Litecoin and 795 other crypto-thingies are also available. Which should I buy, or better: Should I buy at all? Does not a cryptic tulip mania unfold before our eyes? What to do with such reader questions? These coin stories are not for me. But help from the community is approaching: Reader C. is Crypto-Investor. He tells us how he deals with the matter as an investor.

Reader C. introduces himself

I am 50 years old and a longtime passive reader of the Finanzwesir blog. Here I have taken many useful tips. I am a self-employed manager of a small 10 man IT company and decided 15 years ago to provide for life insurance instead of ETFs. But I also have parts in bonds and real estate, but I'm already looking for reputable and cheapest investment opportunities for diversification, where my money is not going out for horrendous fees to any middlemen. In the process, I discovered Cryptos as a building block in the depot.

Why C. buys Bitcoin and Co

Today I want to share with you my experiences in investing in bitcoins and cryptocurrencies and to encourage you to consider for yourself whether a facility in the field of crypto-currencies (Cryptos) can be something for you. This article can only give you a very first insight into the world of cryptos on such a complex topic and should motivate you to familiarize yourself with the topic if you are interested.

First a few short definitions:

block Chain

A blockchain is a database whose integrity (protection against subsequent manipulation) ... is secured by cryptographic concatenation. The method is the technical basis for so-called cryptos, but may also help in distributed systems to improve/simplify transaction security compared to centralized systems.

cryptocurrency

Cryptocurrencies are money in the form of digital means of payment. They apply principles of cryptography to realize a distributed, decentralized and secure digital payment system. Each cryptocurrency has its own peculiarities, advantages, and disadvantages. The most important cryptocurrency is 46.4% of the market capitalization of all Bitcoin cryptos. Cryptos use blockchain as the underlying technique.

Bitcoins
Bitcoins are currently the largest cryptocurrency in terms of market capitalization.

Coins

A name for pieces of Cryptos. If I have cryptocurrencies, then I have coins. A Bitcoin is a coin. A Litecoin as well and 0,0001 bitcoins are also coins.
Cryptos are used on the Internet as a means of payment and sometimes as a credit for provided computing power. Cryptos can be exchanged for other cryptos and also for real money and have a market value in money.

That's how I became a crypto investor
Blockchain and Cryptos will change the world as the Internet changed the world 20 years ago. For example, a Western Union becomes superfluous if anyone on the Internet with Bitcoins can safely send their money in seconds to another part of the world. Perhaps Western Union would then mutate into a Bitcoin exchange office and everyone else could also run a competitive currency exchange office since all movements are public and understandable.
In the Bitcoin example, the total amount of bitcoins available is limited by design. There will never be more than 21 million bitcoins. This distinguishes Bitcoins fundamentally from other Fiat currencies, such as the Euro, which can be multiplied arbitrarily. But what you can do: You can invent a new cryptocurrency. Let's call him the rip-off coin. This happens every day. However, it's relatively easy to protect yourself from bad coins by just focusing on high-capitalization coins.
As a technician, I found the technology of Bitcoins and Cryptos (Blockchain) fascinating and so in the last 3 years I have bought a total of 8 Bitcoins for 3,200 Euros and just let them lie. They are now over 20,000 euros worth.

Initially, I thought Bitcoins and the cryptocurrency facility to be devils, a criminal currency, and bubble comparable to the Dutch tulip bubble in the 17th century. This is due to the one-sided coverage in the media. Therefore, many consider shares still for devil stuff and gambling papers.

The appreciation of the Cryptos I have liked in recent years and I have been very busy with Cryptos. Meanwhile, I have a different relationship with Cryptos. I consider these forms of payment as safe or uncertain as everyone else.

Honestly, I also have no idea which of the assets will turn out to be more valuable in the end. Euro? Dollar? Gold? Bolivar? I just learned how to invest in the market.

Bitcoin Trading - Crypto Marketplaces
Now the term market has fallen for the first time. One of the most important sites for a crypto investor is the website Coinmarketcap. Here you can see at a glance which cryptos there are and how high the market capitalization of the individual cryptos is.

We can see at a glance that there are over 800 cryptos, but that only a small number, perhaps a maximum of 20, are relevant at all. Presumably, it is still much less. Honestly, is not that the case with equities?

The second glance reveals that the total market capitalization of the crypto market has grown to over US $ 100 billion. And the money that flows into the crypto market is getting more and more.

At a glance, we realize that the trading volume in the crypto market is about $ 2.5 billion a day, and we can also see on this website which cryptos have an increasing or decreasing market capitalization bias.

Soberly considered, the market relevance of Cryptos is simply there, you can not argue that away.

Why am I investing in cryptocurrencies? Quite simply, because I invest in the entire market and because this entire market has changed with the introduction of cryptos.

How risky are cryptocurrencies?

I think the system in Cryptos is very risky. The risk of loss is 100%. And past performance is no guarantee of future performance. You should only invest in cryptos if you are a responsible investor who knows what he is doing.
Now you could argue: The stress of investing in Cryptos I do not do, that's not worth it.
Personally, I find the chance-risk ratio at Cryptos, however, very favorable. Let's compare:

With call money, I can actually only really lose money after inflation.
For real estate, I can lose a lot in the event of a possible slump in the current high prices, but I can hardly win anything. (Exceptions prove the rule). The currencies like the dollar and the euro really scare me, the money supply is rising and rising and the economy is not rising. Broadly spread ETFs may briefly fall by 50%, but more than doubling in 10 years is usually not possible. Cryptos are currently rising steadily with small resets, as more and more money is flowing into the market (compare capitalization above). Here, the risk of loss is 100%, but the odds are a multiple of 100%. Bitcoin has increased from less than one euro to 2,400 euros today. I would not expect such developments to recur, but I think a tenfold increase is realistic. The value potential of cryptos like bitcoin is theoretically unlimited. Some self-proclaimed prophets believe that one day you can buy a house for a bitcoin. However, I consider such information to be exaggerated.

Construction of a coin deposit

Since I wanted to invest in Cryptos, but no one is for gambling, I did not feel at home with the 100% risk of loss. That's why I thought about what I can do to minimize the risk. As a result, I've come to the idea of using only a small amount and dividing it by market capitalization into the five most important coins according to Coinmarketcap.

I've decided to go around manually like an ETF computer and mercilessly throw a coin out of my "Coin Depot" when it's no longer big players. Likewise, I would accept successful climbers. By distributing it to multiple cryptos, I can reduce my risk a little and do not run the risk of losing one loser.

Where buy?

There are marketplaces for cryptos on the internet; The reputable marketplaces are also controlled to some extent and require, from a certain volume, full identification with name, address, and ID. I myself use the provider Kraken from the US, where you can trade with many cryptos. I have not acted on other marketplaces yet. The marketplaces take a small fee when buying or selling cryptocurrencies. At Bitcoin.de the fee is currently 1%, which is paid by the buyer and seller in each case in half. For octopuses, the fees are depending on sales so the 0.4 percent, which is also divided between buyer and seller. Deposits and disbursements in real currencies also cost a small fee there. Deposits and withdrawals can be made in euros via SEPA transfer. Since Kraken has an account with Fidor Bank, I can make SEPA transfers from Fidor to Fidor, which are usually credited within two hours in the bank. By the way, you do not have to buy whole units. You can also buy fractions. 1 Satoshi is about 0.00000001 bitcoins.