Win the Lottery, Buy Bitcoins – Is That a Smart Idea?

People dream of buying so many things in the event of winning the lottery.

Some would want a fast car. Some would wish to a medieval castle or a Picasso painting. Some would spend on plastic surgery; others will gamble all of the millions away.

But there are some people out there who surprise everyone with their decisions.

Today’s story is about one such person. As you’ve gathered from the title already, the lottery money was invested in cryptocurrency. Was that a good idea? What happened after the bitcoin purchase? We’re on a mission to find the answers to these questions today.

Winning the Lottery to Make Bitcoin Acquisitions

A Reddit user by the nickname of /u/Joxnlol won approximately half a million dollars from a scratch-off lottery game in Illinois.

He made the hit in April 2019 and was faced with the task of deciding what to do with money.

The decision was made only a month later, and in May, /u/Joxnlol invested half of the money in the acquisition of the most popular cryptocurrency – the bitcoin.

We have no idea just how familiar you are with cryptocurrencies, so here’s a quick overview.

Cryptocurrencies like bitcoin are digital assets that derive their value from a decentralized network of users. This means cryptocurrencies aren’t under the control of a bank or a government. They’re also not backed up by a national reserve or any other tool used to give national currencies their value.

As a result, the bitcoin is pretty volatile. It’s been known to gain massively at a price, only to go down soon after. Currently, a bitcoin is worth 8,483 US dollars. This is much lower than an all-time high that was achieved at the end of 2017. At that moment, a single bitcoin was valued at more than 19,700 US dollars.

Why are we telling you all of this? We want to paint a picture of just how risky an investment in bitcoins happens to be at the time being. While some have managed to win a lot due to price appreciation episodes, others did lose a lot of money when the cryptocurrency rapidly started going down out of nowhere.

High Risk = High Reward (or Does It?)

Bitcoin Reddit topics have been discussing the decision of the lottery winner who didn’t invest in something traditional but instead went the cryptocurrency route.

Everybody has an opinion on this choice.

An evidence-based approach towards examining the effectiveness of the investment, however, isn’t possible at the time being.

If you take a look at price predictions for the bitcoin, you will come across so many diversified conclusions.

Some believe that bitcoin will become quite expensive in the future. Some have predicted that it would reach a value of over 35,000 dollars by the end of 2019. While the year isn’t over yet, the most popular cryptocurrency is currently going through a downward trend. Reaching such a value isn’t impossible in the remaining months, but it’s highly unlikely.

According to some experts, the bitcoin will reach a value of 200,000 by some time in 2020. Such predictions appear to be way too far-fetched in the absence of international acceptance for the cryptocurrency. Some countries like China have been going through active campaigns to limit mining and the use of cryptocurrencies. Such campaigns have been affecting the value of the bitcoin, showing that it is susceptible to some traditional economic principles.

There are many other variations of the theme – bitcoin enthusiasts like John McAfee say that the bitcoin could reach one million US dollars in 2020, while others are much more pessimistic.

You get the picture and where we’re heading with this.

Nobody knows for sure what would happen shortly. Hence, investing in bitcoins is considered a high-risk strategy. While it could contribute to massive returns, it could also lead to the most spectacular losses known to humanity.

Should You Buy Bitcoins if You Win the Lottery?

The case poses some interesting questions.

Regardless of the asset that you choose to invest in, a straightforward rule is valid every single time. It’s crucially essential to buy at the right moment and to sell at the right moment.

As a rule of thumb, successful investors buy when the price of the asset is at its lowest and sell when it reaches its highest. This is true for bitcoin. The only problem here is that predicting what the lowest low is (and what the highest high is) can be a nearly impossible task. There will be some element of luck there and the chance for serious losses.

Will you invest in bitcoins if you win the lottery? That’s a choice you’ll have to make. Avid supporters of the cryptocurrency swear by it and suggest it’s one of the most effective investment assets today.

They claim that the value of the bitcoin will continue increasing regardless of the episodic declines. There is a finite number of bitcoins in the world. Anyone familiar with financial principles knows that a limited supply will eventually contribute to scarcity, and a scarce supply is expensive.

For now, investing in cryptocurrency doesn’t make a lot of sense, especially if you have zero experience with bitcoins.

If you happen to win a large sum from the lottery, don’t go investing or spending on a whim.

Talking to a financial consultant and coming up with a strategy to go your wealth is a much smarter idea that’s bound to grow the amount you claimed from the lottery. If you want to become richer, this is precisely what you should do.