By DART TIGLAO

NOTE: This is not financial advice but solely for informational purposes. Invest only what you are comfortable of losing. At the time of writing, Bitcoin has been down 41% on the average for the last three months. But its price is still up by 299% compared to exactly a year ago. Total market capitalization of all cryptocurrencies including Bitcoin is USD 1.4T. Exactly a year ago it was only USD 260 million, a 438% increase in market cap. 

Due to the amount of volatility involved and the fact that no one really knows the future of Bitcoin and other cryptocurrencies, the term “bet” or gamble is far more appropriate than “invest.”

Therefore, a much better question than “Should I invest in cryptocurrencies like Bitcoin?” is “How sure am I right now that Bitcoin (or other coins) will significantly increase value and be widely adopted in the coming years, and how much am I willing to lose if it doesn’t and is not?” 

Keep that question in mind as you go through four reasons why you should bet right now on cryptocurrencies. 

1. Bitcoin and blockchains are not really new. The “Lindy effect” states that the “future life expectancy of some non-perishable things, like a technology or an idea, is proportional to their current age.” A classic example is that the longer a book has been on the bestseller list in the past, the more likely it is expected to stay there longer. 

Sending cash through the Internet has been a problem from the very beginning of the World Wide Web. Many actually have tried and failed but in 2008 Bitcoin became the first “digital cash” that solved the problem of “how to move value peer-to-peer on the internet without any trusted central intermediary (such as Visa or any banks),” as explained by blockchain MIT professor and currently US Securities and Exchange Commission (SEC) head Gary Gensler. 

Bitcoin’s mysterious inventor Satoshi Nakamoto solved the problem by improving and applying an obscure cryptograph protocol that uses “a chain of blocks,” an idea that was conceptualized as far back as 1981, and after 10 years in 1991 was first implemented as a document time-stamping technology. It was only years after the birth of bitcoin in 2008 and onwards have countless others followed suit, seeing the effectiveness of using blockchains for creating working digital currencies. But because of the Lindy effect and first-mover advantage, Bitcoin would probably outlast most of them and survive at least 10 more years. 

Blockchain has since proven to have countless proven uses within and outside finance. Blockchain is being applied to lessen administrative costs in the insurance industry, for logistic companies to reduce errors in tracking shipments, creating digital assets that cannot be forged (NFTs), and countless more applications. 

2. Might as well bet since there are many ways you can mitigate big losses. I personally subscribe to serial entrepreneur and technology investor Kevin Rose’s views on Bitcoin and cryptocurrencies as he has been right on so many digital trends and investments for so many years. When I started last year, I took up his odds which is something like: 30% chance Bitcoin will lose half of its value, but 70% chance it will 10x in a couple of years.

Here is a much more conservative estimate: What if there is a 60% chance you will lose all crypto coins you will buy, but a 40% chance they will total 10x in a couple of years? Are you willing to gamble, and if yes, by how much? (Has it been explained to you that you can buy very tiny fractions of a whole Bitcoin?) 

YouTube digital lifestyle influencer Ali Abdaal (who is the main inspiration for this article), mentions that the rich and ultra-rich have typically put 2% or less of their investible funds on cryptos. Many crypto enthusiasts such as Ali who have taken some kind of online course or read at least one book on the subject usually invest around 20%. “Crazy” ones have “invested” 75-100% of their worth or even 200% via loans (do not ever get into debt to buy crypto coins!). 

If you have high confidence but are afraid of short-term volatility, “dollar-cost averaging” strategy might work for you as it has for me. This works by regularly investing a small amount every month. You may hit peaks and dips of price but since you are confident of long-term growth, the average will result in positive returns and you would have avoided major losses. 

There are also many applications and websites that will alert you if coin price changes. But Kevin Rose also warns that “99 percent of [coins or crypto projects] out there are garbage.” He adds that the easiest way of evaluating projects is to check their market cap. 

3. Institutions and big players are panicking. This happens whenever a new major technology is on the cusp of massive adoption. There are Bitcoin maximalists who believe Bitcoin will reach USD1M price and is the solution to everyone’s financial woes. There are minimalists who believe Bitcoin, while it has paved the way for a working digital currency, is very flawed and will be surpassed by much better solutions. And there are many in between. But the fact that billionaires, large companies, huge institutions and even entire governments are scrambling and finally taking action on cryptocurrencies is a strong sign that something is going on. If one or more country bans it and one or more country officially allows it, it is no longer a joke but a serious force to consider. 

4. Give in to your FOMO (Fear of Missing Out), curiosity or social pressure, and just have fun with it. I also got this idea from Ali Abdaal. Perhaps this is highly unscientific or unprofessional advice but I can assume you have heard more than enough about Bitcoins and other cryptocurrencies in media. You have been mulling about it for some time now and taking too much brain bandwidth. Your curiosity and even social pressure are just enough that giving in would be worth losing even just PHP5,000 (or USD100) or keeping it locked in for the next five years. 

You’ll have a sense of relief – now it’s off your mind since you took action. You might also get the feeling the pride of participating in a possible future or being one of the “daring” ones (current estimates is that just 1% of the population has bought Bitcoin). Give in to FOMO as long as you still stick to the concept of betting on what we have discussed. 

“What makes a decision great is not that it has a great outcome. A great decision is the result of a good process, and that process must include an attempt to accurately represent our own state of knowledge. The state of knowledge, in turn, is some variation of ‘I’m not sure.’” – Annie Duke, World Poker Champion

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