Thanks for the warning, 37andhappy, and I hope you get rich quick. I’m entirely open to crypto and block chain being revolutionary in society. As a passive investor, I’m experiencing cognitive dissonance in seeing an exciting new industry and whole new asset class emerge, yet feeling my wallet frozen, because:
1) I know the indices that I already own will reflect, soon enough, any viable block chain stocks that grow real commercial legs, similar to how Amazon, Facebook, Apple, Netflix and more emerged during the time I’ve owned the total stock index fund and now drive its value. I don’t feel equipped to speculate on companies or even block chain ETFs that will surely come along soon.
2). Bitcoin has been a spectacular speculation device to date but it has little or no practical application. Its shortcomings are spawning and splintering into many dubious new crypto currencies, like Bitcoin Cash, that purport to address Bitcoin’s shortcomings. Will one succeed? Which one/s? Ether has some advantages but it’s supply will not be limited, so why buy it?
3). I have invested long enough to have “been warned” that I would miss the boat if I didn’t allocate every dollar immediately to biotech stocks. And if I still had any dollars left after that fad, I was an idiot if I didn’t plow everything into nanotech stocks. I suppose I own some of those in the stock index funds but I’d be hard pressed to say which.
Welcome and thanks! Well "rich" is of course all relative. I did it so far the old-fashioned way - hard work, and good sensible investments over time. For me, Bitcoin should be treated more as a hedge on the future and an investment in a long term trend. Those who are in for the short term, and in particular who cannot understand (or stomach) volatility, an investment in Bitcoin of an significant size is not for them. But for the average conservative investor who wants to preserve wealth, and have the benefits of diversification, not to mention options given a whole range of scary future scenarios, I would recommend 1-3% allocation to Bitcoin (and a similar amount to gold).
A few comment on your points above:
1. Many of the equity indices you have will not have direct allocation to Bitcoin, although over time yes the such funds will have indirect to BTC via banks, crypto exchanges, fintech companies etc in the index. Eventually maybe also via a Bitcoin ETF. So yes, that is certainly one option. And in general I agree, don't get caught up in fads, and its also a good general principle not to invest in things you don't understand. (Although a little addition to that last point I would add, is to make an attempt to understand things which may be good investments - even if the end conclusion is to not proceed to invest).
2. You are plain wrong on your comment on lack of practical application. (Not wanting to sound rude here, but if you are genuinely interested, so some research on how is provides a store of wealth and direct bank account for millions of people in the world currently "unbanked". Not to mention how it can be used as a store of value against declining fiat currencies. And how for all humans, it removes the ability of Governments to control our freedom to spend and exchange value. (And bear in mind we don't all live in the US).
As for splintering into "new currencies" this is an important FUD to consider, and understand. But the basic answer comes down to network effects and collective societal agreement on what will be used as a global store of value. Which is of course why despite a theoretical number of "alts" to Bitcoin can be created, none have usurped BTC, and almost all have (and will) fade away into almost nothingness. These types of FUD are good questions to ponder, but the opposing FUD you should consider if what may you miss out on by not having zero exposure to BTC in the event that certain future scenarios might arise. You are correct not to buy any alt that is not limited in supply, and yes that is a very good reason to be cautious of or stay away from ETH (despite the hype).
3. Yes, good to be aware of anything that is a fad or hot. Stay away from anything you don't understand, And be especially careful only to allocate small portions of your portfolio to such areas.
Good luck! (And in the future do thank me, or rather ultimately yourself, if you acquire some BTC and HODL).
