Hello, In this post i’m going to try and make a case for why you should start Bitcoin investing. Before I start of I want to say the following important things. Even though at the time of writing this post I have approximately 15% of my portfolio, I do not recommend this. My goal is to get this percentage down to around 5%, which is also what I would recommend to the average person reading this.
As with every other investment, please do your own research before putting your money in! Bitcoin is a very volatile investment so you will have to be able to withstand the swings. If you want to take a look at the swings in my cryptocurrency portfolio, click here. Bitcoin is also still quiet a new asset class and technology. This means that you can still be an early adopter and possibly get the gains that could come with that. This also means that it still is a very risky investment!
Bitcoin Cannot be debased
There will always be a limited supply of bitcoins. Even though new coins will be mined for the next 100+ years. The amount of coins being created will go down over time and the maximum supply will never cross 21 million coins. This is a big contrast with fiat currencies. Governments all around the world control their issued currency. It also means that they can create more money if they choose to do so. This is why we have inflation. Inflation causes money to lose its value over time. It is also the first time in history were we can make transaction without relying on a third party.
No storage cost
Bitcoin is often compared to gold. This has a couple of reasons. They are both a store of value. Both can be seen as a hedge against fiat currencies. Even though they can be compared, don’t be fooled and think that gold will ever be replaced by bitcoin. They are very different assets. Bitcoin (or other cryptocurrencies) can not replace gold as a precious physical asset. But since at is not physical it has a big upside, It will cost you noting to store it and very little to transact it!
Adoption is exploding
A lot of merchants worldwide are accepting Bitcoin. From the small online stores to big giants as eBay and AT&T. An interesting trend is that third world countries, were inflation has gone through the roof, have also shown that citizens flee to bitcoin to protect their wealth proving the case of hedging against failing fiat currencies.
Risk of loosing out on the next big thing
Bitcoin has been the best performing asset of the last decade and many believe there is still a lot of room to grow. If you would have been 1% bitcoin and 99% cash over the last decade you still would have outperformed the S&P 500. This being said, past results are in no way a reference for future results. But I think a small percentage of your portfolio is just a small risk to take for a potential huge reward. If bitcoin would ever be as big as gold, one coin could be worth more than $300 000.
Many people say bitcoin is too risky, it has no value, don’t invest. This only shows that we are still very early. Which shows it is still a great time to buy since there is fear in the streets!
Hedge against FIAT
Even though bitcoin can be seen as a risky investment due to its volatility. If you invest the right amount in comparison to your portfolio and the right amount compared to what you can afford. I think it could potentially de-risk your portfolio, since bitcoin can be seen as a hedge against the financial system as a whole, the traditional banking system on which all your other investments are probably based. I would argue that you SHOULD diversify your portfolio with bitcoin which at the same time could bring you greater returns as well!
To end this post I want to say the following. Don’t ever invest your money in something just because some random person on the internet told you so. Do you own research and see whether investing in bitcoin fits your style and your portfolio!
Good luck!
I bought Bitcoin at € 3.000, with the increase in price it’s now at 50% of my total invested capital. But I’m afraid that when I sell, the price will rise. Also, I have 1 Bitcoin, that’s kind of symbolic, I don’t want to break it up in Satochis ?
Hi Vincent,
Nicely done! I wish I had the capital available to buy 1 whole bitcoin when it was €3000. I now have ~0.55.
You have 2 choices here: Selling or Holding. I would just hold but invest my future capital in stocks to make sure bitcoin doesn’t stay that overweight.
Let me know what your game-plan is. I’m very interested (and kind of jealous!)
Good luck,
Michiel
That’s exactly my plan, keep the Bitcoin (hodl, strong hands!), and add to my VWCE when fiat is available – and save a little too, of course – which isn’t much, because I have a mortgage to pay (owning a house might be opportunity cost, but still I’d rather pay mortgage than rent).
It seems like you are a bit further along in life.
Investing wise, you feel like future me! Keep on investing!
Yeah, I’m 42, but 20 feels like yesterday ?. You have a headstart, I never thought about investing until recently. I first heard about Bitcoin in 2011, but then I found it too complicated and forgot about it.
My best financial decision (in retrospect) as a youngster was to buy a small, cheap, dilapidated house in the Brugse Poort. I had it refurbished and sold it back with a lot of profit.
Yeah, I regret not getting into Bitcoin sooner. I actually learned a bit about it in school when I was 17 or something like that. Sad that I was too ignorant and young back then.
I’m interested in real estate as well, but it seems like a steep learning curve and my budget is not big enough right now I think. I still have a lot to learn about it.
Brugse Poort is 15-20min from where I live! Nicely done fixing up the house. I would like to get a small pretty cheap apartment in 2 years, live in it for ~5-10 years, and get something bigger when I’ve saved up some more. Hopefully, I can rent out the first apartment after that. These are just thoughts though right now.
Michiel