin is too broken to continue to be the leading crypto and that Ethereum will absorb several billion dollars of Bitcoin abandon-ship dollars over the next six months. You may come to a different conclusion on any of these points. You need to put in the research yourself and make up your own mind before investing a single cent.
Send money to an Exchange.
This step separates the children from the adults. You may think Ether is a fantastic investment opportunity. But maybe it’s a scam? And your friend who works at Google hasn’t heard of it. And your father lost $100K on a solar panel investment in the 1970s — wasn’t he just as sure about that? And do you think a hacker could steal the codes or whatever and take all of your money?
All of these questions scream at you as your finger hovers over the button that will link your bank account to a digital asset exchange you never heard of.
Guess what? This is what it feels like to get in early. 30x returns means that you are going to have to get comfortable in a wild west like environment (that thankfully feels scarier than it actually is).
Full disclosure: Even after you hit send and the money flies out of your bank account and is transformed from fiat to digital currency, a part of you will feel like you just answered an email from a Nigerian prince who only needs a few bucks in order to send you a much larger inheritance.
Volatility would be an understatement. Turbulence means potential 50% swings in the value of your investment over a 72 hour period. It means per unit value from $32, back to $2, then up to $1300, then back to $250 (Bitcoin 2012–2014). This level of turbulence requires emotional stability, restraint and the ability to manage stress without cashing out.
Ethereum is an emerging asset with big whales buying and selling Ether, setting off price fluctuations. As the market matures, these big swings will be less common. Remember, you should be like me and only invest in Ethereum if you believe in the fundamentals and if you can commit to investing for the long haul.
Bottom line: Want a 30x return on your Ethereum investment? Then you need to be willing to put up with some crazy, third world swings in day to day value, for the time being.
Yes, I’m a true believer. Maybe I’m brainwashed? Or paid to scam for Ethereum? Or just stupid? You have to make up your own mind. All you have are your instincts, judgement and work ethic to research the hell out of anything that could separate you from your money .
Why am I writing this? Because I want to put my stake in the ground. I am an early Ethereum supporter. I’m just an average, usually financially conservative dude. I’ve either lost my mind or I’ve identified a life changing investment — a once in a generation opportunity to get in on the ground floor of Web 3.0 (another term describing the Ethereum blockchain).
If Ethereum tanks, I’ll be deleting this post and telling friends who mention it much later “I was joking, dude!!” But if Ethereum goes big (which it will) I’ll be headlining self help conferences across the country, urging people to take a calculated risk once in awhile for Heaven’s Sake. You only live once, right?