This bitcoin story starts back in 2011, when a dashingly good looking college student (yours truly) was sitting in his tiny upstairs bedroom in a shabby house shared among 3 impoverished dudes.
He was fidgeting in a hand-me-down chair, with his index finger tensely poised to press the enter button on his laptop which would signal the transfer of $100 from his checking account towards the purchase of a new cryptocurrency called bitcoin.
Little did he know that he would be sitting (in much improved conditions) here, in 2017, writing this article with the anguishing knowledge that he passed up on hundreds of thousands of dollars…
Back in 2011, I was about to purchase 100 bitcoins worth about $1 each. At the time of publishing, 1 Bitcoin is equivalent to $2459.96 US Dollars.
That means if I had simply pressed the enter button, today I could sell all 100 bitcoins for $245,996.00, or the value of a nice house. Yeah, if only I had a time machine….
Back in 2011, the online platforms that allowed an investor to procure bitcoins were in their infancy. Because of this market being so virgin, I was fearful that I would lose my $100 (about a month’s worth of groceries), and possibly suffer from computer viruses at the best, or a stolen identity and empty bank account at the worst.
Thus, I shut my computer and forgot about bitcoins for the next 6 years.
Why the Bitcoin Fanfare Now?
Two reasons, China and Japan. China has, in recent history, attempted to pressure bitcoin platforms to the point that the biggest exchanges in China announced they would suspend bitcoins for one month.
With Chinese government pressure letting up, many investors in China have sought out bitcoin as a safe investment as asset prices are falling, as is the Chinese stock market.
It’s basically the result of supply and demand. Bitcoin is the commodity and there is a growing demand for this commodity. (Note: there are only a finite number of bitcoins, unlike US dollars which can apparently be created into infinity).
Has Bitcoin Hit the Ceiling?
As any investor worth his/her salt will tell you: your guess is as good as ours.
There are many prominent talking heads who predict the continued rise of bitcoin. Take for instance, Wences Casares, the CEO of Xapo and member of PayPal’s board of directors, who earlier this week predicted that the cryptocurrency would hit $1 million in the next 5-10 years… say what!?
Not everyone has jumped on board the bitcoin train however. Abigail Johnson, chairwoman and CEO at Fidelity Investments recently voiced some of her concerns with the cryptocurrency.
“Companies that build products on these platforms don’t have clarity about the future path they might take or how to influence developer communities,” Johnson explained. In addition she expressed that the bitcoin ecosystem is “outpacing” regulators ability to keep up with the technology.
It’s important to note that many investors see this lack of regulator control as a potential long-term benefit.
This same (dashingly good looking) young professional is now stuck in a similar conundrum. Will he regret in 6 years that he didn’t purchase bitcoin at the bargain price of ~$2500, or will he be relieved that he preserved his hard-earned dollars by forgoing investing in a digital currency that went belly-up when the world realized how artificial and lacking in security bitcoin truly is.
I think I’ll take Wences Casares advice; “Put 1% of your net worth in Bitcoin and forget about it for 10 years.”