In a previous article, I discussed Bitcoin and other cryptocurrencies. Since then, cryptocurrencies have continued to be volatile and have dominated headline news. Due to the multitude of emails and messages from clients asking if Bitcoin was an appropriate investment, I decided to be the guinea pig and attempt to purchase some coins. Below is an account of my very interesting roller-coaster ride.
The Bitcoin Start-line
12/8/17 - 1:30 AM
So I finally did it… well almost. I added my credit card to the Coinbase website. Now, I have to wait for two trial deposits. I elected to use my credit card instead of my debit card or bank account for security purposes. Additionally, the bank account method stated it may take 4-5 days to process transactions. After reading further, I discovered to make withdrawals I am required to have a "USD Wallet" and I'm required to connect my bank account. This requires a copy of my photo identification and taking a selfie. What happened to the anonymity of cryptocurrency? Once the verification of my selfie and driver's license was approved (this took only 5 minutes), I was able to connect my bank account for future withdrawals. While waiting for the license/selfie confirmation, I checked my credit card pending transactions. Sure enough, there were 3 debits and 1 credit from Coinbase.
Eureka, it worked! My initial transfer limit is $750. Ready to splurge
Kicking It with Bitcoin
12/8/17 - 1:35 AM
Bitcoin is $15,869.13, Etherum is $440.18 and Litecoin is $99.58. - I’m definitely not willing (or able based on limits) to purchase an entire Bitcoin. If I were to spend all $750 BTC I’d only get 0.04604853 BTC. Since I'm not well versed on either of the three cryptocurrencies offered, I may as well buy all three. One Ethereum, one Litecoin and a tiny fraction of BTC (provided transaction fees don’t rob me) 1 ETH - Coinbase fee of $17.56 (4%) 1 LTC - Coinbase fee of $3.98 (4%) 0.01166746 BTC - Coinbase fee of $7.28 (4%)
Here goes nothing… I purchased ETH and LTC first - both gave me prompts that the coins would be in my wallet instantly. A few moments later. Wallet = $0.00
So far this isn’t feeling so good. Refreshed the screen again, still nothing. I logged out and logged back in. I thought to check my Capital One pending transactions, maybe they assumed fraud and denied the charge? It’s not often I’m buying cryptocurrencies at 1:45 in the morning. Just as I suspected, my Capital One was restricted. Their spending algorithm is correct, I do not normally spend $750 on cryptocurrencies in the middle of the night. I called the 800 number on my card, the automated service allowed me to verbally confirm each of the purchases. I logged out of Capital One and logged back in. No pending transactions. I'll try the purchase again. LTC purchase confirmed - 1.0 LTC - $99.79 ETH purchase confirmed - 1.0 ETH - $443.00 BTC purchase confirmed - 0.0108 BTC - $182.00 Total Investment - $724.79 (after fees)
I immediately felt buyers remorse. It’s the nearly $30 in service fees that I know I will have to pay again when I sell. It’s like buying a mutual fund but worse!
12/8/17 - 2:05 AM
It’s 2:05 am, the entire process took 35 minutes, half the amount of time I would have sat at the blackjack table. Now I can go to sleep. When I wake up, maybe I will be a crypto-millionaire! The prices are changing constantly. Just in the time it took me to write the last two paragraphs my ETH is up $0.02, BTC is down $2.00 and LTC is up a $0.10!
How am I supposed to sleep?
12/10/17 - 9:44 AM
LTC is up 38%! What in the world is going on? My total balance is $764.17, if I sold now I’d net $733.60 - still a loss after the damn fees. I promised myself I won’t check prices for the rest of the day. We will see how that goes... 9:36 pm 1.0 LTC - $169.73 1.0 ETH - $498.42 0.0108 BTC - $169.83 Total - $834.34 up 15%
I decided to ignore the app on my phone and set alerts for various prices on each coin. Since LTC was so close to achieving 100% return, I set a price alert for $200. I set ETH at $600 and BTC at $20,000.
12/12/17 - 6:00 AM
Alert! Alert! Alert!
Not only from the Coinbase app, additional alerts from CNN, WSJ, CNBC, and others. Litecoin's price was over $300! I couldn't get my app open fast enough. I immediately sold 0.67 LTC and reaped profits of $241.51. Meanwhile, Ethereum had achieved the $600 price target as well, so I sold 0.25 ETH - for $152.28 in profits.
Over the last few weeks, I checked in on my cryptocurrency from time to time. Anytime I could reap profits of $100 or more, I cashed in. On a few occasions, I logged in to check on my coffers and was greeted with the unsettling message: "We are sorry, however, due to trading volume we have temporarily suspended transactions, please check back later."
I watched my Bitcoin prices soar to a high of $19,810 and a low of $10,803. I still own the same 0.01083821 shares, currently worth $116. Ethereum is currently around $975 it peaked last week at $1,338 and dropped over 30% in the last 48 hours! I have sold 0.61 shares of my ETH and have remaining shares of 0.39 valued at $378. Every time my value exceeds $550, I sell off $100 or more. I have done this four times netting $478. Litecoin seems to have had its day in the sun. I purchased at $99 and sold near the peak of $368. Today I still own 0.33 LTC valued at $58.80 and cashed in a total of $241. Total invested - $724.79 Total cashed out - $719.00 Remaining balance - $552.00 Total return - 75%
The Bottom Line of Bitcoin - Buyer Beware !
The number of articles about people losing their coin due to lost passwords or hacks grows every day. Over the past few days, the most popular cryptocurrencies lost nearly 50% of their value .
- The market is open 24/7
- Cryptocurrency is volatile, often to extremes.
- Cryptocurrencies are like precious metals, hard to find, expensive to extract and only worth what the next person is willing to pay for it.
- Cryptocurrency is currently unregulated. There is no government oversight or consumer watch-dog. You buy & sell at your own risk.
If you decide to make a cryptocurrency purchase, please do your research, remember your passwords and don't invest more than you'd be willing to lose at the blackjack table. If you think you are going to become the next crypto-millionaire, odds are you won't. Just like you're probably not going to find a pot of gold at the end of a rainbow or win the next mega-million lottery.
The cryptocurrency market will continue to expand, contract and mature. There is a tremendous amount of chatter about an Exchange Traded Fund that tracks the prices of multiple currencies and talks of regulation. Regulation, the antithesis of the intention of cryptocurrency and its purpose in society, might be investors only saving grace. Only time will tell.
This article is not a recommendation to buy cryptocurrency as an investment vehicle. Nothing in this article should be misconstrued as a recommendation to buy or sell. This exercise was for information purposes only. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only. As of the time of this article, MoneyScript Wealth Management LLC does not have an investment in any cryptocurrencies.