Bitcoin Pioneer: 'Invest Only Small Amounts' in Cryptocurrencies to Enjoy and Learn

  • Bitcoin pioneer Charlie Shrem advised investors to only invest small amounts in cryptocurrencies, or only as much as they can afford to lose,
  • Shrem also said that bitcoin ETFs will likely be approved next year.

Charlie Shrem, co-founder of Crypto.IQ, an investment firm with over $1 billion worth of assets under management, recently recommended investors start learning about cryptocurrencies. While speaking to Yahoo Finance at the MoneyShow conference in San Francisco, Shrem suggested that buying and holding digital currencies may be a good long-term investment strategy.

The University of New York graduate said that investors should start by “Pick[ing] something in the top 10 or 20, and look at those, learn about them, and take a stake in them.”

He continued, 

“Any crypto you’re going to buy, hold for five years. Say, ‘I’m going to lock this, and this money is locked for five years. There’s a high probability you’ll come out ahead in five years, because usually, these bull and bear markets go in two-year cycles.”

Charlie Shrem

Notably, Shrem is an early cryptocurrency adopter as he reportedly bought bitcoin (BTC) when it was trading at only $0.75. The self-proclaimed social economist is also the co-founder of the now defunct BitInstant, a cryptocurrency exchange that used to process up to 30% of all daily bitcoin transactions - well before the emergence of numerous other digital currency trading platforms.

"Conspiring To Commit Money Laundering" With Bitcoin

In January of 2014, Shrem was arrested at the JFK airport in New York on charges of "conspiring to commit money laundering by selling more than $1 million in bitcoins to users of the black market website Silk Road." These users then allegedly resold the pseudonymous cryptocurrency to other users in secret online forums in exchange for drugs.

After Shrem’s arrest and conviction, the crypto entrepreneur spent over a year in a Pennsylvania prison. This experience, Shrem reveals, was quite “humbling” for him.

The bitcoin millionaire then went on to launch a new company called Crypto.IQ, which provides crypto-related investment advisory services and resources. Crypto.IQ’s clients and registered users receive research reports on various cryptocurrency projects and text message alerts regarding the prices of digital currencies they’re following.

"Invest Only Small Amounts" In Cryptocurrencies

Commenting on the tremendous growth of the cryptocurrency market since he first entered the industry in 2011, Shrem noted that "these 1600 [new cryptos] are doing the guerrilla marketing, They’re doing that on-the-pavement work that crypto used to do in the early days. It’s getting people in — it’s getting people intrigued.”

In order to avoid huge potential losses, which many crypto investors have now suffered after cryptocurrency prices dropped sharply from their all-time highs last year, Shrem recommends people only invest small amounts.

He explained,

“You’re putting your wealth in these things, and they break...Things happen. The values go down 90%, then the values go up 100%. I always tell people if they want to get into crypto, ‘How much money, if you lost it right now, would you be OK with?’ ‘$500,’ they tell me. So invest $500 in a basket of crypto, and then just have fun with it. Just enjoy it, learn...learn what makes them different.”

Charlie Shrem

Bitcoin ETFs "Will Happen"

Notably, the cryptocurrencies Shrem considers to be “good ones” to invest in include bitcoin, ethereum (ETH),  litecoin (LTC), and Dash. When askedabout whether the US Securities and Exchange Commission (SEC) will approve bitcoin ETFs, the Crypto.IQ founder said it could happen sometime next year.

He added that crypto ETFs would be instrumental in the mainstream adoption of cryptocurrencies. However, Shrem wants the SEC to carefully review all crypto ETF proposals before possibly approving them, in order to ensure consumer protection.

He remarked,

“I want it. I also want it to be where people don’t get screwed. We only have a ‘first shot’ at it. If we have an ETF, something happens, we get screwed. They shut it down. You know [how] hard it’s going to be to have an ETF again? An ETF will happen. I would almost put it certainly in 2019.”

Charlie Shrem