ERIK Finman became the youngest Bitcoin millionaire at 18 after investing in the cryptocurrency aged 12 – but his teacher told him he’d never amount to anything.
The Bitcoin mogul was told to “drop out” of high school and work at McDonald’s because he’d “never amount to anything more in life”.
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The risks of buying with cryptocurrencies
Investing and making a purchase in cryptocurrencies such as Bitcoin is risky .
Their value is highly volatile and City watchdog the Financial Conduct Authority has warned investors should be prepared to lose all their money.
Investing in cryptocurrencies is not a guaranteed way to make money.
You should also think carefully about making purchases with a cryptocurrency.
For example, Bitcoin has had wild price fluctuations in recent months and the price can change on an almost hourly basis.
The price of a Bitcoin was at $40,258 on January 9, according to Coindesk, but fell to $34,214 just three days later.
That’s a 15% drop.
These price swings are risky for a business as you could sell an item for a Bitcoin at one price and the value may drop soon after, leaving you with less money from a sale.
Similarly, the price of Bitcoin has soared by more than 21% since the start of this week so it can be hard for a shopper to get an accurate idea of the price of an item if its value changes on a daily basis.
Finman told the Business of Business: “I really didn’t like high school. People didn’t really get what I was trying to do, get what I was searching for or what I was dreaming of.
“I had one teacher tell me, yeah, drop out, work at McDonald’s since I’ll never amount to anything more in life.
“I dropped out of high school and made a bet with my parents: if I make a million dollars by the time I’m 18, I don’t have to go back to school or go to college.”
And that’s exactly what happened when the 100 Bitcoins he bought with £700 given by his grandmother skyrocketed in value – hitting an eyewatering $27,000 per coin.
He invested in the crypto after his older brother told him about it.
In the UK, kids under 18 cannot hold company shares in their own name. However, parents can invest in stock on behalf of their children using certain trading mechanisms, according to Wealthify.
Crypto currencies are unregulated and investing in them is not a guaranteed way to make money.
It is also incredibly volatile because they are very young markets and it’s not uncommon for the price to experience wild swings within a day or even within minutes making it very a dangerous venture.
As of June 2020, Finman had grown his holdings to 341 Bitcoins worth over $4.8million.
The crypto king, now 22, has used his riches to build an education business out of Silicon Valley.
He told the same publication: “I started a business from my bedroom. I had some bitcoin money at that point—bitcoin shot up a bit, so I was able to use a lot of that to fund my business.
“I was hiring contractors, freelancers, programmers, employees. Nobody knew I was 15.”
Finman has been desperate to get out of crypto these days.
“We’ve been doing a lot of stuff out of crypto these days,” he said.
“I’m tired of crypto, I’m sick of being the bitcoin person, it’s really like if I hear the word ‘bitcoin’ one more time, I’m going to smash my head against a wall.
“I put a hundred percent of my trading under somebody else.
“I care about building something much more than I care about just trading numbers on a screen. I’ve done bitcoin, crypto trading for six years.”
He said he’s now pouring cash into airplanes and “anything with wings” which he says has made him “good money”.
In 2018, Finman caused controversy when he said that if you don’t get rich investing in crypto in ten years then “it’s your own fault”.
He told Business Insider: “If you are smart about cryptocurrency over the next ten years, many people can build their fortunes even better than before.
“The area is still relatively small — the market capitalisation is just over half a trillion dollars.
“I do not want to be misunderstood — this is, of course, a very high amount, but in comparison to other asset classes, it’s small.
“Therefore, I say if you do not become a millionaire in the next ten years, then it’s your own fault.”
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
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