Sirwin
Sirwin
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Will investing time in crypto make you rich?

By minimalist | minimalist | 8 Apr 2021


Seriously. If you are one of those guys who invested $10,000 in Bitcoin 5 years ago, you would have made $1,321,525 by now. Assuming you kept your hands off the assets and did not forget the keys.

However, most readers here probably have not invested that much 5 years ago. Many like me will have jumped on the bandwagon. Few believe Bitcoin to continue rising at the same rate (this would mean $7,617,402 per coin by 2026). Chances are something new emerges, or already has.

If you are reading the Financial Times, you may recall the article "Bitcoin: a symptom of market mania — or the new gold?" by Merryn Somerset Webb  (8 January 2021). Merryn owned just 0.0066 bitcoin at the time, but considered to buy "a little more", and here is the thing - as a hedge - so she does not "feel too awful" if the price goes up to $500,000. I doubt she will have invested more than 5% of her assets in crypto.

The problem for anyone diving seriously into the crypto world - there is virtually an unlimited number of options and the market runs 24h / 7 days a week. It is fun to engage in this for some time, however, does it pay off?

Think about the amount of time you invest in crypto in a typical week (x, in hours), the amount of money you would normally earn per hour (y, in $), for example, doing consulting work. So over 10 years, this would be 10 * 52 * x * y. Plugging in some numbers, I get $1,040,000. Try it out for yourself!

That number reflects only time invested. You will have invested some fiat currency as well.

And even if you are fortunate enough to make a profit that compensates all your time spent researching/trading crypto. Chances are the country you live in has accumulated significant debts to soften the impact of Covid-19. Taxes (e.g. income, wealth) are likely to raise. The best thing to future proof your finances would seem to develop the skills that are needed to perform a job that is not taken away by machine learning or automation.

Especially for anyone under the age of 30, or even higher, it would seem a no brainer to invest your time in education rather than crypto. It is also far more rewarding in a non-monetary sense. Using crypto as a hedge, like Merryn, makes perfect sense (assuming you can afford to lose what you put in). However, investing considerable time on a regular basis will likely have a detrimental effect on your finances, at least in the long-term.

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