The Future of Money pt. 2

For last week’s post, I wrote about my experience with cryptocurrency, detailing back to when I first heard about it, to when I first invested in it (May of 2021), all the way to when I lost 2,000 dollars when the market fell overnight (also in May of 2021). That post got a little long, so I thought I’d save the second half for this week.

Picking up where I left off, after investing quite a substantial amount of money (at least for me) into Ethereum when it was at 3900 dollars, I watched as it plunged from 4,300 down to 3,400 in just a few days. That’s when I sold the ether I had and watched as it plunged even farther down to 1,800 dollars.

It seems funny writing this now, because at the moment Ethereum is at 4,700, seven months later. It was also during that initial plunge that Bitcoin dropped down to 30,000 or so (now it’s hovering close to 67,000).

After this experience, I didn’t want anything to do with crypto. I stopped looking at the charts, and just transferred all the money I had in my crypto account back into my bank. The swings were too much to handle. I even saw a post on Reddit where someone wrote how they lost over 40,000 overnight because of the market crash.

Now, losing 2,000 overnight felt bad, but I couldn’t imagine 40,000. The strangest part was, the person in the post wrote how they weren’t going to sell.

I finished out Spring Term and only logged back into my crytpo account to check the charts once in June. The market was still down, and I wasn’t planning on buying Ethereum again. However, there was one coin that my brother (who’s 10 years older than me and in finance) mentioned he had been thinking about buying. So I put 50 bucks into it and promised myself I wouldn’t log in again for at least a few months.

And I held myself to that promise. Throughout the entirety of Summer term, my main priority was classes. I even heard mention of another crytpo crash sometime in July, although I never logged in to check where everything was at. I just left it alone.

I did this partly because I was just sick of looking at the charts, because of all the money I had lost, just days after putting so much in. But I also knew there was a good chance I’d sell the coin I bought for a small amount if I logged in. I didn’t want to sell it for its value now. I wanted to keep it to see how high this small investment could get if I just left it alone. And I found that with investing such a small amount, it’s actually pretty easy to not have any desire to log in constantly.

Then in the beginning of September I logged back in. I had been finished with classes for a few weeks, and I was on vacation. I had honsetly kind of forgotten that I had invested anything at all at that point, and when I remembered it felt like enough time had passed. To my surprise, I had actually made a hundred on the 50 bucks I invested a few months earlier.

The market seemed to be more stable at this point, and so I gradually started putting more money back in. And the weird part is, it seemed like everyone else was too. The older coworker of mine (who warned me just a few months earlier that it’d be better to put money down on a blackjack table than into crytpo) told me he had invested a few thousand. My brother, who was also skeptical a few months earlier, had put in five figures. One of my cousins and her husband had even built a computer to start mining it.

After holding crypto for a few months and not looking at it, I became better at resisting the urge to constantly check my own asset level. Luckily, after investing some more gradually and not overreacting every time there was a dip, I was able to make my initial money back that I had lost back in May.

In one interview, Elon Musk said that there’s a good chance cryptocurrency is the money of the future, but that at this point, it’s all still speculative. There could be multiple coins that everyone uses.

It’s just interesting to me that a concept the large majority of the population ignored and criticized when it was first introduced has swept so many people up. That something could go from less than a cent to 67,000 dollars in just about a decade is insane. And the world’s wealthiest man is telling people that it’s the way of the future.

However, the funny part is that Bitcoin can only process 4.6 transactions per second. Whereas something like Visa can process 1,700 transactions per second. To me, for something to pave the way into the future, it should innovate and progress past what already exists. For something to be viable for use with NFTs and the upcoming metaverse, and be used by hundreds of millions of people, it should be able to process more than just 4.6 transactions a second. Interestingly, there is one coin that can process way more transactions than Visa, and is massively cheaper to push through transactions than both Bitcoin and Ethereum. With a coin like this, I can see cryptocurrency becoming more of a step towards something that can be widely used for more than just storing value.