You know what, the headline is wrong. I didn’t invest – I gambled.
I bought £250’s worth of cryptocurrency – Bitcoin, Ethereum and Litecoin – in December. I know nothing about them, I just saw the price rising and thought I could make a quick buck.
Yet I only bought what I could afford to lose, as there was a risk it could go up in smoke. I’ve since learned my flutter is no different from a ‘spread bet’ on the number of corners in the FA Cup final or the number of falls in the Grand National.
And that’s how I think people who know nothing about Bitcoin or other cryptocurrencies should view it if they ‘invest’. You could argue traditional investing is a form of gambling, but that’s a debate for another day.
I’ve detailed my experiences below but also see Martin Lewis’s Should you invest in Bitcoin? blog for more help.
Will Bitcoin’s value rise?
I’ve no idea which way it will go, whether a crackdown on cryptocurrencies in East Asia will hit it for six, whether big UK banks such as Lloyds refusing to allow people to buy Bitcoin on its credit cards will create a downturn or whether it’ll rise for some other reason I can’t think of.
I suspect all, bar real technology or crypto-savvy punters, are in the same boat – whether they admit it or not.
Even those supposedly in the know surely couldn’t have predicted the wild swings from when one Bitcoin was worth about £1,000 last summer, soaring to almost £15,000 late last year, only for it to crash down to about £7,000 now.
How’s it work?
The technology behind these currencies is called blockchain. Some very clever people have tried to explain it to me but I’ve still little clue.
I’ve been told to think of it like a Google Doc or the ingredients of a sausage. But I’ve still no idea.
Without wishing to blow my own trumpet, I know a thing or two about personal finance given my job. But I have to hold up my hands with crypto that I’m an amateur.
Why did I get involved in Bitcoin?
I, like many others, thought “wow” when the price kept soaring late last year. I just wanted some of the excitement of getting involved as, other than a £20 buy-in when I play poker with my mates once a month or putting $30 on the tables when I went to Las Vegas a couple of years ago, I rarely gamble.
A friend told me he’d bought some crypto and as there was a possibility it would keep rising I thought “why not?”
I have no intention of ever using any of the currencies I’ve bought, I just hope for my gamble to net a profit.
How did I buy Bitcoin etc? And what I’d have done differently now I know more
I used the Coinbase app as after some quick research it seemed the easiest way to buy, as it can get very complex via other means. Within 30 minutes of downloading the app I’d ‘invested’.
Coinbase isn’t the cheapest but the fees were bearable for the convenience. They were about 4% of what I bought.
One thing I have learned is to avoid too many transfers within Coinbase. When I saw Bitcoin’s value plateau in December I used some Bitcoin to buy some Ethereum within the app. I was charged for taking money out of Bitcoin, and again, for using it to buy Ethereum.
Coinbase can also be expensive when withdrawing money – see my colleague Callum’s blog on how to withdraw money from Coinbase.
Have I made any money?
As I write this, my £250 gamble stands at £300.57. Sorry, scrap that. It’s now £303.65 – it moved about 1% in the hour or so between first writing this and applying the finishing touches.
I’ve lost money in theory in the last few weeks, though. It hit £450 a few weeks ago, then dropped to £200ish only to recover a bit to the £300-or-so mark.
There have been other yo-yo moments within those peaks and troughs. If the stock market had bounced around like Bitcoin, there would be chaos.
Should you gamble on Bitcoin or other cryptocurrencies?
You may be reading this in the same position I was in last year when considering whether to take the plunge, and hoping I’ll answer that question for you.
Sorry, I can’t. It’s simply down to your attitude to risk and whether you are prepared to gamble on something you probably know little about.
What I would say is if you’re an amateur in this field like me, don’t put in any more than you can afford to lose as you could lose it all if the worst happened. And if you prefer safe havens see our Top Savings Accounts guide.
See it as a flutter, wondering what number will come up when you open the app – and hopefully making some money.