You can’t escape them. The people who promise you riches with Bitcoin.
- “Buy Bitcoin with your credit card!”
- “5 ways to make money with Bitcoin!”
And the best thing? It’s so easy that everyone can do it. But is that really the case?
I must be honest, when you hear all the stories of people who made so much money in a short while, you get curious. And if you take a look at the price of Bitcoin, you see that exploded it 2017. If you had bought the currency just before the boom, you would end up with more than 2,000% return within a year.
It’s an attractive investment, right? Wrong. “Investing” in Bitcoin is not investing at all. It’s speculation. According to Benjamin Graham, the difference between investing and speculating is straightforward. It has everything to do with risk as Graham writes:
“For investment, the future is essentially something to be guarded against rather than to be profited from…. Speculation, on the other hand, may always properly — and often soundly — derive its basis and its justification from prospective developments that differ from past performance.” (emphasis mine)
Speculation is different. Like Graham writes, that’s when you buy something with the sole purpose of selling it at a higher rate in the future. And that’s how Jack Bogle, who’s called a “hero” to the average investor by Warren Buffett, recently described Bitcoin:
“There is nothing that supports the Bitcoin except the hope that you can sell it to somebody for more than you paid for it.”
In the same interview, he also says you should avoid Bitcoin like the plague. He has a good point. Hope is generally not a good strategy. And there’s nothing that supports Bitcoin but ideals—nothing tangible.
The funny thing is that Bitcoin supporters say, “We’re not speculating!” They are. They are just backing up their beliefs. It’s a common cognitive bias.