Investing in cryptocurrency is the newest trend to seemingly sweep the financial world. Cryptocurrency has the ability to provide you with quadruple-digit returns. It can also bottom out and leave you with nothing. Raw, unregulated, and hard to understand – some people have foregone crypto altogether. I am here to lay out the facts and leave the hysteria aside. Wondering how do I invest in Bitcoin begins with education about the industry. The ultimate decision is up to you but the buy-in is low and the rewards are potentially astronomical.
Should I Invest in Cryptocurrency?
If you’re new to the crypto-space, Bitcoin may be the only word you’re familiar with. A digital currency, it is in fact, the first digital currency. What makes it special is that it was the first working example of blockchain technology. Bitcoin was invented by Satoshi Nakamoto – a pseudonym for a person or group of people responsible for writing the white paper, building the system, and mining the genesis block. From Bitcoin, everything else was spawned. It gave developers new ideas and proved there was a market for the new technology.
The invention and more importantly – the success of Bitcoin opened the floodgates. When you ask yourself, should I invest in cryptocurrency? Remember the history of Bitcoin and the massive growth this industry has already shown. Cryptocurrency incentivizes new tech companies and investors alike to speculate on which tech will be the next big thing.
Cryptocurrency is dominated by Bitcoin and Ethereum. Every other coin is highly dependent on these two protocols. Why? Because altcoins receive their value in relation to Bitcoin and Ethereum. The more valuable Bitcoin or Ethereum have, the higher an altcoin will be worth. Ethereum’s protocol allows developers to make their own cryptocurrency with ERC-20 tokens – which run on Ethereum. These tokens make up a large percentage of existing cryptocurrencies. The importance of Bitcoin and Ethereum mandates a thorough analysis of the reasons to invest, or not to invest in them.
3 Reasons to Invest in Bitcoin
If you’re still reading, it must mean you’re curious, wondering, should I invest in Bitcoin? I’m here to let you know there are extraordinary benefits to investing in cryptocurrency.
1. You can’t afford to not win. I know it’s a gamble, you know it’s a gamble but if you don’t gamble, you can’t win. Can you really afford to not make huge percentages if the market swings up again? With more people entering the crypto world every day, the potential for an increase is extreme.
2. It’s the most well-known coin. Never discount the importance of marketing behind a product. Bitcoin has the best name recognition and it’s only getting stronger. When new people invest in cryptocurrency, one of their first investments is likely Bitcoin. This increases demand.
3. It is the most secure cryptocurrency. The increased level of security comes from its decentralization. It’s akin to having thousands of witnesses watching each transaction.
3 Reasons to NOT Invest in Bitcoin
Should I invest in Bitcoin? Although I am a believer in the technology and the coin, investing in cryptocurrency is not for everyone.
•You can’t afford to lose. Bitcoin and cryptocurrency, in general, is a gamble. Only invest with money you can lose and still be alright financially.
•You don’t understand the technology. How do I invest in Bitcoin? It’s tempting to jump in the hype and succumb to FOMO. However, if you can’t fathom how it works, it’s not a good investment. Only put your money into industries you understand. This will keep you from being blindsided by market events.
•You believe in government regulation. If you trust that the government is the only entity that can add value to a currency, then Bitcoin is not for you. The value of Bitcoin comes from the large network of users who mine the coin and conduct transactions on the blockchain. It is completely divorced from centralized power structures.
3 Reasons to Invest in Ethereum
When beginners start investing in cryptocurrency, after learning about Bitcoin, the next popular coin to look into is Ethereum. Ethereum builds upon the success of blockchain and increases its utility to more than a simple value exchange. Users can make their own tokens on the protocol allowing for investors to buy into dAPPs. To keep it brief, Ethereum shows the world the vast potential crypto has.
Source: bloqwire.com
Popular, with a working product, investing could be a smooth move.
1. It works. Even with some flaws in its history, Ethereum works. There are over 25 million unique ETH addresses, showing a huge user base. Developers use the ERC-20 tokens for ICO’s and dAPPs. The ecosystem is robust and continually pumping out new products.
2. Strong name recognition. Inside the crypto-industry, everyone knows Ethereum. For many, it forms the foundation of their own company. It is being used as a tool to build the next generation of the internet. When new people are attracted to crypto, they will coalesce around a product they understand.
3. The future is bright. The creators of Ethereum actively maintain the blockchain and community around it. There are plans to switch to a Proof-of-Stake method of consensus in the near future. To conduct a hard fork like this will take incredible cohesion for a decentralized platform. If that happens, it will prove the viability of ETH well into the future making it lucrative to invest in Ethereum.
3 Reasons to NOT Invest in Ethereum
ETH is not for everyone, there are some concerns to review if you are a potential investor.
1. Its complexity raises concerns. Ethereum is built to allow for more utility than Bitcoin affords. Developers can build dAPPs, use smart contracts, even create their own tokens. Unfortunately, this complexity comes with a cost - while the blockchain is safe the smart contracts build on top of it might have security issues.
Early in its inception, Ethereum wallets were robbed – big ones. New companies built on the ETH blockchain created private addresses for users to invest in. It was these supposedly “safe” addresses that were hacked into. While the problem was fixed, it shows the dangers for investors. It’s important to remember that the technology is still new. Mistakes happen.
2. There is newer and probably better technology. While ETH might have been the first decentralized platform for smart contracts, it is not the only one. There are dozens of cryptocurrencies that boast more advanced technology. If you are looking to invest in theoretical tech, ETH is only scratching the surface of the crypto-space.
3. It’s expensive. Because of the popularity, the price of buying into Ethereum is higher than most coins. Couple this price with the uncertainty of a higher market cap and you have a recipe for a loss. With new competition for Ethereum, can it continue to hold as the world’s 2nd most popular crypto?
How Can I Find the Best Cryptocurrency to Invest in?
Investing in cryptocurrency is similar to any other investments you may be a part of. Look for what interests you, follow it, and put your money there. The crypto-industry is growing rapidly and there are various niches that each token falls into. Look for technology that directly competes with your current job or find a token that facilitates a task you truly believe in.
Popular Cryptocurrency Categories
I laid out some of the more popular industries in the crypto-sphere. This is by no means a full list of options as that would be illogically long. I hope it shows you an example of the variety of directions your investment can take and the best cryptocurrency to invest in.
How do I find the Best Altcoins to Invest in?
Altcoins, short for alternative coins, refers to everything that’s not Bitcoin. The best part of altcoins is how explosive their growth can be. Should I invest in cryptocurrency? Bitcoin’s popularity makes it expensive but other coins can be bought for pennies. Finding the next best cryptocurrency to invest in demands a background of technical analysis and a strong review of market trends.
•Market Cap. Refers to the total value of a coin in terms of fiat value. Learning this term will help you make decisions on how to invest in Bitcoin. High market caps show more popularity and more use. Low market caps exist for coins not well known or used. Investing in cryptocurrency with a coin featuring a low market cap is relatively affordable but there is a higher probability it fails.
Meanwhile, investing in a coin with a large market cap is more expensive, less likely to fail but without the potential for explosive growth (maybe). The best altcoins to invest in toe a fine line between the two.
•Volume. Refers to how many coins are being traded between individuals. The more volume, the higher demand, and more value a coin can accrue. Low volume can be inferred as low popularity and therefore, less overall potential for growth.
•Circulation supply. Refers to the number of tokens in existence. Some protocols feature a finite supply which makes them de-inflationary currencies. Others generate new coins throughout time which makes them inflationary.
Is Investing in Cryptocurrency Right For Me?
Still wondering, should I invest in cryptocurrency? The move to invest in Ethereum and Bitcoin generally makes up the first coins investors gravitate toward. After some initial research, you will start finding the best altcoins to invest in and industry niches to grow into.
Positives
• Fun and Exciting. Invest in cryptocurrency because it’s new. It’s not a stagnant industry, quite the opposite. Compare it to traditional assets being traded on the NYSE where in-depth analysis will likely put you to sleep. If you want to make money, you need to be actively engaged with your money.
• Potential for Explosive Growth. Enter a world where new technology is invented on a daily basis and some gains reach ludicrous heights, I'm talking 300%+ gains overnight. You could always invest in the stock market and wait for established companies to increase their value by single percentage points. Being safe is boring. Boring prevents you from attaining the kind of growth you actually want
• Have Influence Over the Market. Even though the overall market cap for crypto is in the hundreds of billions, its nowhere near the size of the NYSE, for example. The relative startup nature of crypto means your investments have an effect on the overall economy. A two thousand dollar investment into traditional stocks does nothing to the world economy. But if you buy $2,000 worth of a low valued altcoin, you have the potential to control a large portion of the overall supply.
Negatives
• Value can drop to 0. Cryptocurrencies are valued because of their utility and the user base surrounding each protocol. If an exodus occurs, they will drop to 0 relatively quickly. Think about MySpace, one day it was ubiquitous, the next day, it’s forgotten about. This phenomenon could happen with any cryptocurrency – including Bitcoin.
• No government safety net. When the stock market tanks, the government is there to bail it out. Not the case with crypto. When you lose, you lose it all. The lack of regulation means your gains are uncapped but so are your losses.
• Scams are everywhere. Lack of regulation and general misinterpretation of the tech opens the doors for snake oil salesmen. Be wary of every new company and piece of technology. Some have real development teams behind them, others are frauds, interested in running as soon as they get your money.
Should I invest in Bitcoin? As an adult, you make your own decisions. This is the beauty of cryptocurrency, no one will tell you what you can or can’t do. You have the ultimate freedom and ultimate responsibility to advocate for yourself. If you can afford to lose some money in crypto then you can’t afford to not make more money with crypto.
Investing in Cryptocurrency Could be in Your Future
Deciding to start investing in cryptocurrency is ultimately up to you. This article summarizes the risks and rewards, laying out reasons behind what your investment rationale should be. Should I invest in Cryptocurrency? Do your research and look into all the existing coins to find the right one for you. There are thousands of possibilities and CryptoManiaks has created an easy to use interface to help your research. Check them out here Check them out here and welcome to the world of Crypto.