Teen bitcoin millionaire Erik Finman saysMillennialswho are curious about investing in cryptocurrencies could dip their toe in the crypto pond by investing $1,000. After all, that strategy transformed the 19-year-old high school dropout into a millionaire.
Many people are understandably leery of cryptocurrencies because of the erratic price movements ofbitcoinand other digital coins. Moreover, they’re unregulated and are not backed by a central government or bank, adding to their murkyreputation as an investment vehicle.
But Finman thinks bitcoin is the wave of the future, and for now, he believes it’s the safest virtual currency to invest in. “I think bitcoin is the safest cryptocurrency right now,” hetold CNBC.
Of course, Finman is biased: The teen crypto phenom used $1,000 his grandmother gave him when he was 12 years old to buy his first bitcoin when the little-known virtual currency was just $12 a token. By age 18, Finman had become a millionaire.(See more:Who is Erik Finman, the Bitcoin Millionaire Teenager?)
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The baby-faced investing whiz currently owns401 bitcoins, which translates to about $3.8 million using today’s bitcoin price of $9,300.
While $1,000 isn’t chump change for most Millennials, it isn’t a prohibitively huge amount, Finman noted. According to CNBC,40 percent of people between ages 24 and 35 have at least $1,000 in their savings account.
Finman said Millennials would be better off investing that money than letting it sit idle in a savings account. However, he warned Millennials (or anyone, for that matter) to heed the advice of billionaire Mark Cuban: Only invest what you’re willing to lose.
When asked about the recent plungein bitcoin's price since the beginning of 2018, Finman was nonplussed. "I still believe in cryptocurrencies," hetold Business Insider."There are always ups and downs on the way up. Many people have anticipated this decline. It was almost a self-fulfilling prophecy after many experts spoke of a bubble."
Finman said a major problem with inexperienced investors is their short-term outlook. "The biggest mistake they can make is to get out of the market now and sell their bitcoins just because of a setback," he explained.
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Finman said if you're careful, you can get huge dividends by investing in crypto. "The area is still relatively small. The market capitalization is just over half a trillion dollars," he explained. "I do not want to be misunderstood: This is, of course, a very high amount, but in comparison to other asset classes, it’s small. Therefore, I say if you do not become a millionaire in the next 10 years, then it’s your own fault."
Meanwhile, bitcoin and other cryptocurrencies have come under fire by leading figures in the financial world.JPMorgan Chase CEO Jamie Dimon famously slammed the cryptocurrency as “a fraud” and called its investors “stupid.” (See more:JPM’s Dimon Calls Bitcoin a ‘Fraud’, its Investors ‘Stupid‘.) Dimon has since backpedaled a bit, but remains a crypto skeptic.
Similarly, billionaire Warren Buffett warned that the crypto bubble will eventually come crashing down. “I can say with almost certainty that they will come to a bad ending,” the Berkshire Hathaway chair told CNBC. (See more:Buffett: Cryptocurrency Will Come to a Bad End.)
Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns no cryptocurrencies.
I'm an enthusiast with a deep understanding of cryptocurrency and blockchain technology. My expertise extends to the intricacies of Bitcoin, altcoins, and the broader crypto market. I've been actively involved in the space, keeping a close eye on developments, market trends, and the evolving landscape of digital currencies.
Now, let's delve into the concepts mentioned in the article:
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Erik Finman's Strategy:
- Erik Finman suggests that millennials curious about cryptocurrency investment can start by investing $1,000. He transformed a $1,000 investment into significant wealth, owning 401 bitcoins valued at $3.8 million.
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Bitcoin as the Safest Virtual Currency:
- Finman believes that, despite the volatile nature of cryptocurrencies, Bitcoin is currently the safest option for investment. He attributes his success to investing in Bitcoin at a young age.
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Risk and Caution:
- Finman advises caution and echoes Mark Cuban's warning to only invest what one is willing to lose. He emphasizes the importance of a long-term outlook and cautions against reacting to short-term setbacks.
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Millennials and Investment:
- Finman suggests that millennials, who often have at least $1,000 in savings, could benefit more from investing in cryptocurrencies than keeping the money idle in a savings account.
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Cryptocurrency Criticism:
- The article mentions criticisms from notable figures like Jamie Dimon, CEO of JPMorgan Chase, and Warren Buffett. Dimon called Bitcoin a "fraud," while Buffett warned of a crypto bubble that would come to a bad end.
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Cryptocurrency Market Size:
- Finman highlights the relatively small size of the cryptocurrency market, with a market capitalization just over half a trillion dollars. He sees potential for substantial returns in the future.
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Risks and Disclaimers:
- The article concludes with a disclaimer, emphasizing the highly risky and speculative nature of investing in cryptocurrencies. It advises consulting with a qualified professional before making financial decisions.
In summary, the article covers Finman's success story, his perspective on Bitcoin, cautionary advice on investment, criticism from financial figures, and a disclaimer on the risks associated with investing in cryptocurrencies.
