During her senior year at Shenandoah University, Amanda Loranger ’17 started investing in the cryptocurrency market. The Bachelors of Business Administration (BBA) alumna, who now works in the mortgage industry, began researching potential investments in digital currencies while a student in the university’s Harry F. Byrd, Jr. School of Business.
“Bitcoin was brought to my attention when the other forms of the digital currency—Ethereum and Litecoin—came out, because they were a lot cheaper than Bitcoin,” she said. “I’ve been investing in Bitcoin, Ethereum and Litecoin for a little over a year now. I decided to invest in all three forms of currency because I saw the potential of the other two, and because of the huge increase I estimated would occur when I looked at Bitcoin’s performance over the past couple of years.”
For now, that investment seems destined to rise, with more than a thousand cryptocurrencies—from Bitcoin, Ethereum and Litecoin to Ripple, Digibyte and Verge—garnering potential investor attention as market values in digital currencies skyrocket to record highs.
“The best thing about investing in this particular currency is that it always seems to grow,” said Loranger. “I’ve already gained back my initial investment of $1,000 and have made an additional $3,000 on top of that.”
According to ARS Technica blogger Timothy B. Lee, who writes about Bitcoin, “the currency’s astonishing gains—it was worth less than $1 in early 2001—have caused people to wonder if they should be paying attention to this technology.”
Today, one bitcoin equals $17,666 U.S. dollars (as of Dec. 15, 2017).
Built on a cryptographic algorithm called a blockchain, these peer-to-peer decentralized digital currencies maintain shared transaction ledgers, but there is no real currency or company behind them. Transactions take place between users.
“There’s no Bitcoin company, so there’s no one to guarantee that Bitcoin balances will have a particular value,” writes Lee. “Instead, bitcoins float against conventional currencies, with their value determined by supply and demand.”
Digital currency owners like Loranger use online passwords to access their accounts, which gain or lose value based on the market, and users can spend their balances similar to how a conventional bank’s website allows them to spend the balance in their bank accounts.
But Loranger cautions digital currency investments also represent potential risk. She advises first-time investors to do their homework, consider the risks, and invest in lower-cost options that have the potential for longer-term gains.
“The risk to consider is that it’s not backed by the federal government, which means you buy in at your own risk,” she said. “If things fall through, you will not get your investment back.”
She also advises potential investors to diligently and thoughtfully research all investment possibilities.
“Do your research and don’t just blindly invest in something you have no idea about,” she said. “Consider investing in lower-valued digital currencies, like I did with Ethereum and Litecoin, before they become just as big as Bitcoin, where you’re paying over $16K.”