Tempted to buy Bitcoin on its recent 20% plunge because you believe in a robust future for cryptocurrencies?
There’s a new app that makes the process super-easy, but you need to go into it eyes wide open regarding how you choose to fund the account.
Take a look at the Bitsy app
Bitcoin, as you probably know, is just one of several cryptocurrencies — all of which are a new breed of digital encrypted currency issued independent of any government or central bank.
Other popular cryptocurrencies include Ripple, Ether and Litecoin, among many others.
To be clear, Clark Howard is neither a fan of cryptocurrencies in general nor Bitcoin in particular.
"That's because I have said all along that these are not real forms of money," the money expert says. "If they were real forms of money, there would be stability in their price."
Funding the account
Yet despite Clark’s warning, I decided to dip my toe into the cryptocurrency craze in a very nominal way. So I downloaded the Bitsy app, set up an account and funded it with $10.
When initially funding the account, you have the option to link up your checking/savings account or link up a credit card. Because I'm paranoid about the many dangers of using a debit/checking approach, I opted for the latter.
The Bitsy app clearly (I thought) explained I would have to pay a 45-cent fee “wallet fee” for housing the Bitcoin I was about to purchase.
There was also disclosure about a “network fee” of 65 cents that I’d have to pay, which I assumed was similar to a credit card processing fee.
Turns out I was wrong on that last count. Very wrong!
What I didn’t understand and what wasn’t explained clearly on the app end was that by linking up a credit card, I was taking a cash advance on that card — and would have to pay a cash advance fee accordingly, which in my case was $10.
So I wound up getting billed a total of $20.64 to buy $10 of Bitcoin!
I am not sure how they arrived at the 64 cents. Based on the description of the wallet fee and the network fee, I thought miscellaneous fees would amount to $1.10…as in 45 cents plus 65 cents. It doesn’t make any sense.
But even worse was when I saw that $10 cash advance fee on my credit card account. I immediately called up the card issuer and got that reversed as a one-time courtesy.
I certainly don’t intend to make the same mistake of funding this account with a credit card again!
How is my Bitcoin doing?
So, I am now the proud owner of 0.00157482 in Bitcoin! The bad news is the cryptocurrency continues its downward spiral.
When I started writing this article an hour ago, my share of Bitcoin was worth exactly $7.34. Now that I’m wrapping up, it’s only worth $7.12. My Bitcoin is losing value by the minute.
Of course, it could skyrocket in value tomorrow, or six months down the road. Who knows? The point is that I didn’t contribute more money than I would feel comfortable losing completely.
And that’s the key anytime you’re doing something speculative like cryptocurrency.
Clark Howard sums it up best:
“So you want to buy this stuff because it’s fun, you want to buy this stuff with money you don’t care if you lose? Fine, and if you hit a big score, fine again, but just remember what money is,” he says. “It’s a method respected by others to buy and sell goods and services…and every cryptocurrency fails that test because there is not transparency, there’s not normal liquidity, and there’s not stability.”