Friday, October 27, 2017

What If I Had Invested In Bitcoin For The Past 7 Years

I'm sorry Mr 15HWW, I just saw your posts on the STI and Berkshire and I just had to do this, ehehe!

BTC price data is pulled from here, and I just followed his format, with additional columns for my calculations.


1. SGD is converted to USD to purchase BTC

2. Transaction Fees include conversion, remittance, deposit fees, large spreads and slippage

3. Initial Fees are a WHOOPING 30%, due to what I think was a very illiquid market initially

4. I gradually adjust fees to be lower to take into account the better market infrastructure

5. My final number of 5% for transaction fees is STILL ridiculously high. I am paying closer to 1% now.

6. I got Gox-ed (lost all my bitcoins during the Mt Gox hacking of Q1 2014)

With those very very heavy penalties (getting Goxed) and conservative assumptions (super expensive fees), here are the results:

The pink highlights are the bitcoins that would have been lost because of the exchange hacking.

So, with $350,000 being deployed every quarter with $12,500, the portfolio would have ended at $2,148,954. If my math isn't wrong, with only about half the time (Q2 2014 onwards), my IRR would have been 51%.

If I hadn't lost my BTCs in the Mt Gox hacking incident (I think most people did though..), the portfolio final value would instead be $315,962,750. If I didn't get Gox-ed and safely kept my BTCs throughout the years, my IRR would have been 252%.

My math regarding the IRR might be wrong though. I'm not really bothering too much. Just know that the returns would have been YUUUGGEEE.

Of course, in retrospect it is easy to see what would have been the best way to have invested in the market.

Anyone crazy and brave enough to have bought huge amounts of bitcoins in the early days when the technology was still developing and still unstable, should and have been handsomely rewarded for taking such risks with something that could very well be nothing. In my opinion, those bitcoin millionaires all deserve it.

Sometimes I wish I had the balls, foresight and understanding to have invested heavily into crypto years ago. I was playing around with mining bitcoins in 2013, but my conclusion was that if its ONLY use is a digital store of value, it is not going to work out. The paradigm shift that blockchain tech is not necessarily only just for money (bitcoin as money is an extremely narrow usage of blockchain technology) is what made me come back to the crypto space and convert myself to a strong believer after finding out more.

The true main point that I am trying to make here isn't that you should invest in bitcoins or other cryptos - NO, THIS IS NOT THE POINT I AM TRYING TO MAKE.

Instead, I think the better learning point here is that as long as you invest in fundamentally sound assets for the long term, you should be making decent returns.

I'm sure a lot of people are gonna be pissed reading this post.


Magic internet money.



  1. Is that your drawing? I love it haha.

    1. HAHA it is unfortunately not mine. that was the ad that used to run on reddit when bitcoin was still a very niche and developing community. not a very convincing ad, but i guess anyone that purchased bitcoins during that period and held it until now are stupidly rich!

      penny for your thoughts on crypto and bitcoins, BB?

  2. Magic Internet Money yea! I'm dipping my toes into the sea of magical internet money!

    1. I read your post on it, good luck to us both! :)

  3. Wow, kana trolled! LOL

    Honestly, I doubt 99% of participants would have "mechanically" continued to invest if they were a victim of Mt Gox.

    All the best for your cryptos!

    1. No matter what, investor have short memory, just like as in stock, crash after crash yet still people invest and speculate. And there are still people buying Noble too everyday even if it is just 0.00001 mm to bankruptcy. I am one of them, as long as we don't speculate beyond what we can lose, that is fine, because the risk reward ratio are too tempting. So is bitcoin, definitely not for those with weak heart, i think everyone should have at least a small position here, the reward is great, much greater than the risk. JMO


    2. HAHA I was curious myself, but your posts inspired me to dig up the actual numbers.

      Thanks, I hope I can continue blogging with my head up high, rather than with my tail between my legs!

    3. Victor, actually I think it is quite different. Noble has been an obvious sinking ship for YEARS. Some cryptos on the other hand have extremely strong fundamentals and I would agree very concrete price expectations. Not a fair comparison to simply say both are high risk / high reward.

      Unforunately, as much as some people might want to have a small position in bitcoins, many people do not know how to yet!

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