This week we are going over the newest tips and tricks for investing in cryptocurrency. With such a volatile year, 2021 is coming nearer and with it will bring a new financial period with changes to the market as we continue to recover from the blow of COVID-19. In case you are new to the world of cryptocurrency or investing we will talk about some of the important things to consider before spending your money.
Cryptocurrency is Radical
If you are reading this article then its likely you already know what cryptocurrency is. You may have heard of people making or losing hundreds of thousands of dollars. Both are true. For example, in 2017 Bitcoins value jumped up to $20,000 at its highest and $900 and its lowest. Thats just in a year. The market for cryptocurrencies is more volatile than most other markets. So you should know that while the payout can be legendary, its risky business. Though to be fair, no investing is without risk. Self-discretion is advised.
It Isnt a Solved System
Cryptocurrency has only been in existence since 2009, when Bitcoin was created by the alias Satoshi Nakamoto. Nobody actually knows who this person is or the extent of the possibilities of cryptocurrencies. This means that the market and the way we interact with the currency is constantly changing and evolving. Its also not regulated by any form of government or leadership. All exchanges occur between two parties. If we consider all this, theres likely only a handful of people globally who truly understand the system and how to optimize it. We hope that this article betters your understanding so you can make the most of your investing.
The Dark Side
Unfortunately because of the anonymity of cryptocurrency, there are people out there who use it for illicit activity. Just as you might use bitcoin for your next shopping spree at your favorite store, someone else can and will use it to make deals on the black market. Money laundering is not without its place in the digital world. We dont want to scare you away from using cryptocurrency, but we do want to warn you of the possible dangers ahead. That being said, not all users are frauds.
Gambling
As we mentioned earlier cryptocurrency is kind of all over the place when it comes to its value. It doesnt have a consistent rising and falling pattern. That means that it doesnt have a proven rate of return. Which means that investing and trading in cryptocurrency can be akin to gambling. There is no way to accurately predict returns the same way you would in a typical stock market. Unfortunately there just isnt enough data at the moment. Long-term investments are going to be your highest form of risk because of this.
But gambling can also work in your favour too. If you want to cash out your BTC, a sportsbook is a great option to make your profits grow, because you can place your bets on highly likely scenarios, then withdraw your winnings. Over night the value of your cryptocurrency could rise meaning a bigger return on investment.
Where and When Should You Invest?
Now that we have introduced some of the must-knows of investing in cryptocurrency we will mention a few of the best places to invest in cryptocurrency.
Bitcoin – If its not obvious, Bitcoin is the number one company in the crypto world. Right now the value of Bitcoin is over $10,000 with a maximum cap of approximately $200 billion. Bitcoins also make up for near 60% of the current market. This is our number one pick for investing.
Bitcoin Cash – You might be thinking, I thought this was an article covering cryptocurrency, why are we talking cash? Because bitcoins are generated with blockchain technology, the larger the value of the currency the more data that exists. That means the rate of mining slows down as the rates go up. All that considered, Bitcoin developers created another version of Bitcoin which is capable of storing 8 times the amount of data. With only a few years on the scene, and the leadership of Bitcoin developers Bitcoin Cash has the most potential for becoming the best cryptocurrency.
Litecoin – Founder Charlie Lee wanted to create a faster, more accessible version of Bitcoin. Litecoin can be mined in under three minutes while it takes bitcoin near 10. Litecoin can also be processed by lower spec devices meaning you can probably use your laptop or home computer. This widens the range of miners and increases its potential value.
Ethereum – The goal of this company is to decentralize the internet and because cryptocurrency was created to decentralize money they share some fundamentals. Ethereum wants to replace servers with a global system of nodes generating one computer for the whole world. Ethereum has created their own cryptocurrency called Ether. The market cap is currently set at $40 billion, second only to Bitcoin. While the cryptocurrency is highly rated, the biggest value is the platform that the company is creating. Its host to many other forms of cryptocurrency and investors can make money off Ether and the users of Ethereum.
Your Pick
These are just some of the options available when it comes to investing in the world of cryptocurrencies. Good luck investing in the new year!