Today, I’m going to focus on one of the hottest topics around right now; crypto. Investing in cryptocurrency is hardly new, people have been doing it for decades.
However, making a significant profit out of this investment is certainly something that’s perhaps only been seen in the last couple of years.
Bitcoin led the way, and everyone saw how crazy things got with it towards the back end of 2017. Its price rose to over $19,000 last December, which meant it had grown 13 times in value during the twelve months of 2017.
Granted, the price has dipped since then, but it’s starting to perk up once more, which is setting cryptocurrency investors into overdrive.
The whole result in this Bitcoin saga is that so many new investors have come out of nowhere. It’s very much seen as an investment for millennials, due to the links it has with the tech world.
Loads of influential people jumped on the bandwagon, which led regular folk to see what the fuss was about too. As a consequence, we end up with lots of people (like you guys reading this right now) who want to invest in crypto but are keen to learn more about it.
Now, I think there’s a lot of things no one ever tells you about investing in cryptocurrency. This isn’t because they’re trying to withhold information, it’s mainly because very few people even understand what they’re investing in!
Bearing that in mind, I hope this post acts as a bit of a guide to help you learn more about investing in crypto and the potential benefits/risks that are present.
#1 Bitcoin Isn’t Your Only Option
Bitcoin, Bitcoin, Bitcoin; it’s all anyone talks about when they discuss crypto investments. To prove my point, it’s the only thing I’ve mentioned in this post so far!
This is because it’s the most popular, valuable, and well-known digital asset out there. So, it’s a lot easier for people to understand things when you use it as an example. However, you may not be aware that there are loads of other options out there.
Some of which may even be better than Bitcoin for numerous reasons. I’m not going to list them all here because it would just take up too much time, and I think it’s something that deserves an article in its own right too!
But, what I will do is talk about a couple of other examples to give you an idea of what else is out there. The first of which is called Ripple. Some of you may have heard of this, others have no clue what it is. For me, this is an exciting cryptocurrency because it’s currently worth very little.
This means you can invest hardly any money, and own a fair bit of it. While it doesn’t look like you’ll make any huge profits anytime soon, this could be something to hold onto for years to come.
We’ve seen how quickly cryptocurrency can rise in value, so think of this as the new Bitcoin. Back in the day, Bitcoin was worth pretty much nothing when it first burst onto the scene. Fast forward a few years and people became Bitcoin millionaires in 2017.
Another alternative is Litecoin, which many experts see as the little brother of Bitcoin. The price of both things isn’t comparable as Bitcoin is much more valuable. However, you can easily compare their price graphs over the last twelve months. It seems like whatever happens to Bitcoin, the same happens to Litecoin.
The fact that Litecoin is so much cheaper means it’s a good alternative for people that aren’t willing to invest too much money in Bitcoin.
#2 You Can Earn Cryptocurrency By Mining It
This is where things truly get a bit complex, and you can see why a lot of people stay away from understanding the nuances of cryptocurrency.
In this world, we have to remember that everything is digital. You’ll never be able to hold cryptocurrency in your hand because it simply doesn’t exist as a physical entity like normal money.
It’s free from standard bank regulations, which presents a significant challenge to investors. Mainly; how can you validate crypto transactions to ensure they’re legitimate?
Well, this is where cryptocurrency mining comes into play. It’s this idea of verifying all the different transactions that happen in the crypto world. So, when someone sells Bitcoin to someone else, a miner will look at the transaction and verify that it’s legit.
The thing is, to verify it, they need to run loads of complicated equations that essentially crack the code and determine if things are good or not. How do they do this? Most miners will build a mining rig that forms part of their computer and runs all these calculations for them.
This allows then to tackle multiple things at once, verifying loads of transactions. Why is this worth mentioning? Because you can earn cryptocurrency if you’re a miner. The more transactions you confirm, the more crypto you earn.
Basically, this is seen by many as an alternative way of investing in crypto. Instead of buying and selling like most people, you work in the background as a miner, accumulating your fair share of digital assets, ready to sell when the time is right.
#3 Crypto Prices Move All The Time
If you’re thinking about investing in crypto because you want a nice steady investment, then this might not be the right thing for you. Sure, it’s definitely proven that the price will increase over the years, but the actual daily price of your assets will move all the time.
There were days last year where Bitcoin dropped by thousands of dollars and then went back up the next day. It’s a very volatile market, which makes it potentially brilliant and dangerous.
It’s dangerous for people that are nervous investors. If you see your assets dropping in value, then it might panic you into selling. Do this with crypto, and you could lose thousands of dollars in a 24 hour period.
The future of cryptocurrency is definitely cloudy as people aren’t sure where things will go next. Most items are down right now, but that doesn’t mean they’ll stay this way forever. As last year showed, all it takes is a crazy 12 months for something to grow over ten times in value.
I guess what I’m saying is that you should be prepared for what you’re getting into. Cryptocurrency can drop in value way more than some stocks and shares on any given day.
But, they can also rise in value way more as well. Right now is probably a good time to invest as prices are low – but we know they can go higher. It’s almost like when you invest in real estate on the property market. Don’t buy a house when house prices are high as it limits your ability to make money.
You buy them when the market crashes and house prices drop! Currently, it’s not a great time for people who already bought crypto during the boom last year as they’ve lost money. But, for new investors, it’s a great time to get in and seize some assets. Just be aware that the market is volatile and your digital assets may go down on one day, but rise back up the next.
Should you invest in cryptocurrency? Possibly, but be aware of the things mentioned in this article. It’s a confusing place to invest your money, and I always advise against putting all your eggs in one basket. Even if you do buy some crypto, make sure you have other investments in other places to help you just in case you experience a loss.
What are your thoughts on cryptocurrency?