When I first started a family, bought a house, and began paying multiple premiums for multiple kinds of insurance policies, I accepted that I had become an adult. Being an adult involves sacrifice – sacrificing personal pursuits and deferring dreams for the sake of family. Life doesn’t end. Ambitions and dreams don’t die. I just know that what my family needs takes precedence over what I want.
As a family man, I had to perfect my skills in perfecting budgets. I really can’t afford to overindulge in hobbies or chase the newest popular culture fads. Like cryptocurrencies. Just like everyone else, I was very tempted to begin bitcoin investing – it’s easy to get caught up in the hype.
Yet, the average family income is about $73,000. Average family expenses can top over $60,000 a year. The more research I did, the more I realized it was a gamble that I just couldn’t take – primarily for the sake of my family budget.
Experience Takes Time
A cryptocurrency is an intangible, virtual currency that stores a financial value that can transacted or traded over the internet. Cryptocurrencies are basically created through the computer code writing of extremely complex computer programs. In fact, cryptocurrency creation is a very complex process. It takes time, money, and dedication to become an expert. If you have a family, you might find you have bigger priorities.
Cryptocurrencies Are an Investing Gamble
Most people use cryptocurrencies as an investment medium. I have been learning that the trading value of cryptocurrencies are extremely prone to volatility. The trading value of a cryptocurrency can swing wildly from one day to the next. Or, one minute to the next.
On December 17, 2017, the trading value of a single Bitcoin, the world’s most well-known cryptocurrency, was about $19, 783. Since then, the trading value of a Bitcoin has plummeted from that price. As of this writing, the trading value of a single Bitcoin is about $5,000.
Bitcoin has lost well over half a billion dollars, if not more, in financial market trading value since December 2017. This development evaporated my cryptocurrency hype mania. Balancing my family budget is enough of a financial adventure for me.
Bitcoin Breakeven Costs
There are almost 2,400 kinds of cryptocurrencies. I am most familiar with Bitcoin. So, I looked into the process for Bitcoin creation, and learned that advanced software programs create cryptocurrencies. Computer algorithms and/or cryptocurrency users then determine the new cryptocurrencies they create or distribute.
Believe me, it’s a lot more complicated than it sounds. What I know about Bitcoin is that they are created primarily through a process called cryptocurrency mining. I would have to buy expensive computer hardware and software. Bitcoins are created after, “mining rigs,” as they are called, solve complex mathematical problems.
Mining rigs run 24 hours a day. They are prone to breakdown and need replacing. Based on the cost of mining rigs, and the current trading value of Bitcoin, the breakeven cost is about $7,300. That means to just breakeven for paying thousands in mining rig startup costs, I would need to profit by at least $7,300 in Bitcoin creation. The current value of a single Bitcoin is $6,200. You do the math.
I am not dissuading you from investing in cryptocurrencies. Far from it. However, you should know what you are getting into. It would also help to have a little money to burn. If you are balancing family budgets however, like me, the last thing you have to burn is money.
Understanding Cryptocurrencies and How They Work
A Concise History of Bitcoin and the Blockchain
6 Times When Renting Is Better Than Buying