The Upside of Optimism: Why Every Millennial Should Invest in Bitcoin
Bitcoin. The word alone triggers a flurry of emotions, from excitement to scorn to skepticism. Naysayers believe that cryptocurrency is a fad. Proponents believe it is ushering in a new world order for transactions of all kinds.
Learn more about the origins of Bitcoin’s architecture: Satoshi Nakamoto’s Groundbreaking Paper on a New Financial System
The volatility & complexity inherent in cryptocurrencies drive many would-be investors away from Bitcoin, but I believe that all markets—especially nascent ones—must undergo drastic adjustments in valuation as they mature. I also believe that you don’t need a Ph.D. in blockchain technology to understand and invest in the value of Bitcoin.
Bitcoin’s fall from 2017’s high of $19,783.21 to, as of this post, today’s value of $6363.99 is a formidable 67% decline. Yet even established markets such as the Dow Jones Industrial Average have seen similar epic declines over extended periods. During the Great Depression, the DOW recorded an 85% decline from August 1929 to June 1932, plummeting from $5,549 to $795.
While the future of Bitcoin is uncertain, the time horizon for millennials to invest for the long term is ideal. As big players such as JP Morgan and Citigroup enter the ranks of blockchain believers, it’s becoming clear that Bitcoin is no longer the sole domain of hardcore technophiles. The opportunity to partake in what could be the greatest wealth creation opportunity in generations is before us.
Millennials came of age during a tech revolution in microprocessing and the internet. The tech revolution created a global nervous system accelerating transmission of ideas and information in ways rarely seen throughout human history.
Humankind’s evolution from hunter-gatherer to agrarian communities fueled the original networking age through increasingly cooperative societies. These networks of people accelerated the collision of ideas progressing civilization towards the next adjacent possible innovation. (Steven Johnson’s How We Got to Now is an excellent deep dive related to this premise.) Today, the next adjacent possible breakthrough is a financial system governed by blockchain technology.
In spite of our generation’s massive growth in technology, information sharing, and interconnectedness, many people feel as though they have missed the boat on this tech revolution.
“I'm getting the feeling that I came in at the end. The best is over.” - Tony Soprano
While the early internet age has already come and gone, the best of what a connected world has to offer is far from over. Blockchain technology is revolutionizing investments into illiquid assets through the use of Security Tokens. This prospect alone offers reason enough to get into Bitcoin now. The opportunity to get in at the ground floor of an innovative technology such as blockchain and cryptocurrency is a rare thing. We are only nine years removed from when the first Bitcoin was mined. Standing where we are today places investors at the near epicenter of a new economy. Millennials must have the foresight and courage to acknowledge this and take action in a responsible way.
As in any period of wealth creation using new technology, there are hoaxes that attempt to make a quick buck--cryptocurrency is no exception. That’s why I recommend safe, automated purchasing of Bitcoin using dollar-cost averaging. I will only ever advise on investment strategies that I personally use--statistician and author Nassim Nicholas Taleb calls this, having “Skin in the Game”--so I share with readers how I would begin investing in Bitcoin:
STEP 1. Open an Account with www.CoinBase.com
CoinBase is the ‘Bank of America’ of Bitcoin investing. You do not have to buy an entire Bitcoin (currently at ~$6,300). You can buy in fractional amounts as low as $5.
STEP 2. Deposit an initial amount of $25 or more
I would only deposit a small chunk of cash, to begin with. It should be money you intend on saving for a long time (more than 5 years) and have no intention of dipping into.
STEP 3. Set up a Recurring Transaction
You can select daily, weekly, bi-weekly, or monthly purchases of Bitcoin. Unfortunately, coinbase charges fees for their transactions, but it is the most secure way to buy Bitcoin.
The automated element of investing is VERY important. Make your recurring amount something you can manage for a long period without it being too noticeable to your finances.
I invest about 20% of what I save monthly into Bitcoin:
Monthly Savings Amount X 20% = Bitcoin Investment Money
Then, when I have unexpected cashflow or solid gains from another investment, I buy small additional chunks of Bitcoin to help accelerate the growth.
STEP 4. Forget about it.
Do not follow Bitcoin like a hawk. This is true of any investment, but especially with Bitcoin. You should rarely look at your overall bitcoin account except when you are analyzing your monthly or quarterly returns. The key is to set it and forget it!
With these simple steps, you will begin to take an active stake in the future of Bitcoin. No one knows how long it will take for Bitcoin to bounce back, but as history shows, markets take time to mature. This is a long-term investment. Have patience, be consistent, and continue to sock away a small percentage of your savings into Bitcoin.
As Millennials, we may have entered the ‘dot com’ boom a little late, but we are positioned right at the sweet spot of the blockchain revolution. Let's ride this rocket ship to the moon. ₿ 💵🚀