Reflections of Buying My First Cryptocurrency

I bought my first cryptocurrencies a few weeks ago. 

I’ve been watching from the sidelines for years. I’ve been researching and educating myself. I feel it’s important to stay up to date on trends in investing, even if I am not personally investing that way. 

Crypto still doesn’t make sense to me. But, it doesn’t have to make sense to me. Someone paying millions of dollars for a painting will never make sense to me, but it still happens. There is still a huge market for high-end art. 

This is my reflection on buying my first cryptocurrencies. I explain why I decided to do it now, what the process was like, and what it’s been like watching the fluctuations since I bought it. 

Why I Bought Cryptocurrency Now

Let’s get something out of the way. 

I didn’t go all-in on crypto. I didn’t jump into the ocean with all my belongings. I dipped my toe in the water to see how it feels. 

I’m not one of those people selling everything from the traditional finance world to put it into Web3, DeFi, and a bunch of other projects I don’t fully understand. 

Crypto now makes up less than 1% of my net worth. 

I’ve been following crypto for years. I never bought any because I never understood the value of it.

As it rose in value and made some people millions of dollars, I still couldn’t answer the question of, “How does this have value?” It seemed ridiculous. 

It doesn’t produce dividends. There is no company behind it that can grow earnings to increase the price like owning individual stocks. It doesn’t pay interest. 

For the longest time, it couldn’t be used to make something else like you have with commodities, such as wheat, corn, and sugar. 

It was worth what it was worth because the next person was willing to pay a certain price for it. 

So, why now? Why buy crypto now? 

The audience has changed. 

It used to be a small subset of the population buying crypto. That’s changing. 

When something is small, it doesn’t take much for it to go away overnight.

Think about your small-town family restaurant compared to a chain like McDonald’s. 

Your small-town family restaurant could go out of business due to a family member getting sick, a fire, or rising rents. One event, totally outside the control of the restaurant owners, could crush the restaurant. 

Now, think about McDonald’s. What would it take for all McDonald’s everywhere to go out of business? 

It likely won’t be a fire, rising rents, or someone getting sick. 

It will take something more systemic. It could be a shift in the dining preferences of a new generation or taking on too much debt. It likely won’t happen overnight. It would likely be a slow decline over time. 

Institutions are Trying to Make it Available

Over the past few years, we’ve seen ETF (exchange-traded fund) providers try to bring a Bitcoin ETF to market. So far, no luck. The Securities and Exchange Commission (SEC), which oversees securities markets and protects investors, hasn’t approved it. 

If you search for Bitcoin ETFs, you’ll find them, but they don’t actually own Bitcoin. They own Bitcoin futures contracts. I won’t go into what a future contract is in detail, but know that it is an agreement to buy an asset at a specified price on a certain date in the future. 

Owning something directly and owning the right to buy something are two different things. 

They will also perform differently. 

Institutions are continually attempting to launch Bitcoin ETFs. I don’t know whether they will be successful, but it certainly feels like crypto is gaining momentum to become more mainstream. 

What really did it for me is the partnership between Ritholtz Wealth Management, WisdomTree, and Onramp. They created a crypto index for their clients to invest in. 

As far as I know, it’s the first of its kind. 

I recommend reading the article by Barry Ritholtz. It helps explain the compliance and integration nightmare of putting it together. And let me tell you, it would be a nightmare to set up. Many people don’t realize how tightly regulated registered investment advisors are and how limited the software and custody integrations for developing technologies and investments are. Despite the obstacles, they appear to have figured out a way to do it. 

This announcement, combined with a 20% drop in many cryptocurrencies, is what made me want to dip my toes in the water. 

I think a crypto index is going to have wide appeal if crypto interest continues as it has. 

I haven’t loved the idea of putting money into a crypto exchange that is not regulated as a major custodian like Charles Schwab would be. I also don’t love the idea of putting cryptocurrency on a digital wallet and being my own bank or custodian. There is more risk of money being stolen or lost. 

I also don’t fully understand the premise behind each cryptocurrency and how it works. The appeal of a crypto index is similar to a stock index. Instead of researching individual cryptocurrencies and deciding which to buy, I can own the index with everything in it. 

I have no idea how this partnership will work out, but the fact that these three companies from different parts of finance (two from more traditional finance backgrounds) have come together to create the first diversified exposure to cryptoassets makes me think crypto is here to stay in some shape or form. 

Plus, what happens if more institutional investors follow suit and crypto is more easily accessible? 

Nobody knows what will happen, but I’m guessing there is a huge demand that sparks more interest and further increases demand. More demand usually means higher prices. It’s estimated that institutional investors account for about 70% of stock trading volume. If part of that carries over to the crypto market, we could see higher prices. 

Again, nobody knows. I’m speculating and sharing my thoughts. 

What it Was Like Buying Crypto

It was almost too easy. 

After setting up the account and connecting my bank account, I clicked “Buy, Preview Buy, and Buy Now” next to the cryptocurrency I wanted. You can see the order below.

Solana preview buy
Solana order preview
Solana successful purchased

Coinbase fronted me the money to buy the cryptocurrency at the current price and then would pull the funds from my bank account into the account. This was odd to me. 

Most custodians in the traditional finance world actually need you to have settled funds in the account before trading. What this means in practice is usually requesting funds to transfer via ACH (the system most people use to transfer funds between financial institutions), funds arriving the next day or two days later, and then settling a few days after that. In total, it might be a week or so before you can trade. 

It was strange being able to buy something with $0 in my account. 

I also found it odd that each of the trades settled at a different time. Normally, if I buy different ETFs on the same day, they are going to settle on the same day. The cryptocurrencies were not like this. You can see below that I could send my Solana off Coinbase, such as to a digital wallet, on December 10, but I couldn’t send my Bitcoin off until December 14, despite buying them within the same ten-minute window.

I’m not sure why there is a difference. 

And how about the encouragement on the screen below? 

Who doesn’t want to own a piece of the future? 

As I said at the beginning, it was almost too easy to buy it. That’s a little concerning to me. 

They have a good interface. It’s easy to use, and I appreciate it. I get why they want to make it easy. It encourages people to buy more – they earn a fee each time, but part of me feels there should be some restrictions or some sort of warning. I don’t know what a better solution looks like, but it felt a little too simple. 

It doesn’t feel right that I could buy cryptocurrency with no money in the account in about three clicks. 

Maybe this is my traditional finance background speaking, and I need to get with the times, but I worry about the gamification of trading and investing. Everything is fine as markets go up, but as soon as they go the other way, you start to hear horror stories. 

How Do I Feel About it Now?

It’s always different once you experience something. 

You hear about it when people become parents. I’m not a parent, but I often hear, “I had a baby, and life changed.” You can tell someone what it is like being a parent, but until they experience it, it’s not the same. 

I still don’t fully understand why cryptocurrencies have value. Part of me still believes it’s only because there is enough interest and demand that someone is willing to pay whatever price I see on my screen at that moment in time. 

But then again, how is this different from other assets? 

I wouldn’t pay hundreds of dollars for a baseball card. Even if I had millions of dollars to spend on art, I can’t imagine I would. The same goes for rare coins or stamps. 

These assets don’t make sense to me either and yet, a market has existed in them for a very long time. 

I limited my purchase of crypto to an amount that if it were to disappear overnight, I’ll be disappointed, but my life won’t change in the slightest. 

Although I’ve been watching crypto for years, I decided to buy it because it’s different when you own it. As a fiduciary financial planner, I have an obligation to stay on top of what is happening in finance and be educated about many types of investments – even if they are not as mainstream as stocks and bonds. 

I don’t regret buying them, despite being down a little more than 7% in a week as I write this. 

One thing I have noticed is the volatility, or ups and downs, of the crypto market. Over the past week, I’ve received numerous price movement alerts of five percent or more in a day. It’s a rollercoaster ride. 

The money still feels a little fake to me, akin to Monopoly money or tickets at a fair. 

I know I can redeem it for US Dollars, but seeing the name “Bitcoin” or “Ethereum” in my account with a dollar value next to it feels intangible. 

I’m not sure what it will take to make that money feel real. 

Most importantly, my curiosity is satisfied. I’m watching the crypto market and reading about it more. 

I don’t feel the urge to invest more, even though I have the same fear of missing out as others whenever I read the articles about people retiring from their crypto gains. There is survivorship bias. We don’t usually hear about those losing a ton of money. 

It’s easy to go overboard when it feels like everyone is getting rich. 

I have no idea where crypto is headed. I have no idea if I’ll regret investing the money I did because it went down or regret that I didn’t invest more because it went up. Hopefully neither. The process is more important than the outcome. What I do know is I had a reason for buying it now, and I can live with the results – either way it goes. 

Summary – Final Thoughts

I still don’t understand the potential for cryptocurrency, but I’m less negative about it than I was a few years ago. 

The partnership between Ritholtz, Wisdomtree, and Onramp was a big turning point for me. If they figured out how to offer it, it feels like more institutions are going to start to enter the space. It feels like crypto has more momentum and strength behind it, but who knows? 

As with anything new, regulation, compliance, and laws are usually catching up. My guess is we continue to see changes in those areas as more people put money into crypto. It still feels a little like the wild west in how easy it is to buy. 

I’m a big believer in making investing more accessible, but I also believe there need to be safeguards in place for people. 

I’ll probably do an update at some point in the future about how I feel about crypto, but for now, I’m going to continue learning and watching the crypto market. 

Disclaimer: This article is for general information and educational purposes only and should not be considered investment, financial, legal, or tax advice. It is not a recommendation for purchase or sale of any security or investment advisory services. Please consult your own legal, financial, and other professionals to determine what may be appropriate for you. Opinions expressed are as of the date of publication, and such opinions are subject to change. Click for Full Disclaimer