Lesson: Is Bitcoin A Good Investment Idea?
Thanks to Brian Page and Amanda Volz for this blog post and for sharing this great lesson to engage your students in this craze called bitcoin. Here's a link to a bitcoin primer that we wrote last summer (eons ago in cryptocurrency time). As of February 6th, bitcoin trades at $7615.27.
Every investor wants to be “in early” and find that diamond in the rough. Every investor wants to make a lot of money. Every investor wants to make a lot of money fast!
The cryptocurrency market is interesting, unfamiliar, and speculative. Bitcoin is a type of cryptocurrency, and rumors of easy money being made in Bitcoin are rampant. Students are bringing up Bitcoin in class, and many believe it’s easy money. It seems like everyone has someone they know who has “made a fortune” on Bitcoin.
With stories of savvy investors making a fortune and reputable experts advising consumers to stay away, this topic has piqued the interest of students who are just learning the basics of investing. While some students understand speculation, others have just bought into the noise and think this investment will quickly make them rich.
But what should you do when a student wants to “put all of their money into Bitcoin”? Perhaps first respond with your best “Are you sure about that?” face. Then remind students of the principles of investing such as risk vs return and diversification. And if that’s not enough, consider using our [Brian and Amanda's] new Bitcoin lesson (LINK) that sprinkles in current events, the myths, and the facts about Bitcoin.
Editor's note: This is my favorite chart (November 2017 before the recent 67% decline) showing how bitcoin dwarfs all other recent asset bubbles. Note that in order to get Bitcoin on the graph, they had to create the scale you see on the right.
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.
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