Bitcoin, Altcoins, & Wealth
Today, we are finally going to be talking a bit about personal wealth. As a lover of finance, I'm always taking a deep and objective look at any financial venture to determine whether it's worth it or not - or if there's any way to make it better. So naturally, when I came across cryptocurrency, I gave it that very same thought. If you are a reader not in cryptocurrency just for the tech, but also the money too (and don't be ashamed to admit that), then this post is most certainly for you.
Easily becoming the best performing asset-class in the world shortly after it's creation, it's no secret that the cryptocurrency market has minted a new wave of thousand, million, and billionaires. As one of the only ways right now for regular people like you and I (anybody, in fact) to generate massive wealth, there are many clamoring to grab what they can and hopefully go up with the ride. However, from my study of how regular people interact with this market, there is a certain nuance most people miss:
Bitcoin will not make you rich anymore.
This realization came when speaking to a friend about what they were doing in and how they were approaching the current bear market. Their answer to me, was that they were going to accumulate Ethereum aggressively, and after reaching a certain amount, do the same for Bitcoin. Which prompted me to ask: well what about other altcoins? Their reply, was that those other altcoins could drop in price another massive amount, but Bitcoin and Ethereum would likely stick around and retain their value. Which was when I realized...that they were right! But in a weird way...they were also wrong too. And if you take time to follow me through a little thought exercise, I will explain why this approach and the related misconception, is part of what holds a lot of us regular people back from making the wealth a lot of us truly seek.
Cardano (ADA) Thought Exercise (Using Prices on CoinMarketCap)
For all you Cardano fanboys and fangirls out there (and there are a lot of you!), your coin is the first one on the list for this thought exercise. It's really simple. We're going to use Cardano to highlight the difference in wealth created when investing in it, rather than in bitcoin. So if right now, in this bear market, instead of buying 1 whole bitcoin for about $17,000; we bought Cardano instead, we would have 58,621 of them. Now check this out.
Your Bitcoin Investment January 8th, 2023
1 for $17,000
Your Bitcoin Investment November 9th, 2021
1 for $66,953
Your Cardano Investment January 8th, 2023
58,621 for $17,000
Your Cardano Investment November 9th, 2021
58,621 for $124,863
If this current bear market ever went back to where it was near the top of the bull market back in 2021, your Cardano investment right now, would give you about $58,000 more than if you invested that same money in bitcoin! Check the numbers yourself if you don't believe me. To drive this point home, let's do it again.
Solana (SOL) Thought Exercise
For the Solana holders, it's been a rough few weeks, but stay encouraged; it still has solid fundamentals. It will take time, but the system will stabilize. This is for you.
Your Bitcoin Investment January 8th, 2023
1 for $17,000
Your Bitcoin Investment November 9th, 2021
1 for $66,953
Your Solana Investment January 8th, 2023
1,237 for $17,000
Your Solana Investment November 9th, 2021
1,237 for $306,618
If this current bear market ever went back to where it was near the top of the bull market in 2021, your Solana investment right now, would give you about $240,000 more than if you invested that same money in bitcoin! Check the numbers again my friends! To drive the point home, let's do it again!
Filecoin (FIL) Thought Exercise
An underrated coin with the potential to become a piece of the backbone for this new Web 3.0, this is for you Filecoin lovers!
Your Bitcoin Investment January 8th, 2023
1 for $17,000
Your Bitcoin Investment November 9th, 2021
1 for $66,953
Your Filecoin Investment January 8th, 2023
5,045 for $17,000
Your Filecoin Investment November 9th, 2021
5,045 for $324,513
If this current bear market ever went back to where it was near the top of the bull market in 2021, your Filecoin investment right now, would give you about $258,000 more than if you invested that same money in bitcoin! Oof! To drive this point home, let's do it one more time!
Ethereum (ETH) Thought Exercise
No comments here. I'll just wait until the end. Though I'm sure Ethereum is an altcoin lots of you hold and have a strong feeling in. Take a look!
Your Bitcoin Investment January 8th, 2023
1 for $17,000
Your Bitcoin Investment November 9th, 2021
1 for $66,953
Your Ethereum Investment January 8th, 2023
13.44 for $17,000
Your Ethereum Investment November 9th, 2021
13.44 for $64,640
If this current bear market ever went back to where it was near the top of the bull market in 2021, your Ethereum investment now, would give you about $2,360 LESS than if you invested that same money in bitcoin! Huh!? Shocked anybody?! Sadly, you are not going to "hit it big" with Ethereum either even if you pass on getting into Bitcoin. The truth is, as a regular person, you already missed the boat on making extreme amounts of money when it comes to this altcoin. You should have been around to buy Ethereum when it was $80. You should have been around to buy Bitcoin when it was under $1000. And this is exactly what most regular people like you and I don't understand. Bitcoin and Ethereum are no longer wealth generation cryptocurrencies. They are now wealth preservation cryptocurrencies. They have gotten so bloated, they have gotten so crowded, they have gotten so big, that they cannot grow that fast anymore. But it is this same thing that makes them so hard to knock down. You will not become wealthy investing in Bitcoin and Ethereum, but you probably won't lose a lot investing in them either.
So back to the start of the post. Was my friend wrong to want to invest aggressively in Bitcoin and Ethereum at this point in the market? No they weren't...but also, yes they are. I will contend that if you want to build real wealth in cryptocurrency, you should be accumulating altcoins in the bear market as they have dropped a lot more compared to Bitcoin and Ethereum. Then, as the next bull market comes around and your altcoins go up, slowly start swapping them for Bitcoin and Ethereum as the market continues rising to preserve your wealth. As the bull market reaches the top and eventually fades, the next bear market will come back again. During that time, slowly switch your Bitcoin and Ethereum into altcoins once more to generate more wealth for the next bull market.
I understand that Bitcoin and Ethereum are sexy and the most well-known/stable cryptos, but if you are serious about generating wealth for yourself, understand the new role that these coins now play in their current growth cycle. You missed the boat. I missed the boat. It happens. The thing to do now is find and catch a ride on the next few ships that are making their way to us now.
