In 2016 I decided to buy bitcoin on coinbase.com. I didn’t think anything of it at the time, and I honestly forgot all about it. Fast forward to August 2020. I’ve been home for three months now; everywhere I look, everyone is talking about bitcoin, and it dawned on me, “hey, I have bitcoin too!”
I logged into coinbase.com and quickly sold it!
I believe when everyone is talking about something, RUN THE OTHER WAY. And when I say everyone, I mean everyone. I heard homeless people, kids, the elderly, nuns, monks, and countries with no electricity or running water getting into bitcoin.
My friends were distraught at my selling. The argument my friends presented me was, “it was free money, you started with $5, and since the profit was free money, you can gamble it because you didn’t do anything to earn it.”
In the past, I would’ve agreed, but now I understand Mental Accounting. It works like this: All money is the same, no matter how you came into possession of it. It doesn’t matter if it was 80 hours at work or you hit the lottery. The money belongs to me. I can withdraw it and use it immediately. If I allow the money to stay and bitcoin bottoms out, I lost all the money I’ve gained + the initial investment. Do you understand why you lost the money and it wasn’t “free money”? Because it was always your money for the taking at any point.
Think of it like this. You start at the blackjack table with $5. In a few hours, you’re up to $100,000. You can walk away and spend that 100 grand instantly. Instead, you stay and give it all back to the casino plus the $5 you started gambling with, for a total loss of $105,000.
You leave the casino and arrive at home. Your friends greet you at the door and ask, “how you do at the casino?”
You state: “I only lost $5.”
Rather than gamble, I pulled out and sold the coins. I won!
Remember, quitting is not the same thing as quitting while you are ahead.