Even though this is a big milestone, I hesitate to post about it because I’m afraid it could cost people money! Let me explain.

First, why is it a big milestone? For the first time ever, a single bitcoin is worth over $100,000 USD. That is WILD. I remember learning about bitcoin in 2010. At the time bitcoins were trading around 6 cents each. I considered investing $100 just for the hell of it, but decided against it. My logic was that bitcoin is just this made up digital currency and “there’s no way a bitcoin could ever be worth a dollar”. I was very wrong about that. If I had invested that $100 back then and held until today it would be worth over $171 million. Ouch! (In all reality though, I probably would have sold it all when bitcoin hit $0.12 and called myself a genius for doubling my money).

So why could this lose people money?! If you look at the bitcoin price trends laid over google search trends, they peak at the same times. What that means is when there’s a lot of hype (as there is sure to be today) the price spikes and a bunch of people buy bitcoin. Then a few months goes by, the hype dies, new investors wonder why their bitcoin isn’t working, it plummets 50% or more, disillusioned, they sell, losing a lot of money. Don’t do this!

What do I do? I own a tiny amount of bitcoin. About 0.1% of my portfolio. My problem is that bitcoin is at best a currency or commodity and at worst total speculative gambling. I don’t invest in either of those things! I buy dividend producing assets like stocks and real estate and hold them for a very long time to build wealth from the resulting compound growth. Bitcoin is just a hope that someone is going to pay more for it later. That’s worked great so far, but it might not work at all in the future. No one knows. I’m not betting the house on that.

If you want to buy bitcoin, I’d try to buy when the hype is LOW and plan to hold for a long time. Be careful out there.

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy