“Invest?” Absolutely not.


Should you “speculate?” Well… Maybe.


By now, you have certainly heard of Bitcoin, the most popular cryptocurrency in existence. In fact, Bitcoin was one of the strongest performing assets in 2020, tripling in price. I am sure we all have a friend who is swept up in the hype. It seemed crazy to you… at least it used to! But, with money being made, you must wonder, should I get in too?

First, I want to set the ground rules for those considering purchasing Bitcoin:


If you can’t explain your investment to a 10-year-old, you probably have no business purchasing it.

  1. Real investing is calculated risk-taking based on business analysis.

Bitcoin is a very abstract asset. Gold has a physical asset backing it. Dollar bills have the United States government backing them. Stocks have real businesses with tangible assets backing them. Bitcoin has… well, it has digital value that is stored in… well, I don’t even know what exactly. I can’t explain it… which is why I don’t own it.

For this reason, I don’t consider owning Bitcoin “investing.” Some Bitcoin enthusiasts will fight me on this. To those I say, get in line.

  1. “Speculating” is the better term for those who purchase Bitcoin. They are acting on a theory or conjecture without firm evidence (thank you Dictionary.com for that definition of speculation).

Is speculating wrong? No, people place bets all the time. Just don’t go around thinking and feeling like you are making a cautiously chosen investment when you buy cryptocurrency. It’s a bet.

And would you ever go to the racetrack and bet your entire portfolio on one horse? Of course not. You don’t bet more than you are willing to lose.


Now, this is an ever-changing world that never ceases to surprise me and prove me wrong. I will therefore not bet against Bitcoin. In fact, there might be room in a portfolio for it. Why I think this:

1. A rising tide lifts all boats. So, what does a low tide do?

You might hold the 10 best companies in the stock market. Doesn’t matter. If the stock market dips, it will pull your companies down with it. Stocks in the market tend to move in relation to one another. There are ways to diversify out of the stock market with assets like real estate and bonds. There might be room for Bitcoin here too.

The Irrelevant Investor has a great article on why Bitcoin can be a part of your diversified asset allocation.

2. Sure, the price seems over-extended. But this wouldn’t be the first time…

You might look at this chart of Bitcoin price and say, “Are you kidding me Jessica? You think someone should buy Bitcoin after this crazy run up in price! There is no way it can keep going up.”

Well, you might be right. That’s why this is a bet… not an investment. Also, why you should ONLY CONSIDER PURCHASING WHAT YOU ARE WILLING TO LOSE.

That said… look at some of these other charts from Yahoo Finance.

Another cryptocurrency? Nope. Apple. And it’s still a good buy despite the run up in price over recent years.

Here we have Netflix. Another company with a big price run up!

I could give you example after example of well-run companies that I wouldn’t blink an eye over paying current top dollar for.

For that reason, I can’t be certain the same can’t true for cryptocurrency.


All in all, I am pretty much trying to convince myself that it is ok to own Bitcoin. It goes against all my conservative tendencies. It also is not in line with my normal investment strategy of owning well-run, profitable companies. Yet, it is somehow intriguing.

Think about it for yourself. We saw the sharp increase in Bitcoin over the last year, but we also saw a 20% drop in the last few days! Maybe buy a little. Maybe buy none. BUT DON’T BUY A LOT.