I bought $200 worth of bitcoin last Friday for a story I was writing on "how to give the gift of bitcoin" during the holiday season.
I held on to my stash for a weekend to see what owning bitcoin was like. Here"s what I learned.
You should probably know this if you"re buying bitcoin, but if you don"t: the value of your bitcoin is apt to skyrocket and then tank at any moment. Minutes after buying $200 worth, my bitcoin value was down to $191. It continued to fall over the weekend before spiking on Monday back to its original value.
When I first purchased bitcoin through the app Coinbase, my bank thought it was fraud and froze my account. I had to call my bank and confirm the purchases before trying to buy it again. Also, I"ve heard reports from friends in the newsroom that there are times when the Coinbase systems are overloaded, which might prevent folks from buying at a lower price. Coinbase addressed this potential issue in a message to its users.
If you pick up a newspaper or watch CNBC, you can often figure out why a company"s stock or a global currency is up or down. Maybe there"s a new CEO, war, government problems, a scandal, a positive or negative earnings report or a new competitor. You can start to figure out why a stock might react the way it does.
Bitcoin isn"t like that. It"s kind of like standing at a roulette table, and seems to spike or sink purely based on the momentum of other people buying and selling. I"m sure other people understand it better than me, but I have a feeling a lot of folks are just as clueless and are simply buying it to "get rich quick." And why wouldn"t you? Someone who purchased bitcoin when it crossed $3,000 in June has already increased their investment more than five times at today"s price.
I am also suspicious that some people are talking up bitcoin because they own a lot -- probably purchased when it was cheaper -- and they want it to continue skyrocket.
It"s really easy to buy and sell bitcoin, as I showed you in an earlier story, and fees through apps like Coinbase are low. That"s probably another reason it"s so attractive. It takes just a few seconds to enter in how much you"d like to purchase, for example, and you can sell it at a moment"s notice. I sold mine on Monday morning after my investment hit a weekend low of $166 and returned back to $200 as bitcoin"s value increased on news of bitcoin futures trading.
I"m not planning to buy bitcoin again, for several reasons. One, I write about bitcoin so outside of writing an article about how to buy it yourself, it"s not appropriate for me to own a significant share. Also, I don"t like that one moment the value of a bitcoin is down $2,000 and another it"s up $5,000. It probably provides the same rush of adrenaline that a craps table in Vegas might provide, but it"s too risky for me.