Interested in Cryptocurrencies? Bitcoin Investing Can Bust the Family Budget
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 the family. Life doesn’t end. Ambitions and dreams don’t die. I just know that what my family needs to take 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 be 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 is 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 of 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 break down 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.
Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business