I bet many of you can remember your parents or grandparents at one time or another saying, “if it sounds too good to be true, it probably is.” Cryptocurrency has a relatively short history in relation to traditional investments. Bitcoin is generally thought of as the first cryptocurrency introduced in 2009. Bitcoin was revolutionary because it is considered the first cryptocurrency to combine blockchain record-keeping technology, user privacy, and decentralized control, all with built-in security.
The value of a single Bitcoin surpassed $1000 for the first time in 2014 and hit an all-time high of just over $68,000 in November 2021. Wow, that his one heck of a return for your dollar! As popular culture began to write more about digital currency, more investors and tokens or coins came into the market. Ethereum, Tether, Dogecoin, and USD Coin, to name a few.
As with many things that show extraordinary profits, everyone wants to get in on the action. This often happens when the lottery reaches possibilities of over $400 million or so, and we all rush out to buy a ticket. The difference is that most of us understand the odds of actually buying that winning ticket. Investing in Cryptocurrencies seems to be a little different. Many individuals involved seem to think that cryptocurrency is just an alternative to traditional stocks and bonds. And why not put some money into cryptocurrency with the potential of a huge payout?
Let’s look at some real numbers. For someone who invested money into Bitcoin in 2014 at $1000 per coin, that coin is currently valued at $16,836, an average return of 16.97%. Compared to the inflation-adjusted stock market return for the past decade of 14.15%, the crypto investor is ahead by about 3%. But merely looking at the numbers does not tell the entire story.
In 2014, the year Bitcoin first topped $1000 per coin, a Bitcoin exchange, Mt. Gox, when down, with investors losing 850,000 coins that were never recovered. These coins would have a…
