Sunday, January 14, 2018

A few days ago I expressed my view that one should not take on debt to make an investment in something like Bitcoin. That's still my view.

This article that appeared in Fortune recently is along those lines. It's about people using credit cards to purchase Bitcoin, which is a method that tends to come with higher commissions (the article cites a 4% fee if the purchase is made through Coinbase), and the high cost of interest on such balances over time if one does not pay the debt off within the following billing cycle.


Add these two things together and toss in a decline in the value of Bitcoin (which has been the case as of late), and it's a recipe for big losses.

So then the article mentions that some have "concerns" about Bitcoin becoming a systemic economic risk, owing to such behavior.

I just have to laugh at that, because this same behavior, when it involves purchasing ordinary goods and services on credit, things which either rapidly decline in value or represent no sort of retained value, that just doesn't seem to attract these same "concerns." lol.

All that said, if you are using or planning to use a credit card to purchase cryptos, at least do this: use a cash back rewards card that carries no annual fee, and apply the cash back to the balance, which you should then completely pay off before the end of the next billing cycle following the date of your purchase. This will in effect reduce the commission you pay to purchase your crypto, and a credit card balance paid in full by the end of the following billing cycle incurs no interest charges.

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