Investing is one of those things that hopefully is on your radar. You’re likely not going to get rich, or financially independent off of simply putting your earnings into a savings account, or by keeping it under a mattress. To really set yourself up for success, you have to have your money start working for you, instead of the other way around. It’s actually quite a beautiful process seeing your money be invested and watching it grow!

As young professionals dipping your toe more and more into investing, you’ll a) hopefully getting into investing for retirement through an employer sponsored 401(k) or an individual retirement account (IRA) and b) be starting to get more comfortable with the types of investments out there whether it be stocks, bonds, options, real estate or even cryptocurrency! My goal of this site is to continually provide high quality educational articles to young professionals, and in today’s post, I wanted to explore some of the pros and cons of investing in cryptocurrencies, especially bitcoin.

Why you should pay attention

When bitcoin first came on the scene, it was regarded as something either super nerdy, or super criminal, as those were the two initial use cases for it. What started as a white paper published by an unknown author (well, we know the name, Satoshi Nakamoto, but we don’t know if they’re a real person or not), steadily has grown into a cultural phenomenon that everyone is talking about. While it was historically something relegated to the sidelines (but still talked about), we’re now seeing traditional businesses and financial companies getting more into it. Tesla has bought $1.5 billion of it, Square bought $170 million, and even a boring insurance company like MassMutual has too. Cryptocurrencies and especially bitcoin is something worth at least knowing a little about.

Give me the TLDR

TLDR by the way stands for Too Long, Didn’t Read, and is my favorite new phrase to be like “just get to the important part”. Bitcoin is a manner in which to exchange value and everyone, at all times can know and verify who has what and who is using it. Well, you don’t know ‘who’ exactly but you can trace the flow of all bitcoins as they go from one wallet (what holds bitcoin) to another. This is all done on a public ledger, which means there’s no centralized keeper of the records, instead it’s out in the open and maintained by all who use it. Whenever you conduct a transaction, the system records that transaction and it’s verified by the public ledger, which is maintained by lots and lots of individuals who are running software to keep it up to date. Those people are called ‘miners’ and are rewarded with a small transactional fee for their work. There are only 21 million bitcoin that will ever be available, it’s a fixed quantity.

Bitcoin has been very volatile in it’s value, meaning it’s price fluctuates. I first found out about it in early 2013, when it was $250/bitcoin. Now it’s $50,000+. It’s been a wild ride. Here’s a link to the first article I wrote in 2013 on it, and yes I do have some regrets! Oh YoungerYoungMoneyFinance, why didn’t I put like $10 into it back then?!?

The pros

Bitcoin has opened up a whole new world for and the cryptocurrency market has exploded into a multi-trillion dollar space. It has opened up a brave new way of holding value, doing business (called smart contracts), and sending money. Crypto doesn’t rely on institutions or governments, and instead gives the power back to the people, the actual users. Wow, pretty bold stuff, right? Crypto is here to stay (in my opinion) and will only become more and more mainstream in the future. While it may look different in the future, I predict bitcoin and a few other main players will stick around and remain both relevant and valuable.

The cons

Researchers have shown that young people, whether investors or consumers, are very self-aware, making them less ignorant of the societal impacts their decisions have on other people. Concerning cryptocurrencies like Bitcoin, there is actually quite an environmental cost to mining it, i.e. keeping the system going.

To learn more about the phenomenon of Bitcoin’s increasing carbon footprint, please carry on reading and check out the following infographic that makes it easy to see the consequences of the crypto industry on sustainability.

designed by arbtech.co.uk

Disclosure: Some links are affiliate links that earn me a commission. I also as of Jan 2021 have gotten into the cryptocurrency market, owning a small amount of bitcoin and other cryptocurrencies.