It takes a big person to admit that they were wrong, and this post is me doing just that. I think it’s important to make decisions based on the information you have at the time, so I wouldn’t say I regret my decision to have bought bitcoin when I first heard about it (2014), I would just say I wish I would have not been so dismissive and at least put a little bit into it. If only I had decided, “hey, I don’t really trust or believe in this bitcoin thing but it seems cool enough so why not put $250 and buy 1 coin”. That $250 coin would be worth $32,000+ today! Oh well, I’ve made good decisions with my money, have made great progress and so I shouldn’t dwell too much in the past on it. But, let’s jump into why and how I changed my mind.

A simple background on bitcoin

Imagine that you are really into baseball cards, like really into them and you own a few yourself but it’s also important to you that fakes stay out of the market, and that if and when you do trade, you can be confident you’re buying/selling a real card. To make this happen, there’s obviously no governing body or corporation that’s gonna maintain records of everything, as it’s just baseball cards. So, to get around this, you decide to create a general ledger of all the transactions of the comings and goings of baseball cards. 

You put this general ledger in a google spreadsheet and make it publically available online. Each time you or a friend makes a trade, you both first check the public ledger to make sure that it says that you in fact own the card you say you own and that it’s real, and the same for your friend. After confirming, you then make the trade and update the spreadsheet and do a comment blast out letting everyone know what happened. The next time around someone looks at this spreadsheet, they’ll see the update. That way everyone has peace of mind knowing who owns what at what time. 

However, it does take work to maintain that spreadsheet, and perhaps in the process of trading you ask a few friends to also check the spreadsheet to make sure they’re reading it the same way you are too. Perhaps a few friends volunteer to work on maintaining the spreadsheet and verifying transactions. As a thank you for their work, everyone agrees to reward them with a transaction fee and perhaps give them first dibs on the newest cards when they come out. 

As you’ve probably picked up on, baseball cards here are bitcoins. The spreadsheet is the blockchain which is the public ledger that everyone can read and verify. The friends that help maintain are miners. The biggest difference here is that the baseball cards can be divided into bits and pieces, like 100 million of them. Oh, and there are only 24 million bitcoins that will ever exist. 

When I first learned about it and what I thought of it

Ah, young 2013 YoungerMoneyFinance. Life perhaps was simpler then and I certainly didn’t have as much disposable income floating around. I was (and arguably still am) laser focused on saving and investing for retirement, and was saving up for a house at the time. I can’t remember if I learned about bitcoin from my brother-in-law, or from colleagues at work but I remember reading quite a bit on the topic and being intrigued. It was definitely a cool concept and I was really into the idea of mining. However, it was more technical than I had the knowledge for, and so I passed up on mining. 

In terms of buying it, I found an old email my brother-in-law sent me, dated 4/9/13. I wrote back, “My big concern is their frequent use in illegal activities. I can’t imagine the governments of the world stand by for too long while gangs and mobsters now have an easy way to trade their goods, untraceable.” This was my logic for not wanting to throw too much of my hard earned money into bitcoin for. In hindsight, it wasn’t the worst conclusion to come to, back then all you really heard about bitcoin being used for illicit purposes, like buying drugs on silk road, or my colleague’s intern who used it to buy a fake ID. Even those that owned bitcoin from time to time ran into issues with their exchanges either being hacked or going bankrupt, the most famous being Mt Gox, and so even if I felt like getting into bitcoin, it felt to me to be difficult and risky to hold. 

Fun story – I heard that intern didn’t need all the bitcoin when buying a fake and was able to find that their bitcoin were still accessible and worth a lot! 

All that to say, I think that where my head was at was correct and I’m glad I didn’t go all in. I think I’d make the same decision again if I was faced with it. Although I would definitely this go round throw at least a little bit of money into it just for fun. So, 2013-2020 YoungMoneyFinance turned his nose up at it and did not buy any.

Double funny story – I actually signed up for a Coinbase account in 2018 as they had (and still have) a referral program whereby if you get someone to sign up, you’d both earn $10 in bitcoin. Upon logging into my account in 2021, I was crossing my fingers that perhaps at least ONE person reading my site in the past 3 years had signed up and potentially I had secretly earned $10 in bitcoin that would be worth so much more. Alas – no one had! Shameless plug – that referral still exists, so perhaps someone will take me up on this and we’ll look back at this article when bitcoin was $32,000ish and be like, wow I’m so glad I got in and got $10 free!

What changed my mind

It’s a bit of a silly story but around the New Year I always do a deep hard look at my personal finances and set financial goals for the year. This year, for whatever reason it dawned on me that perhaps I should buy a few precious metals, like silver or gold to keep in my portfolio. Financial experts will often recommend keeping a little portion of your portfolio in gold or silver, partially as an inflation hedge, and partially for a ‘just-in-case’ holding. I suppose I felt like I was at that point. It took me about 15 seconds thinking about buying, holding, and one day selling gold that I was like “that feels like way too much work”. How will I know for sure if the gold is real? Where will I keep it? How will I sell it when I’m ready too? It was a lightbulb moment for me and it was then that I decided to buy some bitcoin. 

Where I stand now

Truth be told, I only have a few hundred dollars in cryptocurrency, mostly bitcoin and ether. I’m not going all in, as I never think that’s a good idea in anything, but I’m definitely regularly investing and buying more. I’ve done a ton of reading and a ton of listening to podcasts and am a believer. I think the fact that so many corporations and merchants are getting into the space means we’re getting closer to crypto truly being mainstream. I almost think it’s safer (just my opinion) to invest now vs in 2013 when I first learned about it, although I missed out on a lot of the gains, but I still think there’s room to grow. Just think about how often you see it in the news and how many more of your friends are getting into it. 

I’ve also gotten pretty into proof-of-stake cryptocurrencies, which is a whole other rabit hole but it’s a more organized way of keeping the blockchain up to date and you can as a crypto holder earn a return. It’s a bit of the wild west out there but there are reputable (in my opinion) firms that are paying 5-10% on crypto. As I watch my American Express and Capital One ‘high-yield’s savings accounts continue to fall with their interest rates (currently 0.4% APR), I’ve been thinking more and have been putting a little bit of my ‘savings’ money into crypto. If this is intriguing to you, I did create a separate site – collectmorecrypto.com that goes into super detail on how it works. I’ve even started mining a cyrptocurrency (Vertcoin) with a gaming computer I bought – but that’s a whole other post in the future!

It’s definitely not a perfect system, and there are plenty of flaws. The crypto space has plenty of scam artists out there, it’s super volatile (ups and downs), and it does consume a lot of electricity. I could do a whole other post on the electrical consumption but my take is that it’s not as bad as it sounds but does have room to improve. It’s definitely not just “computers solving pointless math problems” and I do think does, and has the potential for more good in this world.

Summary

No one ever likes to be wrong but I was wrong on bitcoin and although I’m ok with not having invested in 2013-2020, I’ve changed my tune in 2021! 

Shameless plug round 2 – I do still have a referral with Coinbase, which is the main exchange that I use. It feels super safe, and more importantly, it really easy to use. I also have a BlockFi account, where I’m earning 5% interest on my bitcoin. If you signup (with $100 or more), we’ll both get $10 in bitcoin! Definitely do your research and consider carefully, crypto is a wild ride and we’ve seen it this year go from $30K to $60K back down to $30K.