Lessons from ordinary people who own crypto

[ad_1]

vm / Getty Images

Cryptocurrency has been one of the investment buzzwords in 2020 and 2021, as prices and interest in alternative investments have skyrocketed. Names well known in the financial world have very different opinions on crypto, with popular fund manager Kathie Wood saying Bitcoin will hit $ 500,000, while billionaire Warren Buffett, the Oracle of Omaha himself even, told CNBC that I can say with almost certainty that they (cryptocurrencies) will end badly.

Find out: is crypto too risky? 12 experts weigh in: 3 common crypto misconceptions debunked

While no one can say for sure what the long-term fate of cryptocurrencies like Bitcoin will be, one thing is certain: crypto is growing in popularity almost every day with regular investors. Here are the lessons some of them offer about the crypto craze.

Read: Crypto Curious but averse to risk? You can invest as little as $ 1 on Venmo

were heading towards a supply crisis

Didi Taihuttu and his family rose to fame for telling their crypto story to CNBC between 2017 and 2021. The Dutch family liquidated all of their assets four years ago, including their business and home, and used that money to buy Bitcoin and live on the road. . The family still does not have a home or bank account but maintains their Bitcoin position, adding dips. Most of the family Bitcoin was bought at around $ 900, while current prices are closer to $ 32,000.

According to Taihuttu, it will hold on to Bitcoin for the long haul as it heads into a supply crisis. According to Taihuttu, demand will increase over time and the supply of Bitcoin is limited. Quantum Economics’ portfolio manager and founder Mati Greenspan agrees, saying demand is shifting from individual investors to corporations and institutional fund managers.

Take a Look: Dogecoin Co-Founder Says He’s Done With Cryptos, They Don’t Align With His Belief System

Once it’s gone, it’s gone

The story continues

One of the current concerns with cryptocurrency is security. Theoretically, a crypto wallet is more secure than a bank account because the owner is the only one who can access it. While this may be true from a password or login perspective, for hackers, a Bitcoin wallet is just another type of account.

As cryptocurrencies continue to become more popular, hackers are becoming more aggressive in trying to siphon money from crypto wallets. As David Stubley, founder of cybersecurity company 7 Elements, recounts, one of his clients lost all the cryptos in his Bitcoin wallet after clicking on a phishing link. While the Stubleys company could track wallet transactions on the blockchain, there was no way to identify the thieves. His client lost 83 Bitcoins which are now unrecoverable, with a current value of around $ 2.6 million.

Learn: Why is crypto so volatile?

Mining has high energy costs

If you want to make money by mining or creating Bitcoin instead of investing in it, the good news is that this option is open to everyone. The bad news is that it takes a lot, a lot of energy and computing power, something beyond the reach of many average people.

In 2016 and 2017, Rohan Muscat, project manager and electrical engineer, got some graphics cards and went to work on Bitcoin mining. While this worked for Muscat for a while, over time it was not economically feasible for him. Like Muscat said, my electric bill went up to $ 500- $ 600 per month, because the mining rig needed a lot of power.

The bottom line is that if you go down this route, be sure to study all of the costs and requirements to see if it’s worth it.

Take our survey: what cryptocurrency are you investing in?

Bitcoin is just as real as Fiat Money

Some opponents argue that Bitcoin is not real money because it is not backed by any asset and only derives its value from what people pay for it. However, Bitcoin bulls say the same could be said for the U.S. dollar or any other fiat currency, which is only valuable because a government says so. Erik Finman started investing in Bitcoin in 2011, at the age of 12. In 2018, he owned 401 Bitcoin, enough to make him a multimillionaire when he was still a teenager.

Finman carries a good message, encouraging teens to earn extra income so they can save and invest while they are still young. As Finman wrote at the time, Bitcoin is just as real as fiat money, except that Bitcoin cannot be printed endlessly. Finman’s most recent effort, launched with the help of his Bitcoin millionaire status, is the Freedom Phone, which launched on July 14.

More From GoBankingTaux

Last updated: July 20, 2021

This article originally appeared on GOBankingRates.com: Lessons from ordinary people who own cryptocurrencies

[ad_2]