Digital currencies have surged this year. But what if you’d invested much earlier?
It’s always fun to play the “what if?” game with investments, especially when top cryptocurrencies have soared in value since being launched. If that’s something that intrigues you, keep reading to see how much you would have made if you’d invested in Ethereum from day one.
What is Ethereum?
Ethereum (ETH) is the world’s second-biggest cryptocurrency, behind Bitcoin (BTC). It was launched in July 2015 and first traded on August 7 for $2.77. The next day, the coin’s value had fallen to $0.81. It remained under $1 until January 2016.
So, if you’d spent $100 on day one, you’d have 36.1 Ethereum tokens. As I write this, (April 21), each token is worth about $2,420 — so those 36.1 ETH tokens would be worth $87,362.
Bear in mind, the price of digital currencies has made an incredible jump this year — Ethereum is up almost 300% from Jan. 1 alone. But even without that leap, if you’d bought Ethereum at $2.77, you’d still be doing well.
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So, if I’d invested $100, I could have over $80,000 now?
In theory, yes. But life doesn’t usually work out that way.
The challenging thing about cryptocurrencies and other new investments is that with the benefit of hindsight, we’d all have bought Bitcoin or Ethereum years ago. We’d have invested in Amazon back when its IPO was $18 a share as well.
The Ascent’s parent company, The Motley Fool, holds Bitcoin. It does so because it believes it is a solid long-term investment.
What does that mean at a practical level? If the value of Bitcoin falls dramatically tomorrow, The Motley Fool will feel comfortable holding because it has analyzed the digital currency and sees extended value in Bitcoin. So when prices drop, it can wait patiently until the value rises again.
But putting money into a project when you don’t fully understand the fundamentals in the hope that it might be the next big thing is closer to gambling than investing. Added to which, back in 2015, we didn’t have as many secure cryptocurrency exchanges or protections as we do now. Your Ethereum could have been stolen by hackers or taken by scammers.
What if you’d chosen to invest in a coin called GetGems (GEMZ) instead? GetGems was a decentralized media messaging app that launched in April 2015. Users could send Bitcoin via the app. If you’d put your $100 into GetGems on the same day Ethereum launched, you’d have been able to buy 6,250 GetGems (they were worth $0.016 on Aug. 11). It peaked at $0.058 in May 2017 — when your investment would’ve been worth $362.50 — before ceasing to trade altogether. In the end, you’d have lost your money.
Looking forward
It’s easy to look back and wish you’d bought Ethereum six years ago, or even six months ago. But if you didn’t, there are still plenty of opportunities. The important thing is to invest for the long term — look for stocks or cryptocurrencies that you believe are good, lasting investments.
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Cryptocurrencies are unregulated and can be extremely volatile. That means there are higher risks, but also higher rewards. The meteoric jump we’ve seen in recent months has raised concerns about a crypto bubble and fears it might burst. But if you see potential in this new technology, you’re less likely to get burned by a steep price drop — as long as you don’t invest any cash you’ll need in the short term.
It isn’t easy. Buying individual cryptocurrencies — like buying individual stocks — takes time. A lot of investors stick with mutual funds, ETFs, or index funds because they don’t want to, or aren’t able to, research each investment. Instead, they choose a fund, sometimes one with a fund manager, so they can balance their portfolios and risk levels.
But the SEC has not yet approved any cryptocurrency funds in the U.S. As such, the onus is on us as individual investors to work out which cryptocurrencies to invest in. And if you’ve never invested before, that can be daunting. An alternative would be to look for funds that center on blockchain or crypto-focused companies.
Whatever you decide to do, try to think long term. Nobody wants to take on debt in three months because they gambled on crypto and lost.
