I am a bitcoin millionaire.
How did I become a bitcoin millionaire?
Mostly, I got lucky. I’m a bad investor — what I’m really good at is creating companies like AppSumo — but hopefully I can share my experiences and failures and successes around this Bitcoin stuff to help you on your own money journey.
Even though I’m going to be sharing my thoughts on Bitcoin and investing in it, this is not financial advice. Don’t listen to me. Like I said, I got lucky. Always do your own due diligence.
But if you’re curious to know how I became a bitcoin millionaire and what I think about it, then read on.
How I Got Started with Bitcoin
So my story for crypto is in 2010 when I started AppSumo (the #1 marketplace for entrepreneurs — you should check it out) developer Nick Johnson was mining Bitcoin at University of Texas at Austin, and he asked me if I wanted to buy some Bitcoin.
And I said hell no.
I wanted real dollars. I didn’t want any of this fake Farmville virtual currency.
So he started mining crypto when it was worth like $0.0001. And it’s worth a heck of a lot more than that now.
The thing I want to highlight here is there’s probably a lot of things you didn’t do that you’re now regretting, and maybe this is one of them. But I think you have to be mindful of how you made decisions in the past and don’t be too hard on yourself now for what you did or didn’t do.
So fast forward to 2013 at AppSumo and Chad (who’s one of the smartest people I know, he’s the CTO of our company) and everyone at the business bought Bitcoin.
And I… did not.
I think it was around $200 to $400 a share and then prices went up to $1000 after that.
I was definitely a little jealous, and I was happy for them. But I also didn’t really care that much. I mostly just made fun of him and told him to enjoy his fake money.
Shortly after that it went down from $1000 back to $300.
Bitcoin is the funnest roller coaster of seeing your money just go up and down and up and down over the years.
So up until this point, I was kind of okay without it.
Until 2015, when I wanted to buy an illegal NFL stream.
I know crypto got popular on Silk Road. Most people were trying to buy bitcoin for drugs… I was trying to watch the 49ers lose the super bowl.
So I went to a site which I won’t mention because I don’t want to encourage any of you Underdogs to pay for illegal streams, but the site only accepted bitcoin.
Isn’t that crazy? Because of NFL streams I became a bitcoin millionaire.
So I bought some Bitcoin, I sent it to the site, and now I’m still watching my streams from there.
And what was really interesting is that I finally got it.
Not that I got the bitcoin, but I finally got how it’s going to be used.
Their network fees are going to be lower over time and it’s kind of like the universal currency that people can’t just automatically print more of.
Key Takeaway #1: Experience New Tech
So I think for all you Underdogs out there, with all these new types of technology — whether it’s in VR or 3d printing or AR or cryptocurrency — it’s easy to dismiss this stuff.
What I learned here is to just go and experience stuff and then you might actually say all right, I get it.
Or maybe you don’t get it. Or maybe you don’t even like it!
But I recommend at least being open to all the new tech out there.
After I bought my first bitcoin and I saw that it’s actually really interesting — you can transact with it, you can store wealth with it. So I bought more. Around $7000 dollars worth at $400 a share.
But here’s the part that was actually the most interesting… I turned on auto-buying so every month I bought $500 dollars worth and that alone turned into a million dollars of bitcoin.
My Crypto Wallet
So… let’s actually talk about my crypto wallet.
I had around $2000 in April 2016, and it ended up going up to like half a million dollars.
I remember being on the phone with my friend Neville and he was like, should we sell???
And I was like… I’m never selling this stuff.
And it cratered back down to around $80,000 and what was interesting about this is that it was always funny money to me — and so I didn’t really care. I kind of knew this is something I’m just going to hold onto forever, so it was nice to not have to think about it or let it affect my day-to-day emotions.
I also felt more comfortable with it because it was such a small part of my net worth.
I wanted to get to 10% of my net worth in risky investments, and it was only around 3% — so I ended up increasing my auto-buying. I think now I’m doing around $5000 – $7000 dollars a month between ethereum and bitcoin.
So I think I’ve probably put in somewhere between $60,000 – $70,000 into crypto, so the returns are pretty astronomical.
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Investing in 10x Baggers
One of the ways that Aswath Damodaran (who’s one of my mentors I would say) says to invest is you have some of your standard investments be lower risk.
Like Apple. Apple’s probably not going to double in a year, so you want to allocate some of your money to that. And then you also invest in what he calls 10x baggers.
So you put in some money to things that could either totally go to 0, or they could potentially 10x or more… and you have to be okay with that.
That’s why I have crypto in my risky asset allocation.
One thing that I’ve been doing more recently with around $10,000 dollars is buying up the next level of 10x baggers.
Now that bitcoin and ethereum are a little bit more known, I’m investing in other up and coming coins like:
Find out why I’m investing in these coins in this video
Lessen Your Risks
One other thing that I’m doing in crypto lately because I was really skeptical — I use BlockFi.
They literally have a coin that’s matched 1 for 1 with dollars, and you just store it on their site and they give you around 8% a month.
I think there’s something really interesting about that.
I’ve put about $100,000 in it.
You can also liquidate it really really quickly which has some advantages.
Is Bitcoin the 2020s Version of the Internet in ‘99?
What’s interesting is if you think about the internet in ‘99, would people then have ever expected the smartphone and all the ways that it’s taken over since then?
There’s been some theories that bitcoin is kind of at that same level.
Key Takeaway #2: Get in Early for Max Upsides
What I think about a lot of the time when it comes to investing comes from my stepfather:
By the time everyone’s talking about it and rushing into it, it’s probably too late for the huge-ass upsides. So just be mindful of that.
For me, my investing style is literally buying things that I would never sell.
So I own Apple and the same stocks that a lot of you probably own, and even though I can see their transactional value in the future — my plan is never to sell them.
Key Takeaway #3: Upsides & Downsides
Also consider that there’s an opportunity cost of putting money in bitcoin.
What is it?
It’s what else you could have invested that money in!
Around the same time I started investing in bitcoin, I also put $25,000 into a bar in Austin. That’s out of business now. I also put $15,000 dollars into a church. I got $7000 dollars back.
So I lost money on that.
What my friend said once which I thought was really interesting is, what is the upside/downside of these types of investments?
So what I mean by that is — the same amount of money I’m putting in this, what’s the upside?
The upside is 10x my money.
The downside doesn’t go all the way to zero.
So be mindful of this and look at your asset allocation and also be aware of your risk tolerance.
I am not a risky investor.
I don’t want to be thinking like, oh my god if this doesn’t go up I’m not going to be able to feed myself or pay my rent. I now allocate around 15% of my net worth to crypto, but those numbers obviously with crypto right now fluctuate really big.
And so you just have to be comfortable with that either go all in on it, or do Dollar Cost Averaging which works out really well for me and it’s why I auto-buy bitcoin no matter what the market price is at the moment.
Key Takeaway #4: Asset Allocation
My asset allocation strategy (because I’m not a risky investor) is, I like knowing where my money is.
At all times.
I know some people are like shut up, you’re just wasting your money by investing in crypto!
I just like knowing where it is.
I don’t want to worry about it.
I’d rather focus on the big money-making which is AppSumo and growing our business.
So my asset allocation is:
- 20% cash
- 30% real estate
- 35% long term and equities
- 15% risky
And obviously if you’re heavy in one, you can move it.
Sometimes I’m heavier in cash, so each month I move more money into different categories.
This is how I like to approach my investing in general. Results may vary — you have to choose your own preferences. But again, this isn’t financial advice.
Should You Invest in Bitcoin?
One of the questions I get all the time is should you be investing in bitcoin?
If you have no money and you’re praying that this is going to get you rich, don’t.
I don’t believe in hope or prayers in business.
But should the average person invest in bitcoin?
I can’t tell you what to do with your money.
I think that bitcoin is a really interesting asset, but I also think it’s really volatile so what I would do is put a little bit into crypto each month as well as into some more long-term equities like stocks or index funds.
For me, I’m putting in $5000 – $7000 a month and then I’m doing buys throughout the month — like a $10,000 buy of ethereum here and there.
For me, this isn’t about getting rich.
I think it’s fun and it’s part of the future. But it’s also my risky investment — not my retirement investment.
So if you want to try investing in crypto, then go try. You might become a bitcoin millionaire but you also might not. Just be prepared for the volatility and know your risk tolerance before you start.
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