How I negotiated with my wife to invest in Crypto

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I recently helped someone with an assignment where they were required to give a detailed analysis of an instance where they negotiated with someone. This is what I came up with —

Since the year 2015, cryptocurrency, especially Bitcoin, has grabbed most people’s attention towards the new and revolutionary Blockchain technology. But like most people, I didn’t really buy into it as it was quite new, volatile, and unregulated. And as a part-time student, living on a very limited income, I didn’t think that it was the best thing for me to invest in, especially something that I didn’t really fully understand how it worked. Only a couple of years back, did I start getting an interest in the technology itself and started trying to understand its history, the various concepts embedded in it, and the rise of the infamous Cryptocurrency.

Months before our wedding ceremony, my wife and I had started to discuss our goals in life and how supportive can we be of each other. One long-term goal we both agreed on is to be able to buy a residential property in a good locality where we can raise our kids. And we believed that this would require a systematized and diversified long-term investment plan. We started looking at different investment opportunities and narrowed them down to the following:

· Mutual Funds — A diversified stock base inclusive of a large number of companies like the S&P500 Index, and a few other stocks that I had hopes would take off in the future

· Life Insurance Policy — Under the right circumstances, life insurance is one of the safest forms of investment with a fairly decent return.

· Cryptocurrency — A risky but very rewarding form of investment instilled in a technology that’s very safe and has the potential to be the next best thing.

My wife was a little wary about the third option, as it is still quite risky and the markets were unregulated (at least in India it was at that time). So, she didn’t want to risk her savings, as she also was living paycheck to paycheck.

Explaining the concept to my wife:

Before I negotiated or convinced my wife to invest in Cryptocurrency, I wanted her to understand the technology and the concept of Bitcoin itself. So, she could make an informed decision. I started by explaining the history of the technology, and how it was developed by a group of scientists in the early 90s. This technology is what we call Blockchain technology. It is a decentralized method of storing data that is incapable of being tampered with. Each block carries its own unique fingerprint that is encrypted along with the data inside the block. And apart from the genesis block, every other block carries the fingerprint of the previous block, hence creating a chain of blocks containing information. And this is what we call “Blockchain”.

Cryptocurrency is nothing but a concept that was created off of this technology wherein it acts as a digital currency on a decentralized platform designed to work as a medium of exchange. This could potentially eliminate any third-party regulators like banks and other financial institutions that have an edge of being able to tamper with transactions between any two parties acting upon their own interests. The unique fingerprint given to each block in Cryptocurrency is called a “Hash” that uses the SHA256 algorithm.

Bitcoin is the first-ever cryptocurrency that was created. It is believed that it was created by a person called Satoshi Nakamoto. But there is no evidence to support the fact that it is true or that it is a real person. Though it is the most widely known and well-performing crypto, for now, there is no institutional backing for the currency itself.

She then asked me — “How is it reliable if the concept runs on trust between the members of the blockchain?”

I then proceeded to explain the consensus models of Proof of Work and Proof of Stake to her. And even told her that the PoW method is how most email sites and networking apps differentiate between real emails and spam emails.

After she got a basic understanding of how this works, we got to a point where we needed to discuss the investments we were going to make. She even did a little bit of her own research on different cryptocurrencies, and the organization behind their creation. And came up with her own list that she felt were good investments.

We first put down our disposable savings and created a percentage-wise division for the different investments. I suggested that we go with 40% in Mutual Funds, 20% in Life Insurance policy (annual premium paid), and 40% in cryptocurrency. Still wary about crypto due to its market volatility, she was not ready to invest more than 20% of her savings in it. I convinced her to up her investment by another 10 percentage points, and that any loss that occurred on that additional 10% shall be borne by me out of my savings to have a game room in our new home (which my wife wasn’t very fond of). So, this way, she was happy that both sides favored her. I decided to stick to my original plan of investing 40% of my disposable investment fund in cryptocurrencies.

We came to terms on the following:

Once we agreed on this, the next thing to decide on was which cryptocurrencies to invest in. This money is what my wife referred to as “high-risk capital” (HRC)

My high-risk capital — 400x

My wife’s high-risk capital — 300y

I was interested in putting down a huge chunk on Bitcoin, about 25–30%. But again, my wife wasn’t very interested in a currency that didn’t have a good organizational backing to reduce its risk factor. I had very good intuition about BTC as it is the top-performing asset of any class with a 9,000,000% increase in the course of a decade. That, in my opinion, however risky it may be, is worth taking the risk. I even told her that with this kind of return, more and more people are going to be drawn to the idea, and there are better chances of it being regulated and even being recognized as a legal tender.

She seemed to be convinced by this argument and agreed to put down 20% of her HRC in BTC. She also convinced me to bring my ratio down to 25% from 30% stating the risks it encompasses. The next currency that we both were quite positive about was Ethereum. Funded by the Ethereum Foundation, it is organization-backed crypto and is currently the second-best digital currency, with a comparatively more stable price fluctuation. And given that it runs on the Proof of Stake consensus, and also runs as a business on Smart Contracts. We didn’t have any issues with coming to an agreement on this, and so we both decided to invest 30% in ETH.

As my wife is quite environment-friendly and a big advocate of the climate change crisis, she was happy about her decision to invest a lower amount in BTC and ETH given the amount of carbon footprint it produces in every transaction through mining. So, we decided to focus more on the eco-friendly currencies for the rest of our 50%/45% of HRC left.

On this, we agreed that we will do 10% on XRP, 15% on ADA, 5% on IOTA, and 20%/15% on SOL.

At the end of about a month of research, and negotiations, we came to this allotment of our high-risk capital –

Though it seemed like a very strenuous process, trying to get my wife to agree, and trying to be thoughtful to her concerns about her hard-earned money, the whole process seemed quite interesting. My wife and I both feel that we spent a lot of time together discussing our life goals and even though we got into small bickers here and there, it definitely brought us closer and helped us get to know each other better.