Introduction

People often ask me :"Is bitcoin is a worthwhile investment?". To which I always respond:"Yes, if you understand bitcoin...at least the fundamentals.". Many people see bitcoin as a type of investment only. They don't even consider its other advantages. Bitcoin is decentralized, scare in supply, cheaper and faster to send money and much more. My friend needed convincing on why this was a good investment, so I went to do dome thinking.

Invest twenty dollars(USD) a month in bitcoin

I needed a way to display why bitcoin would make a good investment instead of showing a timeline chart. I also did not want to paint the scenario of buying say USD5,000 worth of btc at once and them holding on for a period.

The best decision was to go with what is known in the bitcoin community as stacking sats.  According to www.coingecko.com, "Stack Sats refers to the act of accumulating bitcoin over a period of time. A "Satoshi" which can be abbreviated as sat(s), is equivalent to 0.00000001 Bitcoin".

I thought USD20 (+- NAD300 depending when you look) might be a reasonable monthly investment for a first-timer. I also thought 2 years would be a long enough period to use to measure the performance of the hypothetical investment.

The analysis

The data I used for the analysis can be found here. I did not want to use the price for a specific date because then I would leave it to luck. In some months the prices spiked or dropped just before month end while prices did not do much in other months.

I decided to use four scenarios in order to smooth things out a little. The four scenarios were the monthly minimum; monthly mean; monthly media; and the monthly maximum. The main goal is to see the return on investment for those four scenarios.

The results

After all the data manipulating (the kaggle workbook with the coding) I finally had a chart and a summary to show.

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If bought bitcoin at the lowest price per month
Amount spent 480
Bitcoins accumulated 0.0819827
Bitcoin value in dollars right now 963.98
Return on investment in dollars 483.98
Return on investment in percentage 100.83 %
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If bought bitcoin at the average(mean) price per month
Amount spent 480
Bitcoins accumulated 0.0712408
Bitcoin value in dollars right now 837.67
Return on investment in dollars 357.67
Return on investment in percentage 74.51 %
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If bought bitcoin at the median price per month
Amount spent 480
Bitcoins accumulated 0.07136516
Bitcoin value in dollars right now 839.13
Return on investment in dollars 359.13
Return on investment in percentage 74.82 %
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If bought bitcoin at the max price per month
Amount spent 480
Bitcoins accumulated 0.0634197
Bitcoin value in dollars right now 745.71
Return on investment in dollars 265.71
Return on investment in percentage 55.36 %

Conclusion

From the above chart and summary it shows that even if you bought the the maximum price per month every month for the last 2 years........you would have made a return on investment of 55.36%. Did my friend invest after seeing this? Well no :) . I hope he reads this though.

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