If you are not White or Asian American then it might actually be smart for you to use some of your financial aid to buy Bitcoin
This post is not investment advice. This post simply provides balance and nuance to the discussion triggered by the article
More than 20% of college students are applying their financial aid money to buy Bitcoin
The latest article came out revealing what many college students probably already know is obvious. More than 20% of college students are applying their financial aid money to buy Bitcoin. The writers of the article seem to be trying to discourage this behavior with FUD quotes like:
A student who spends their student loans on cryptocurrencies is violating their agreement with the government, said Elyssa Kirkham, of Student Loan Hero, a website for managing student loans.
and
"If you invest the student loans in cryptocurrency and lose money, you will still owe the student loans."
As if students do not already know that? It is true that if people invest and lose their money they will still owe in student loans. What the article fails to mention is that a higher education itself is an investment with no greater chances of making the investor rich than Bitcoin, Ethereum, etc. In fact, a case can be made that minority students (students who are black or hispanic) are going to have better odds of financial success in Bitcoin and Ethereum based on the recent statistics which prove a college education doesn't do much to raise the chances of all students to reach a million dollar net worth equally. I called this the opportunity gap and blogged about it. In other words, financial aid does not produce an equal return on investment for all who graduate and in fact depending on your race you may or may not earn a lot of money relative to your education level.
"Investing from a credit card or a loan is a terrible idea as these assets are extremely risky and volatile," said Christian Catalini, an assistant professor at Massachusetts Institute of Technology who researches blockchain technology and cryptocurrencies.
Risky for who? It really depends on many factors. It depends on which cryptocurrencies you invest in. It depends on how well you understand the technology. It depends on if you are going to a school like MIT which is elite and guarantees you a good job or an ordinary liberal arts college. It depends on your race, your class, what you have to loss and gain. It is risky but so is the job market. If students are going to invest in cryptocurrency they should do their research and apply all the lessons they learned in college on how to research to the task of becoming financially literate.
Conclusion
For many college students cryptocurrency may be a once in a lifetime opportunity to get ahead in life. This is particularly true for black and hispanic students because statistics prove that there is a huge opportunity gap. Perhaps it is actually wise for black and hispanic students to be willing to take the most risk by investing in cryptocurrencies as soon as possible rather than to assume their college degree will produce a return on investment (no matter what the degree is in!). Students (particularly black and hispanic) who wait for elites from above, the establishment, or "experts" whether it be loan experts or the government, to help them get ahead or even get a high paying job, may in fact be waiting forever. The evidence just does not support the idea that any top down system, institution, or "leadership", is looking out for the minority students who must deal with the very real opportunity gap after graduating.
The statistics present interesting odds and while it is possible a student can lose their money in crypto and not be able to pay off their loans, it is just as possible a student can lose their job (or never find a high paying job) and also not be able to pay off their loan. A high paying job is not guaranteed and depending on who you are the odds of landing one may be more or less in your favor. Cryptocurrency does not care who you are and it evens the odds while rewarding the smart and lucky.
References
- https://www.cnbc.com/2018/03/23/college-students-use-financial-aid-money-to-invest-in-bitcoin.html
- https://www.bloomberg.com/features/2016-millionaire-odds/
- https://steemit.com/life/@dana-edwards/does-the-opportunity-gap-explain-why-certain-racial-minorities-are-arrested-more-often-for-certain-crimes
I ended up getting financial aid of which all my tuition was covered and extra 3.5 K left for me of which got me to start buying cryptocurrency. Wish I knew about bitcoin even 2 years ago
And you are female. You defy the standards (most women don't get involved in crypto even when told about it). Being brave and taking risks could end up the key to your success. Also you are not an ordinary female because your life story is not typical.
A lot of females are risk averse. In fact a lot of Americans in general are risk averse. That in my opinion is a bad attitude to have if you want to get rich.
Yes. It is very interesting that the poor use their last savings to play on the lottery. It is expensive being poor. You get a irrational behavior.
The lottery is irrational yes because of the near impossible odds of winning. Investing in stocks is actually rational because every decade stocks have been up. People who lose in stocks tend to invest when prices are high and then sell during the crash. While I'm not giving anyone investment advice, what I would do to win at stocks is invest during the depression or recession when prices are low and then wait for the next mania phase.
The same cyclical nature we see in stocks we also see in crypto. FUD articles like to be released and get promoted when prices are depleting. Suddenly when Bitcoin is going down people want to talk about what a bad investment it was?
If people would have bough Bitcoin in 2013 and simply held it until now they'd be far better off. The same with Ethereum, the same with Steem. Based on statistics and data the best strategy appears to be "buy and hold" and the time period appears to be 3 years.
I think that is a terrible idea. Investing can be done with leverage but leverage can be used correctly or incorrectly. Here is why the student loan idea is an incorrect use of leverage. Student loans cannot be discharged in bankruptcy. Not that you would believe you’d go bankrupt but it would be smarter to use leverage without such an onerous provision as that.
Now onto the use of leverage in investing in general. Leverage such as a loan to buy more bitcoin, stock, etc can accelerate the gains but will also accelerate any loses.
If the only loan you can get is a student loan and you are aware the college system is one big debt trap, why wouldn't you hedge your bets so you have a gamblers chance to escape it?
There are no gains and losses until you sell. If you buy a cryptocurrency at a cheap price and wait until it's higher than what you bought it for then what losses? Additionally you're gambling if you get a degree because it's not like you're guaranteed to land a high paying job. So why is it okay to gamble your money on an education but not elsewhere when the odds are actually no better?
On average the stock market goes up every year by around 7-10%. So just investing in stocks vs a higher education seems to favor stocks at least for some students but both are a gamble. It depends on what you have a degree in, it depends on what school you are graduating from, it depends on your race, and many other factors which go into the odds of you making a high income from your career.
Why is leverage for an education considered okay? Why is leverage for a house considered okay? But for cryptocurrency it's not okay?
My argument is this in bold letters:
If your goal is to get rich then you are better off in crypto than you are in college (particularly if you are black or hispanic). You probably will not get rich from a college degree but you'll go into just as much debt. I say this because it's not usually possible to get rich without taking big risks, and it's not likely the people who ask for an opportunity politely will have the opportunity handed to them, when has that happened?
80% of crypto/bitcoin are in the hands of the top 1%
sorry... it will not change the structure of the pyramid... not to mention that making debt to get rich is a dumbest thing one can ever do. Profit seeking restricts the ability to think... really
Not true. Each crypto has a different Gini coefficient and they aren't all equal. Also who are the top 1% exactly? Do you mean tech experts and smart people who arrived to crypto early? Or do you mean people who came from outside of crypto late who bought their way in?
If you know most people even in the 1% haven't got into crypto yet and you are black or hispanic, why wouldn't you buy the "real estate" before the 1% gets interested to buy it from you? There are few ways to get rich even if all the odds are in your favor. If the odds aren't in your favor then figure out what you can sell to the 1% if you want to have a job and obtain a higher net worth.
Hating the 1% will not get you rich. Fearing the 1% also will not get you rich. Being afraid to take risks also will not get you rich. If you're okay with not getting rich then definitely listen to experts who will tell you how risky every investment is and how you should go the standard conservative course through life.
not fearing the 1% in anyway, they simply would not exist in a world that has understood that chasing money promotes cartels of all kinds.... freedom is impossible
who has the money to buy bitcoin in america when 80% go paycheck to pay check??? trust me, most of the digital currencies are in the hands of the already wealthy
and yesterday I watched an interview of elon musk saying to get prepared for WW3... :) there is a massive human die-off if people dont wake up and fast... that is what happens when one does not grasp the problem with power/1%
and lastly, making debt to invest = inflating/creating a bubble
Tell me how I can have freedom without any money and maybe you can change how I think about money. Right now I don't see a way to live free without paying fees.
trying to get rich with loans creates/inflates a bubble. it is economics 101. I am well versed in it.
thats the whole dilemma but if you only knew how much financial corruption is happening behind the scene, you'd understand that freedom is vain... they want you to believe that freedom is achieved with money, but in fact it is gluing all the massive corruption together, regulators cannot do a thing or the system crashes overnight.
there is a bitcoin offering loophole right now well documented in YT... never trust a mind following money... look also for "phamtom shares", which are shares worth 6Billion of dollars that do NOT exist, traded daily on the stock market as reported more than 10 years ago. Today it could be up to 10-15 billion worth of shares that do not exist being trade daily... For how much of these fake shares have been trade since the problem was noticed...... TRILLIONS of dollars... and what is doing SEC? :)
The entire economy is a bubble. If you go to college on loans you are inflating a bubble. Not going to go to college? If you buy a house with a mortgage you are inflating a bubble. Not going to buy a house? If you start a business with a loan you are creating a bubble, not going to try running a business?
Anything you do which requires money you do not have will require either an ICO, a loan, or someone else's money. They eventually will want their ROI.
My point is sure if you don't mind being poor, if you don't mind being without, then you will not have to take much risk.
You have a right to your opinion. Some people require freedom to be happy. If you can be happy without freedom then you're different from me. Maybe you can tell me how you avoid becoming depressed when you find out all that you'll never be allowed to do?
If we do not have money then certain lifestyles become completely inaccessible. If you do not have money you cannot even support yourself and maintain your family.
I know the world is corrupt but I also know money is what makes the world work. If you don't have it then people will not work for you unless you coerce, manipulate, or they are nice and volunteer. If you do not have money you will find out how hard it is to get people to cooperate with you on even the most basic stuff.
Money gives you freedom, access, and cooperation. If you need expertise then you can pay someone who can be your consultant. If you need professional advice then you can pay for it. If you do not have money, you are dramatically limited because most people with expertise will not give it to you for free.
Amazing blog post as usual,learning lot of things here.
Great to see this from people.Good to see they are investing in next generation technology.
Absolutely,some people don't get investments in return from the education.. That is the money they put in... Definitely an opportunity gap.. They should indeed go for cryptocurrency investments.. Thanks for the enlightenment on the subject..