Another buidlbee AMA happened last week: we spoke about money and earning money on Bitcoin only. CEO and CTO of Bitcoin-only investment company River Financial, Alex Leishman gave answers to your questions.
Here are the most important of his answers.
Q: You are a Bitcoin-only company. Do you think that after five years we will have only Bitcoin?
A: No, I think there’s always going to be a lot of coins. One of the lessons I’ve learned over the years is that coins never die. They just stay forever for some reason, and some random exchange in the world will allow you to trade them. It’s so easy to create a new coin, so I don’t think they’re ever going to go away.
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Still, I do think that almost all altcoins are going to be long-term bad investments.
Q: But not Bitcoin? Why so?
A: We focus on Bitcoin because we believe that there’s a very clear value proposition there.
In general, crypto is a very distinct and different investment product from other assets that most people are used to. Because they’re completely digital native: they have no time whatsoever for the real world. Instead, it is a world unto its own, and buying crypto is believing that this world will continue to grow.
Bitcoin obviously was the first one and it’s just the major one.
Q: Many say that the dollar cost average (DCA) is the easiest strategy for beginners. Do you agree with that?
A: I do agree with that because it is a great way to remove your emotions from accumulating Bitcoin. And bear markets are actually a really good time to DCA because you don’t know when the bottom is and you don’t have to watch the price and think about it constantly.
I noticed that people often do the opposite of what makes sense😀 When the Bitcoin price is going really high, people want to buy, and once it falls everyone’s scared and tries to get rid of it. DCA doesn’t let you make such decisions.
Q: What other strategies do you see easy but effective?
A: Buy at the depth. When you see a big Bitcoin price dump, buy it.
Q: Should personal investment strategy be unique?
A: I think people tend to overthink it a lot. It should be unique, but in the sense that it suits whatever your cash flows are. And, at the end of the day, you just need to make sure that you have money to comfortably invest and live. What happens in these bull markets is a lot of people overextend themselves. They think that this is their chance to get really rich and they get burned by that.
Q: So, what to do instead? What are the best investment options for crypto winter?
A: I think buying Bitcoin is one of the best things you could do in a bear market. I did a dollar cost average during the crypto winter of 2014 and 2015 and that was the best investment I ever made in my life. My other great investment is investing in myself.
You need to build the skills and experience in your own life first to build an income stream. Just speculating on crypto isn’t going to bring you the success you want in your life.
Q: How much money do you need to invest in Bitcoin, and how much can you make?
A: [The] minimum amount is $10. But if you want to make $1,000 from them in a short time, I don’t think that’s a realistic expectation. I guess if you’re chasing those types of numbers, you’re sort of getting into the game of gambling or leverage. But in 5–10 years, Bitcoin could go 100x — who knows?
Anyway, I think a healthy mindset with wealth creation is a longer-term view and incrementally and steadily compounding and building wealth instead of chasing very short-term, massive returns. Look at every very wealthy person in the world. Almost every single one built their wealth over many years. It didn’t just happen overnight and I think people trying to get rich overnight on speculation typically just sets them up for massive failure.
Q: Last question. How to make mining profitable?
A: It is difficult because of expensive electricity, but with River, it is possible because we bought and reserved a bunch of cheap electricity in bulk last year. That allows our clients to mine at a profit still. Basically, what we offer is the economy of scale that we’re able to get as a big company to pass that through to our customers.
In general, I think that Bitcoin mining, just like Bitcoin investment, isn’t always profitable and could be painful in times like ours, but the good thing with mining is that your costs are fixed.
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