Property investing. Bitcoin. What's the difference?
Not much, according to UK paper, The Sun, who reported that a London man has decided to sell his family home, worth an estimated $2.2 million, in exchange for Bitcoin.
The craziest of investments
The man, who I will refrain from naming in an attempt to avoid promoting his business (which is in the Bitcoin 'industry'), had this to say:
"I'm looking to invest in Bitcoin and hold it for long periods of time because I believe that its value will increase massively."
I have worked in investments for quite a few years.
And I have made plenty of cold-hard-cash in speculative investments, lost even more, watched The Wolf of Wall Street, and listened to Will Smith return to his singing career on radio.
So, yeah, I've experienced — and heard — some crazy things in my time.
Tech stocks.
LNG.
Lithium.
Graphite.
Pot stocks.
Unicorns…
I could go on.
However, Bitcoin is close to taking the crown as the most outrageous of them all.
(Okay, maybe that 20-something Aussie bloke 'owning' 200 investment properties is still number-one)
Anyhow, according to coindesk.com, the market for Bitcoin is worth $65 billion.
That's a function of three things: price increases, more coins, and more money flooding the market.
I would be willing to bet that much of the money which has been in Bitcoin for two years or more started in China and other parts of the world where people needed an alternative way of transferring (read: funneling) money across the globe.
Now, mum and dad speculators are jumping on the bandwagon, which scares me.
Sure, "it's only a punt". A, "little bit of money". Or, "It's fun".
But, get this: $1 invested now at 10% per year for 30 years becomes $16.
Put another way, $10,000 becomes $160,000 — a second-hand Ferrari, a silver fox's Caravan with all the bells and whistles, or a brand-spanking new Tesla.
Yeah, only a small punt.
I'll take my $10,000 Tesla, please.
Foolish Takeaway
Speculative events like Bitcoin come and go.
Betting 'the house' on a "massive increase" is worse than believing property doubles every 10 years. At least you will have a huge amount of debt, financial stress and a headache if your property portfolio goes pear-shaped.
But if you are wrong about Bitcoin, by design, you'll be left with nothing.
