Risk is a huge part of business and investment. In the financial world, very few things are certain: the demand for goods and services fluctuates wildly and successful businesses can end up going bankrupt, entire stock markets can crash in a matter of days. Sometimes, risk-taking results in massive losses; on other occasions, seemingly trivial decisions can result in unexpected gains. Five years ago, Lily Allen turned down a risky venture that would have gained her millions of dollars if she had accepted it.
The English musician and actress recently revealed that she had lost out on a possible fortune of over a hundred million dollars in bitcoins when she refused to stream a live gig.
Five years ago, virtual game company, Second Life, asked Lily Allen to stream a live performance for a fee of “hundreds of thousands of bitcoins.” Unlike a traditional concert, Allen would simply have had to perform in front of her computer for viewers watching from within the game. Lily Allen turned them down – and now she regrets her decision. On Sunday, January 5, she tweeted: "About 5 years ago someone asked me to stream a gig live on Second Life for hundreds of thousnds (sic) of bitcoins, 'as if' I said. Idiot." She even used the hashtag #idiot twice, clearly intimating that she feels stupid to have spurned such a lucrative offer.
Launched in 2009, bitcoin is a digital currency that does not have a centralized trading system. Bitcoin users transact directly and use cryptographic signatures to verify their transactions. This form of currency is accepted by a significant number of merchants and vendors worldwide but has failed to gain the approval of regulators.
However, realistically, Allen had no way of foreseeing Bitcoin’s success. When bitcoins were launched five years ago, they were almost unheard of and worth practically nothing – which is why she turned down the offer in the first place. At the time Second Life made the offer, those “hundreds of thousands of dollars” would probably have been worth a few hundred dollars. In the first few days after the launch - January 2009 - they were worth fractions of a cent, and even as late as 2011, they had a value of about a quarter dollar each.
Recently, the value of bitcoins has skyrocketed. The value of one bitcoin briefly rose to over $1,000 in 2013, and currently hovers around $900. The currency is certainly volatile, hitting an all-time high of $1,242 in November 2013. Taking into account the current value of bitcoins, the hundreds of thousands of bitcoins that were promised to Allen would amount to hundreds of millions of dollars today.
At one point, the value of bitcoins was more than the value of gold. However, the value has gone down a bit this year, and it is uncertain how it will continue to fare.
Lily Allen could have been a whole lot richer, but she, of course, doesn’t have too much to worry about. Even without the extra $90 million, Lily Allen is extremely wealthy – with a net worth of over $9 million that has gained her a spot on the list of young music millionaires in the UK and Ireland. It wouldn’t have hurt to have earned those extra hundred million dollars, though.