A bitcoin-to-cash ATM in Venice, Calif. (Lucy Nicholson/Reuters)
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Bitcoin turned 10 this week. Despite having reached this maturity milestone, it’s still too new an investment for the average investor.

Bitcoin is an electronic currency that exists only on the Internet. It’s not something you can hold in your hand. There are no actual coins. It’s basically lines of computer code stored on a computer or held by a third party in a virtual wallet. The value of this cryptocurrency and others like it such as ethereum and litecoin can rise or fall substantially and quickly.

The creation of this electronic cash 10 years ago is attributed to a white paper by Satoshi Nakamoto, a pseudonym for its author.

The paper — Bitcoin: A Peer-to-Peer Electronic Cash System — led to this new online currency.

The idea was to create virtual money that could be “sent directly from one party to another without going through a financial institution,” the paper says.

Watch: Bitcoin explained, in 90 seconds

I get it. This is exciting technology that could revolutionize the way people transact business online. As I’ve written before, virtual currency could reduce the cost of financial transactions, especially from country to country. It could give people living in areas without financial institutions or stable currency a safer way to do business.

And lots of folks are excited about “blockchain,” the technology behind bitcoin.

Read more: How the technology behind bitcoin could change your life, even if you never buy a single coin

Part of the frenzy around cryptocurrencies is also people fearing they will miss out on getting rich by investing in the next bit thing. But for Luddites like myself — that’s people who fear new technology — investing in bitcoin is more akin to gambling.

Read more: Bitcoin is all the rage — but is it worth the risk?

There’s also the volatility.

Bitcoin was valued at $6,447 a year ago and spiked to a high of $19,068 on Dec. 17, 2017, notes Michael Pieciak, president of the North American Securities Administrators Association. At the market close Wednesday, bitcoin was down to $6,300.88. Other cryptocurrencies have experienced similar volatility, according to Pieciak, who is also commissioner of the Vermont Department of Financial Regulation.

The bigger the swings in an investment, the bigger the risk, NASAA warns.

Read more: Thinking about investing in bitcoin? The currency may be virtual, but the risk is real.

“There are new and exciting advances being made daily in the fintech world, but investors and those interested in cryptocurrencies need to be aware of the risks involved before jumping in,” Pieciak said in NASAA’s consumer alert. “Don’t rely on media hype to make your purchase and investment decisions.”

NASAA has released a new video, the second in a series called “Get in the Know,” in an effort to raise awareness of the risks of virtual money-related investments.

The animated video hones in on what NASAA says are the three major issues with investing in cryptocurrencies: It’s untraceable, uninsured and unregulated.

Scammers know many people are eager to cash in on the hype around cryptocurrency. But this electronic cash is not a suitable investment choice if you are a long-term investor who, say, is trying to save for retirement.

Read more: Should you invest in bitcoin for retirement? Only if you think riding a roller coaster without a safety harness is a good idea.

Do a lot of research before you even think about investing in electronic currency.

Watch NASAA’s video: Cryptocurrency and Crypto-Investment Risks.

Think of cryptocurrency like a 10-year-old child. Preteens can bring you much joy. But heading into their adolescent years, they can take you though some trials and tribulations.

Color of Money question of the week

Have you considered investing in bitcoin? If so, why? And if you have, how’s that working out for you? Send your comments to colorofmoney@washpost.com. Please include your name, city and state. In the subject line put “FIRE.”

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The FIRE movement

There are a lot of people who dream of retiring in their 30s. So many that a movement has sprung up called FIRE, which stands for “Financial Independence, Retire Early.”

As I wrote last week, there’s been a hot debate about how much people need to save to retire early and still have a secure retirement.

Read more: Do you need $5 million to retire early? Suze Orman says so. But ‘FIRE’ devotees say no.

Suze Orman, New York Times best-selling personal finance author and retired host of her own show on CNBC said during the Afford Anything podcast that she hated FIRE.

Orman said people would have to save between $5 million and $10 million to retire early.

FIRE proponents fired back that Orman was overestimating what people needed.

The criticism must have worked because Orman toned down her criticism writing for Money, “If you want to retire from a long commute, a corporate hierarchy you loathe and work that you don’t look forward to, I am 100 percent cheering you on.”

I asked readers to weigh in on their thoughts about FIRE.

Laura McAfee of Catonsville, Md., wrote, “I am a huge fan of the FIRE movement, and as much as I love Suze, I think she misses the point here. It’s not about deprivation, or squeaking by the skin of your teeth; it’s about challenging the hedonic treadmill, about forcing yourself to focus on what actually makes you happy, about making yourself answer the question, ‘how much is enough?’ But most of all, it is about power. Keeping your needs and wants well below your income, and building up a big financial cushion with the remainder, gives you the power to walk away from a bad situation, or the freedom to take a chance on a job that sounds more interesting.”

“I am a 45-year-old veteran and federal employee with 18 years of combined service,” wrote Brian S. of San Antonio. “I used to think that federal service was secure and fairly paid employment. But my view changed with the 2013 shutdown. My wife and I made the decision to save about 45 percent of our combined income. I am so relieved we made that decision when we did. Since then, my agency has continued to cut back on staffing and promotion opportunities. Furthermore, federal employee benefits have eroded over the years. The current administration has proposed further cuts to federal employee benefits. While I’m disappointed in the direction my federal career has taken, FIRE has prepared our family for the worst. It has helped us keep our spending down and radically increased our assets. We aren’t dependent on our jobs and have a lot of built in flexibility if we hit a financial rough patch. You don’t have to pursue the ‘retiring early’ part to benefit from pursuing ‘financial independence.’"

“Lots of good things about the FIRE movement, but what I find a bit sad about FIRE is that it shows how many people haven’t found a career that they love and enjoy growing with through the years,” wrote Laurel, formerly of New York but who now lives in Merida, Mexico. “I wouldn’t give up a year of my almost four decades in international business journalism, including more than 20 years as a foreign correspondent in Europe and Latin America. When I was laid off at 61 almost a year ago (because journalism has sure changed in recent years), I had a shortlist of mostly international places from my business travel years that would make good retirement destinations, with year-round warm weather and a more affordable cost of living than New York. I do recognize that in some ways I’m healthier not working full-time any more — less stress, more sleep, healthier eating and more exercise. So I see the appeal of FIRE in that respect. But I still wouldn’t have given up the excitement and challenges and learning experiences of my career.”

Marilyn Hayes of Lafayette, Colo., wrote, “Suze Orman needs a reality check. I’ve followed the simple living/frugality movement since I was 12 and first read Thoreau, and continue to, now, as a Quaker. Nor have I ever earned even $50,000 annually. I retired 12 years ago with a state pension and a little Social Security. No stocks or other investments. No debt other than a modest mortgage, and small savings. My parents lived through the Great Depression, and I’ve always lived frugally, with occasional splurges on books or art, etc., as do most of my friends. Compared to most of the world, I count myself among the affluent, and grateful to be able to have access to medical care, and to be safe, warm, fed and comfortable.”

Devon Brown of North Richland Hills, Tex., wrote, “I think the most important part of FIRE and Suze’s advice is developing a strategy to become successful through financial planning and preparation for uncertainty. At the end of the day, no matter what route you take, it will require some sacrificing to get there and to maintain your desired lifestyle.”

Color of Money columns this week

Knowledge isn’t power. The right knowledge is power.

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In addition to this newsletter, please read and share my weekly personal finance columns.

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Is ‘the IRS’ asking you to pay by gift card? It’s the latest ‘impostor’ scam.

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Have a question about your finances? Michelle Singletary has a weekly live chat every Thursday at noon where she discusses financial dilemmas with readers. You can also write to Michelle directly by sending an email to michelle.singletary@washpost.com. Personal responses may not be possible, and comments or questions may be used in a future column, with the writer’s name, unless otherwise requested.

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