Damn! I missed out on Bitcoin!! Or did I?

There has been a recent spike in the price of Bitcoin from $935 on March 3rd all the way up to today’s price of $1,470.

As with every time the price goes up, you have all kinds of people that “invested” in buying Bitcoin in the past coming out of the woodwork to gloat about their investment prowess. I truly am happy for all of those that have made money as the price has been going up. However, I did want to address what seems to be a very elementary view of investments that I see throughout the sector.

Buying Bitcoin with the hopes that it goes up in price would NOT be considered investing, it is in fact a high risk speculation. Investing is characterized by the ongoing cashflow that it puts in your pocket.

For a similar example I would refer to gold. Buying physical gold in the hopes that it goes up in value would be a speculation, while buying stock in a gold mining company based on the dividends it presently provides would be an investment. Of course, it is not always that cut and dry and many times something can be an investment and a speculation at the same time to varying degrees. The point is that simply buying and holding Bitcoin is not an investment strategy.

I’m not pointing this out to try to knock people off of their pedestals but to wake them up to the fact that investing is something that takes time and effort to learn how to do correctly. I know that many of the people that are interested in Bitcoin are fed up with the current financial system; I’m right there with you. Many of the underlying fundamentals of the overall financial markets are questionable at best and systematically criminally fraudulent at worst. Be this as it may, this does not mean that we should throw out all common sense metrics that have been developed throughout human history to measure investments.

I myself own Bitcoin and I’ll be happy if the price continues to rise. However, I would never consider my holdings to be anything more than a gamble and wouldn’t risk more than I would be willing to lose.

What do you think about Bitcoin’s rise in price?

  • Rick Reigers

    Hi James…rick here.
    For the record, we actually met for the first time this past saturday (and it was a pleasure). I have been following your material for quite a while, and usually agree for the most part on your insights and opinions. But not this time. Actually, I was even a little confused as to where you really stand on this issue. For myself, I’ve always believed since I first heard about btc that something incredible was taking place. Of course it took me a few years before I could wrap my head around it. The world is starving for honest, private money and I believe it has arrived. Your comment about not putting any more money in your speculations than you can afford to lose…I would agree with that as long as you include all the fiat currencies in the world, especially and including the usd. Since I finally and fortunately educated myself about the monetary system, I would consider the cryptocurrencies on more stable ground today than any of its competitors. Yes, it is volatile, but that volatility has a nice trajectory to it….as opossed to the usd going in the opposite direction my whole long life. I traded in my speculative usd a few years back for….anything and everything else. In a sense, I traded it for a new life ! Glad your back James !

  • Hi Rick, Holding dollars with the hope that they will gain in value would also be considered a speculation, not an investment. The difference is the level of risk between the two. The asset with the higher volatility by definition also has the higher risk.

  • Rasputin

    Bitcoin does have the advantage of being able to use it without transacting with the global banking cartel. The volatility makes it dangerous to use as a means of facilitating transactions. I’ve been researching Bitcoin in order to avoid paying exorbitant rates when performing foreign transactions. Unfortunately, if I buy B.C. when it’s high and it drops a few hundred dollars by the time the transfer goes through, I lose more money than paying the monopoly men. If someone would create a cryptocurrency that was reedemable in gold or silver, the value wouldn’t fluctuate as much as B.C. Those markets are routinely shorted to make fiat currencies not to appear as worthless as they really are. A cryptocurrency linked to precious metals could capitalize on the banksters price fixing.