Should you buy Bitcoin?

"Should I buy Bitcoin?"

This is a question I've heard a lot the past few weeks, so I'd like to quickly answer it in a public forum.

My official answer is:

"You should spend no more on Bitcoin than you'd be comfortable putting into a Vegas slot machine."

As far as I'm concerned: Bitcoin is not an investment.

Bitcoin is a speculative, risky commodity gamble.

If you do choose to put some chips down, remember that Bitcoin (BTC) can be subdivided up to 8 decimals places. Although fees make it difficult to trade very small amounts, you can easily trade down to 0.001 BTC, which at publishing time is worth about $15 US Dollars (USD).

So at least you're not required to put a large amount of money at risk to play the game.

Coinbase, one of the largest Bitcoin exchanges (where you can trade "real money" for Bitcoins) recently sent out an email: "Please invest responsibly."

This might as well read: "Please gamble responsibly."

They go on: "We also wanted to remind customers of some of the risks associated with trading digital currency. Digital currencies are volatile and the prices can go up and down."

Well if that's not a massive understatement, I don't know what is.

Here is a graph of the BTC-USD price going back to mid-2010:

I've expressed the graph logarithmically since that's the only way I'm able to make sense of the wild price swings.

The first major bubble/crash that got a lot of press was in mid-2011 where it jumped from about $1 to $30 (3000% gain) and then crashed down to $2.

That means if you "invested" $1000 at the height of the bubble in June 2011, it would have been worth about $70 in October 2011.

There have been two more major bubble/crashes since. $15-$200-$100 in mid-2013, and the Bitcoin "depression" from late 2013 to early 2017 that saw prices go from $200-$1000-$500 and then fall slowly and painfully back to $200 before starting to recover in 2016, leading into the current bubble.

It is near certain that another "correction" (aka. crash) will happen with Bitcoin. Nobody knows when. Most people thought it would happen after it hit $10,000 since previous corrections have happened around major "milestone" USD values, but it's still popping.

When it does correct, it will probably correct significantly and a lot of people will "lose" a lot of money, meaning that the market value of their Bitcoin will be worth much less than what they paid.

So, should you buy some Bitcoin?

My advice remains:

"You should spend no more on Bitcoin than you'd be comfortable putting into a Vegas slot machine."

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