Investing in Cryptocurrency, as Bill Gates puts it – “a technical tour de force” or simply a masterpiece. Needless to say you won’t want to miss this Tech Train! So, why not find a way to invest in cryptocurrency?
Cryptocurrency has really become a fad! No wonder why it continues to climb the ladder of investment avenues despite stiff competition from traditional asset classes like equity, debt, gold, etc.
Let’s face it… cryptocurrency often crosses our minds whenever we sit on the couch planning our investment portfolios, don’t we? But we let this idea pass, either because we think cryptos are illegal or there is no way to invest!
First things first, crypto is not illegal at all. Therefore, you can actually investing in cryptocurrency and hold them as assets, although you cannot use them as fiat to buy goods. Anyway, you can still make your money with it, right?
Investing in Cryptocurrency 2021
For Neophyte, there are actually two broad ways you can enter the crypto world. The first is the complex and intellectual method – mining. For example, let’s take bitcoin. So, if you put your foray into bitcoin mining, you have to implement bitcoin policies by adding blocks of transactions to the blockchain network, and that will give you bitcoins. Either to say, miners are rewarded with bitcoins for doing work in and for the bitcoin system.
But here’s the catch, you have to delve into all kinds of complicated mathematical algorithms and other complicated things to mine these bitcoins. Apart from this, you will also need some special purpose equipment for this. And naturally, that’s not everyone’s cup of tea, is it?
This brings us a more convenient and simpler way to enter the crypto markets – through crypto exchanges. A cryptocurrency exchange is a platform that helps you buy and sell cryptocurrencies like bitcoin, ethereum, etc. Unlike stock exchanges, crypto exchanges are self-regulated, and they operate 24/7 a year.
Irrefutablely, crypto exchanges are a go-to for retail investors who don’t want to delve into the technology and still be able to add a fraction of crypto to their portfolio.
What are the Main Attractions of Cryptocurrency
At the moment, it seems as if the two primary attractions of cryptocurrency are:
- You can own and use it anonymously, and
- It’s subject to price explosions that can make it look and feel like an investment.
And for those who bought cryptocurrency prior to the price explosion in 2017 or the most recent price increase in 2021, it’s probably been the best investment in a lot of portfolios.
So what should you do if you want to get in on the cryptocurrency action?
Is Cryptocurrency a Good Investment? 4 Things to You Know
Before you say goodbye to your dollar and hello to Bitcoin, Ethereum or Doge, there are a few things you need to know up front.
1. Cryptocurrency is unstable.
It’s true- Crypto is as hot-tempered as a 12-year-old. Its value goes up, only to come back down, and you never really know what you’re going to get each day. The value of cryptocurrencies undergoes extreme volatility. There’s no denying that some are really hot right now – but for how long? Someone sneezes and the price drops! Investing in cryptocurrency is risky, to say the least.
But here’s the odd thing: A recent study by Piplase shows that 50% of Americans think it is safe to invest in cryptocurrencies. 2% fifty percent! News flash: Cryptocurrency isn’t necessarily a sure thing—it carries an enormous amount of risk. Let’s be real here, all investments come with some level of risk. But why jump to the deep end with something this up and down?
2. There are a lot of unknowns in cryptocurrency.
There is still a lot that needs to be explored about how cryptocurrencies work. Think about it: no one knows who is the founder of bitcoin! Only a small percentage of people in the world actually understand the system and know how to operate it. Ignorance makes you weak. We always tell people that if you can’t tell about your investments to a 10 year old kid, in the beginning you have no business investing in them. You are setting yourself up for a big mess.
PS While it may seem like everyone and their grandfather is investing in crypto, research shows that only 4% of Americans do.3
3. Cryptocurrency makes fraud easier
It only takes five minutes on the Internet to learn that not everyone has your best interest at heart. Nothing will stop scammers from gaining access to your personal information and passwords—even your bank account. And guess what? Cryptocurrencies make it so easy for them.
Now look, we are not saying that everyone who uses cryptocurrencies is a bad guy who is tricking the government and making dubious deals on the black market. But if someone wants to commit a crime and fly under the radar without being tracked, the cryptocurrency will call their name.
4. Cryptocurrencies have an unproven rate of return
Trading in cryptocurrency is like gambling in a way. Because it is exchanged from person to person without any real rules, there is no pattern of rise and fall in its value. You cannot detect changes or calculate returns with growth stock mutual funds. There is not enough data or enough credibility to make a long-term investment plan based on cryptocurrencies. Don’t play poker with your financial future here.
Should I Investing in Cryptocurrency?
Plain and simple—investing in cryptocurrency is not a good way to build wealth for your future. If you really want a solid investment, don’t mess with adding some crypto coins to your digital wallet. Here’s the Better Plan: If you’re out of debt, have an emergency fund that will cover expenses for three to six months, and you’re ready to invest, invest 15% of your income in growth stock mutual funds. Note- which are much more secure than crypto.
Don’t give in to fools just because there is too much publicity. We’ve talked to people who have taken out a mortgage or quickly exhausted their entire 401(k) to investing in cryptocurrency—heck no! Don’t put it all on the line and risk your financial future, your retirement dreams and your family’s well being. If you can’t afford to lose money, don’t invest it in something volatile like crypto.
A Better Way to Invest in 2021
ground level? The road to wealth creation is slow and steady, and there are still a lot of unknowns when it comes to cryptocurrency. Could crypto become a more legal way to invest later down the road? Sure. But as things stand today, just say no.
Get rich fast schemes are just that – schemes. Don’t risk it and put all your hopes, dreams and money into them. Instead, sit down with a smartwester who has the heart of a teacher. Let them walk you through a solid strategy for investing. And don’t hit that 401(k), guys. It’s Millionaires’ Number One Wealth-Building Tool! And millionaires don’t build wealth through risky investments like cryptocurrency.
Tips to Know Before Investing in Cryptocurrency
Here are a couple of important things you should know before investing in cryptocurrency.
- Capital Gains Tax: For tax purposes, cryptocurrency is considered an asset, like a stock or property. When you sell cryptocurrency and make a profit, you’ll have to pay capital gains tax on what you earned. Keep this in mind when you’re budgeting for the year and planning for taxes.
- Short-Term Investing: Because cryptocurrency is a volatile asset, many investors would consider it to be a short-term investment rather than a long-term one. It’s possible that in the future, cryptocurrency may become a stable investment and that long-term holdings will yield significant profit. But if that’s a big. Since cryptocurrency values have been decreasing, you might have a better chance of making a profit by timing the market. That’s incredibly risky, but crypto is high-risk. If you want your money to appreciate over a long period, you’re better off investing in long-term bonds, index funds, or IRAs.
What is the minimum to invest in Cryptocurrency?
First things first, I know there are a ton of different Cryptocurrencies you can investing in Cryptocurrency. In fact, there are over 2000 of them. But in this guide, I am going to stick to Bitcoin, because once you bought some Bitcoin, you can exchange it for any other investing in Cryptocurrency as well.
The question I am going to answer is, what the lowest amount of US Dollars is, that you can possibly buy Bitcoin with. So let’s get right into it.
Every Bitcoin can be broken up into 100 million smaller pieces, each called a Satoshi. This is also the reason, why you don’t have to own one whole Bitcoin, but rather you can own a fraction of a Bitcoin. But you can’t make your Bitcoin infinitely small. You can only go to the Satoshi level, and no further.
So in theory, the smallest amount of Bitcoin you can possibly buy is one Satoshi. In the future, it might become common to exchange a handful of Satoshis, but at the time of writing this, in November of 2018, 1 Satoshi is equal to 0.0000635595 US Dollars, which is a number that you can’t transact.
Cryptocurrency is a digital asset that uses blockchain technology to assign ownership to each unit. The value of cryptocurrency is entirely dependent on the demand in the crypto market—cryptocurrency units have no intrinsic value. Cryptocurrency is a high-risk investment because it’s a volatile asset and investors should buy with caution. It’s easy to learn how to investing in cryptocurrency. Just open an account at a cryptocurrency exchange, which acts as a broker.