For years, I had heard of bitcoin and never invested. In November 2016, I won $50 from bovada and withdrew it as bitcoins. For all of December, I wrote the price of ether on my calendar every day as a curiosity. I invested 0 additional dollars. The price spiked and I still considered it a curiosity.
Meanwhile, I had no problem buying $10 scratchers and tickets to multi-million dollar jackpots. For social reasons, but still there was a financial impact. I had trouble convincing myself to invest $1 / week in a curiosity. Yet, I managed to invest $25 into a curiosity, ethereum when it was priced at $50. I had no rationale to invest more.
Now I do, most of my investments are in passive investments specifically Schwab Large Cap ETF with a miniscule 0.03% expense ratio. Why reallocate a dime from tried and true index investing? Because of market caps, by buying index funds, I implicitly subscribed to the notion of capital allocation by market capitalization. Today, the market capitalization of digital currencies total over $140 billion. The market cap of us large caps is a tad over $20 trillion.
If an index fund could allocate to digital currencies then 0.7% would be allocated to digital currencies. Anyone can invest 0.7% into digital currencies with ease and receive a decent bet with reasonable risk and payoff. Should the 0.7% drop, then any investor would retain 99.3% of their starting assets. Should the 0.7% grow, said investor would have positive exposure to a growing asset class without taking more risks than average!
That one simple realization got me to thoughtfully embrace digital currencies. When I compute my position on digital currencies relative to my equities, it makes a lot of sense to invest and stay invested in digital currencies.
Thoughts?
Other related thoughts: if the economy grows, there will be sectors that lead that growth, why can't cryptocurrency be that sector? (No mainstream adoption yet)
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STOPNice post! I will follow you from now on.
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