Bitcoin Millionaire: Don’t Invest In Bitcoin

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Originally published as “Bitcoin millionaire: Don’t invest in bitcoin” on Dec 13, 2017 on

Since some of you have been asking for my thoughts on Bitcoin and cryptocurrencies.

I first invested $5,000 in bitcoin back in 2013 at $72 per coin and now own approximately 69.2 bitcoins.

While I had first heard about bitcoin in 2011, it wasn’t until I watched a documentary and started reading forums about the cryptocurrency that I decided to buy it. It was easy to see how bitcoin could disrupt the entire financial system.

I decided to buy as a long-term experiment and used less than 1 percent of my net worth at the time to buy into bitcoin. Sure, I wanted to make money on it, but if I lost everything, it wasn’t going to change the course of my life.

As of this writing, Bitcoin is trading at $16,600, which makes my bitcoins now worth $1,148,720. It took me five years working 80-hour weeks to make over $1 million saving and investing in the stock market, but with bitcoin, my coins have increased to over $1 million in 2017 alone. It’s by far, without a doubt, the easiest money I have ever made.

But I don’t recommend you invest in Bitcoin today.

On my blog Millennial Money, I’ve received over 100 emails from readers asking about investing in bitcoin and other cryptocurrencies. I was even talking to a reader last week who told me he put his entire life savings into bitcoin, buying in at around $11,000. That’s a terrible idea.

I got another email from a 22-year-old who is looking to invest his first $5,000 and wanted to know if bitcoin should be his first investment. That’s also a terrible idea.

Here’s why, even though I’m a bitcoin millionaire, I don’t recommend that you invest in it today.

1. It’s impossible to actually value bitcoin

Bitcoin is a global craze. Even my barber, who has no idea what a blockchain is, is buying it. Because so many new people are buying it (and so quickly!), it’s impossible to accurately value.

When the price of anything fluctuates 20-30 percent in one day, it’s obviously unstable, so you could lose all of your money very quickly. Especially if you need your money in the next year, don’t buy bitcoin. With the insane short-term fluctuations, bitcoin is short-term gambling, not investing.

2. There may not be any value in bitcoin at all

The value behind bitcoin is the blockchain technology, which has been easily replicated by other digital currencies. Many of those have actually built better and easier-to-use versions.

Litecoin is a good example. Sure, bitcoin has an early mover advantage, but it was created to buy and sell things online securely, which no one is doing right now because the price is so insane and transaction costs are skyrocketing.

All of the trading volume is also causing significant delays, with some exchanges reporting up to 10 days to get your money in or out and more than a week for your bitcoin to be sent.

The cost of sending bitcoin is also skyrocketing since the price is fluctuating so wildly, the value of it could be significantly higher or lower than when you sent the money.

Most people aren’t buying into the value of the technology, they’re buying into the hype. This is gambling, not investing.

3. Bitcoin still isn’t that secure

You might think that digital wallets are secure, but cryptocurrency exchanges and wallets continue to get hacked regularly. More than $70 million in bitcoin was hacked from NiceHash, a bitcoin mining marketplace, last week.

Just because exchanges like Coinbase have $200 million in venture funding and a nice shiny marketplace doesn’t mean that they can’t get hacked either. Because there is no central governing body guaranteeing your bitcoin, if you lose it, it can be difficult to get back. If it gets stolen, then you are out of luck. Hacks will continue to happen.

If you do decide to buy bitcoin, I encourage you to buy responsibly. Don’t buy using more than 1 percent of your net worth, and be honest with yourself: Bitcoin is a gamble, not an investment. It’s super risky and there are far better places to invest your money securely for both the long- and short-term.

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  • Comment Author image blank Sam Quirke says:

    Hi Grant, refreshing to see someone with experience caution beginners about just getting long and going with the fad, nice article.

    BTC does look appealing around the $6k figure those, some long term support to play off. Any thoughts on that?

  • Comment Author image blank Bryan Bouchard says:

    This is sound, responsible advice on cryptocurrency investing. Great article, and a huge congratulations on having the discipline to hold your btc for five years.

  • Comment Author image blank dee says:

    Spot on Grant for this post.Took a while to get to read something fresh from you.Anyway, bitcoin is a total gambling & risky if you don’t know how to invest right.But once you invest what you can afford to loose and know exactly how to play this…you’re ahead of the gamblers.

  • Comment Author image blank Sean @ FrugalMoneyMan says:

    Thank you for sharing this.

    I speak to ALOT of peers around my age (25) who are just getting into the investing world, and they constantly ask me if Bitcoin should be their first move. You make a great point that investing in Bitcoin is a gamble, and not an investment. To often people mistake investing with gambling.

    I often like to refer inquiring peers to Benjamin Graham’s definition of investing, “An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return.” Bitcoin just simply can’t promise a new investor safety of their principle.

    Great read!

  • Comment Author image blank Helen Saghy says:

    Humor me. If it’s not all that, and you have $1.4 right now, why not sell it and get your money? Is the value not real? Can you not cash this in and put it to something else? I know I would. I wouldn’t be leaving that type of ‘value’ on the table for further gambling.

  • Comment Author image blank Ms99to1percent says:

    Good article. I like your recommendation of investing no more than 1% of your networth and not with money you need within the next year.

    Do you plan to sell some of it any time soon just in case ? 🙂

    Happy New Year btw!

  • Comment Author image blank Myfinancekits says:

    Bitcoin could be a very good investment for somebody that invested in it early enough. But as you said, it may not be a good investment now. In any investment, you make most of your gain at the entry point. You buy very low so that you can sell high. To buy when the price is very high can be expensive thing to do.

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