Some people call them an exciting development and some believe they’re just a ruse. But whatever your beliefs may be, it seems like cryptocurrencies are here to stay. And many people are getting decent returns on their investment in a crypto currency or asset. So in this post, I’m gonna talk about my own beliefs and the only thing I think you should consider when deciding whether you should buy crypto or not.
If you’ve been asking yourself “should I buy crypto?” or “should I invest in cryptocurrencies?”, the following will help you answer your questions.
My reasons for buying cryptocurrencies
1. Easy to buy and good returns on investment
Just five years ago, in 2016, you could’ve bought bitcoin at around 400 dollars. In 2021, you could’ve sold it for around 60 grand. That’s a 15000 percent return!
This kind of return is not that weird in the crypto market but virtually unheard of anywhere else.
Most of us like making money. And if you know what to do, you can make a nice sum buying and selling cryptocurrencies.
Cryptocurrencies are also easier to buy than many other assets. You can buy any amount you want, any time and from any where.
You can also read:
Crypto meaning and types of cryptocurrencies (+why should you care)
2. Buying stuff on the internet
Cryptocurrencies are becoming more popular and mainstream every day. And now, you can buy a lot of stuff on the internet and pay for them using a crypto currency.
This is especially helpful to people who don’t have access to international debit/credit cards.
3. Sending and receiving money
I have friends and family members living around the world in different countries. And the fastest, safest and cheapest way for us to send money to each other is using cryptocurrencies and the blockchain technology. It certainly beats using any bank or other intermediaries.
4. Helping some amazing projects
In the past few years, a lot of startups with amazing projects have opted out of traditional ways of raising funds. Instead, they’ve done an ICO (initial coin offering) or ITO (initial token offering).
You can find the projects you like, participate in their fundraising sales and hold their coin or token to support them.
5. Staying private and keeping my money safe
One of the best things about using cryptocurrencies is that you can protect you privacy when buying or spending them, meaning you can remain anonymous.
And if you take precautions, your crypto assets would be safe, safer than any money in the bank.
As you can see, buying crypto can have a lot of benefits. And personally, I would recommend it to everyone. In fact, if some random person on the street asks me about crypto, I would say “you should buy some unless the opportunity cost is too high in your intended time-frame”.
What is opportunity cost? What sort of time-frame we’re talking about? These are the questions we‘re going to answer next.
You can also read:
Blockchain explained: a simple introduction to the blockchain technology
Should I buy crypto: Long-term vs. Short-term
So when you’re trying to decide if you should buy crypto or not, what is the time-frame in your mind? Are you thinking short-term, like a few weeks or a few days or even a few hours? Or long-term, like at least a few months or even years?
When deciding about every investment or buying opportunity, you should have an answer for this question: are you thinking short-term or long-term?
Should I invest in cryptocurrencies: Opportunity cost
Here’s a definition, from investopedia:
“Opportunity costs represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another.”
And here’s the formula for calculating opportunity cost:
Opportunity Cost = Return on Best Foregone Option – Return on Chosen Option
So the one thing you should consider when deciding whether to buy crypto or not, is this:
Opportunity cost in your intended time-frame
With a purely monetary view and in the long run, buying crypto will almost always be the best option. But I want you to take the concept of opportunity cost and expand on the meaning of “return”.
If you know how to invest in crypto or trade it, you can have amazing returns in terms of monetary gains. But is money the only kind of return on investment? Of course not! Should you always think of the long-term and forget about the short-term? Again, No!
The world is on fire, poverty rages on in different countries and regions and covid keeps ruining every plan. So when thinking about the returns that you would get from spending your money, you should look at yourself and the people and the world around you and think about the short-term as well as long-term.
- You only have 100 extra bucks and you’re thinking about whether you should buy crypto or better food for yourself and your family? Buy the food and try to save like 10 or 20 bucks. You can buy crypto with the savings. And yes, even 10 dollars’ set aside when possible can add up in the long term.
- You only have enough money to pay this month’s rent but think you can double it buying crypto? Pay the rent and don’t even think about it!
- You want to learn a new skill but can’t decide if you should pay for a workshop or buy crypto? Learn the skill and then buy crypto if you have any money left.
- You don’t really need anything and have some extra money you’re not gonna touch for at least a few months or preferably years? You should certainly buy crypto.
Return on your investment doesn’t come in just one form. It can be money, it can be staying healthy, it can be learning new stuff, it can be keeping a roof over your head or helping someone else. Some of the other forms, are even more important than money, especially in the short term. And considering the volatility of the crypto market and the fact that you can lose money as quickly as you can make it, you should prioritize between all your needs and their related time-frames.Read this if you're wondering “should I buy crypto?” or “should I invest in cryptocurrencies?” Click To Tweet
For ordinary people like you and me, crypto is the only meaningful way to invest in our financial futures. So any time you can, you should consider buying some crypto. But you should do so carefully and you should always think about the opportunity cost, especially in the short term. In the long term, I would say that all of us should buy as much crypto as we can with most or all of our extra money. This is the only near-certain path I know to economic freedom.
If you’ve found it helpful, send this post to anyone who is thinking about buying crypto and share it on your favorite social media.
Comment below with your own thoughts on the matter.