How I accidentally invested in Bitcoin and made 845% in two years

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How I accidentally invested in Bitcoin and made 845% in two years

In January 2015, I signed up for a Coinbase account. Coinbase is kind of like PayPal for cryptocurrency. It operates an exchange where you can buy and sell Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC), and lets you send and receive digital payments from any of those three currencies, as well as your native currency.

Coinbase gave me 0.004 BTC as a sign-up bonus. In January 2015, that was roughly equivalent to $1.00 USD. Then I pretty much forgot about Bitcoin.

If you’ve been following the news over the last few weeks, you may have noticed a few stories about Bitcoin sandwiched in between Trump scandals. The value of a single Bitcoin just crossed the $2,000 mark for the first time this May. According to Coinbase’s price charts, the value of BTC has risen over 380% in the last year, with much of that dramatic growth coming in the last month.

Naturally, I logged back into my Coinbase account to see what my 0.004 BTC was worth in USD. As of right this second, that free dollar has turned into $9.45, representing an 845% increase.

Hot damn.

I immediately regretted not pouring all of my cash into Bitcoin back in January 2015. Of course, the advice back then was the same as it is now: Bitcoin and other cryptocurrencies are highly volatile, and there is a very real possibility that any investment in cryptocurrency will leave you with nothing.

But, at the risk of sounding like Crazy Uncle Bitcoin: oh my God do I wish I could go back in time and buy a ton of Bitcoin. Holy cow. The currency has grown by well over 3 million percent over the last 7 years. An investment of $1,000 in 2010 would now be worth nearly $750 million.

While I can’t go back in time, I am going to make a small bet on cryptocurrency. Here’s the deal: I’ll take $200 out of my pay from PolicyGenius this month and split it evenly between Bitcoin and Ethereum, and, assuming the economy doesn’t collapse in the next year, I’ll report back on my investment.

Obviously, I’m doing this at the extreme risk of losing all of the money I put into BTC or any other digital currency. Unlike a more traditional investment account, which is typically insured by the SIPC, or a savings account, which is insured by the FDIC, cryptocurrencies are not insured by anyone. If someone steals your Bitcoin – which has happened before – you’re screwed.

Also, cryptocurrency has literally no real world value. Even though people like Crazy Uncle Bitcoin call it the new gold, there is nothing physical that actually gives cryptocurrency its value. Unlike actual, real gold, which has held value in the eyes of civilized people since before Christ, we could all pretty much agree tomorrow that Bitcoin was worthless without it really affecting anything.

(Devil’s advocate, here: this is also pretty much the same deal with real currency, and even investments like stocks and bonds. It’s all just paper, and it could all collapse with almost no warning. Sweet dreams!)

Even knowing the risks, why wouldn’t I throw a small amount of cash into my Coinbase account? I’ve done stupider things with my money. Some experts believe that the value of a single Bitcoin could reach $10,000 in the next few years. If it did, my current holdings of 0.004 BTC would be worth about $40.

But more exciting than the potential growth of Bitcoin is the growth of the cryptocurrency market as a whole. Right now, Bitcoin only represents 47% of the total market cap of all cryptocurrencies – a radical change from just a few months ago, when it was around 80%. The price of Ethereum has shot up 1,163% in the last year, according to Coinbase, which much of that value coming in just the last month.

And if cryptocurrency really is the new gold, the market has a long way to go before it stops growing. The total market cap for cryptocurrency is around $70 billion – nowhere close to the estimated market cap for gold, which is somewhere between $6 and $7 trillion.

Major risks, but a massive potential? That’s something I can get excited about.

If you want to join me in this incredibly risky and inadvisable experiment, feel free to use my referral code to sign up for Coinbase. If you buy $100 worth of cryptocurrency, we’ll both get $10 of free, potentially worthless Bitcoin.

Image: Davidstankiewicz