Ready for a spot of Bitcoin whale watching?
We're not even halfway through the year, but 2021 is gearing up to be the year of Bitcoin and cryptocurrencies. An estimated 14% of Americans own cryptocurrency -- and some own a lot more than others.
What's a Bitcoin whale?
A Bitcoin whale is a person who owns large amounts of the world's first cryptocurrency and has the power to move the price with a mere swish of their tail -- or, more accurately, with a single trade.
Back in 2017, around 1,000 people owned about 40% of all Bitcoin. That's likely to have changed a little in recent years, as more coins have been mined and more people have bought Bitcoin. But there are certainly still a number of people with an outsized ability to influence the market.
Bitcoin whales worth watching
Here are four Bitcoin billionaires who saw the potential of the digital currency early on. But these whales have something else in common: They are all holding Bitcoin for the long term.
The Winklevoss twins
Right now, the Winklevoss brothers may be best known for their legal battle with Mark Zuckerberg over the creation of Facebook. But there's a good chance that will change if cryptocurrency continues to grow.
The Winklevoss twins saw Bitcoin's potential back in 2012. Not only did they become the first Bitcoin billionaires, but they also founded popular cryptocurrency exchange Gemini and are involved in several other crypto projects.
Another early adopter, venture capitalist Mark Roszak bought his first Bitcoin in 2012. He's now the chairman and co-founder of Bloq, a company dedicated to blockchain innovation. Roszak is also the chair of the Chamber of Digital Commerce, the first blockchain trade organization.
The Bitcoin enthusiast produced a blockchain documentary called The Rise and Rise of Bitcoin and is on the board of BitGive, a nonprofit organization that aims to pioneer digital philanthropy. Forbes estimates Roszak owns about $1.2 billion in cryptocurrencies.
Losing his first Bitcoin in the hack of Mt. Gox (a Bitcoin exchange) didn't deter venture capitalist Tim Draper from buying more. Even though he lost his entire crypto investment, he went on to play a role in another important early crypto story: Silk Road.
Over the years, authorities have seized over $1 billion of Bitcoin linked to criminal activities on the black market Silk Road website. Draper bought more than 30,000 Bitcoin when the initial seizures were auctioned off in 2014 and 2015. Assuming Draper still owns it, Forbes believes he has about $1.1 billion in crypto.
What is Mt. Gox?
Mt. Gox was one of the first cryptocurrency exchanges. In its heyday, about 70% of crypto transactions went through the Tokyo-based exchange. However, it was hacked in 2014 and later shut down. About 850,000 Bitcoin were stolen and only 200,000 of them were subsequently recovered.
The inventor, entrepreneur, and CEO of MicroStrategy is another crypto evangelist. Saylor himself owns over 17,700 Bitcoin, and MicroStrategy bought over $1 billion worth of Bitcoin last year. Saylor is keen for other businesses to follow suit. -- so much so that you can download a Bitcoin corporate playbook from MicroStrategy's website.
Saylor explains his passion for the digital currency on his website: "Bitcoin is a bank in cyberspace, run by incorruptible software, offering a global, affordable, simple, and secure savings account to billions of people that don’t have the option or desire to run their own hedge fund."
Buying your own Bitcoin
If you want to buy your own Bitcoin, here's what you need to do:
- Work out how much you want to invest. This depends on your own situation, risk tolerance, and investment strategy. Since cryptocurrencies are still a new and relatively untested investment, it's advisable to only invest money you can afford to lose.
- Decide how you want to buy your Bitcoin. There are a couple of ways to do this, including using Bitcoin ATMs. But the easiest and safest is to use a good cryptocurrency exchange or brokerage. Once you've set up an account and deposited money, you'll be good to go.
- Keep your Bitcoin safe. You can usually leave your cryptocurrency with the exchange or brokerage where you bought it. However, you may want to move it into a crypto wallet if you want more control, or you plan to spend it or trade regularly. Like the whales mentioned above do, holding your investments for the long term often makes sense. That way, if the price drops next week, you can ride out the dip.
You may not be the next Bitcoin billionaire, but if you think there's a strong long-term potential in the digital currency, it might be a good way to diversify your investments.
Our best stock brokers
We pored over the data and user reviews to find the select rare picks that landed a spot on our list of the best stock brokers. Some of these best-in-class picks pack in valuable perks, including $0 stock and ETF commissions. Get started and review our best stock brokers.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
Emma Newbery owns Bitcoin. The Motley Fool owns shares of and recommends Bitcoin.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2023 The Ascent. All rights reserved.