Opinion: Why I Bought Bitcoin and I’m Not Selling for the Foreseeable Future
I count myself among a growing share of those who have owned Bitcoin. While some have gotten cold feet and sold out during the huge crash in crypto prices in early 2022, I’m still hanging onto my Bitcoin. Here’s a look at why.
What Is Bitcoin?
Bitcoin is the oldest of a recent generation of cryptocurrencies, a type of digital money. Unlike government-backed fiat currencies, cryptocurrencies come from volunteer developers, small tech startups, and large companies, all looking to engage in a growing digital currency economy.
Behind the Bitcoin cryptocurrency is a blockchain, a revolutionary database technology that allows distributed computers around the world to collaborate to process new transactions, store old transactions, and verify asset ownership. These computers, called miners, are critical to the operation of blockchain networks.
Bitcoin is over a decade old, and in its short history, it has grown to become a global phenomenon. While they may not own it, odds are even your parents or grandparents have heard of Bitcoin. According to Pew Research Center data, nearly one in six Americans had invested in, traded, or used cryptocurrencies as of late 2021.
Bitcoin hit a peak value of $69,044.77 per Bitcoin. It remains the largest cryptocurrency despite a huge drop to around $23,000 as of this writing. The price fluctuates constantly. Similar to global foreign exchange markets, crypto markets trade 24/7.
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How I Started With BTC
In that first month, I accumulated around $100 worth of Bitcoin. Then I mostly forgot about it.
I don’t remember when I first heard about Bitcoin, but I clearly remember the first time I bought my own.
The oldest mention of Coinbase in my email archive is from June 2014. I created my account and made my first purchase in September, 2015. The purchase: $50 worth of Bitcoin for $228.91 per Bitcoin. My biggest regret is that I didn’t buy more and hang on longer!
In that first month, I accumulated around $100 worth of Bitcoin. Then I mostly forgot about it. The currency sat in my Coinbase account, slowly growing in value. When Bitcoin made headlines for reaching $10,000 for the first time in late 2017, I was reminded of my Bitcoin holdings, which had ballooned to over $1,000 in value. I quickly sold with a gain of around $1,000 and felt like a genius. Little did I know what was to come.
Why I’m Hanging On Despite Low Prices
While I didn’t sell at the peak, I continued to feel like a genius for the next few years. I started writing about crypto as an early adopter and profiteer, and my interest and knowledge in cryptocurrency grew. I set up my own miner using a home server, own several hardware wallets, and feel very comfortable using MetaMask with Web3 sites to trade crypto and NFTs.
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But it was hard to keep feeling like a crypto whiz as Bitcoin hit $20,000 and $30,000 and ultimately peaked near $70,000. By then, I had picked up more Bitcoin and other cryptos along the way, notably Stellar Lumens, Dogecoin, Ethereum, Polkadot, Avalanche, Flow, Shiba Inu, Cardano, and a few others that supported their own blockchains. I also bought $15 worth of Baby Dogecoin, figuring it would go to zero or make me a millionaire. (It’s closer to zero than millionaire if you’re curious how I did.)
Like others, I suffered from a little market whiplash in 2021 as prices went up and down by about half before hitting a new all-time high and falling by about 70% into 2022. In mid-2022, Bitcoin hit lows around $20,000.
I’m still holding onto my Bitcoin, however. I see it as a long-term investment. While it doesn’t have the functionality of Ethereum, it is still the gold standard for digital assets. There will only ever be 21 million Bitcoin. With limited supply and global demand, including official use in several countries, I don’t see Bitcoin vanishing or going to zero. While it’s always possible, I’m betting a few thousand dollars of my money that it won’t.
I target up to 5% of my assets in cryptocurrencies, with Bitcoin and Ethereum as the top two. I strongly believe in the future of blockchain technology and think we’re amidst something similar to the Dot Com Bubble. While Pets.com and many other companies failed in the Dot Com era, the period also led to household names like Amazon, PayPal, and eBay.
I’m unsure which cryptos will be Pets.com and which will be Amazon. But I believe a handful of cryptocurrencies will remain and continue to change the way the world handles money, asset ownership tracking, and financial contracts.
The Future of Bitcoin Isn’t Guaranteed
Some opponents say that cryptocurrency is akin to Dutch tulips, which were the center of a massive price bubble in the 1630s. During Tulip mania, those in the prosperous Dutch Republic paid as much as 10x the average income for a skilled artisan for a single tulip bulb. When prices returned to normal, many investors lost their savings and investments.
When the TerraUSD stablecoin blew up, many investors lost big. When Voyager and Celsius went bankrupt, billions of dollars were potentially wiped out. Crypto is still very risky, and there’s no guarantee of what the future will bring. I would never invest more than I can afford to lose.
But for me, keeping a small portion of my portfolio in this speculative alternative investment class is just fine. If it goes up by 10x or 100x, I’ll be thrilled. If it goes to zero, I’ll be disappointed, but I won’t have a dramatic change in my overall financial health. With my conviction that Bitcoin will last for the long term, I’m not buying more. But I’m HODLing onto what I already own. Hopefully, that turns out to be a winning investment.
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