There is little doubt in my mind that sound investment opportunities exist within the digital currencies space, however, these are not without the usual temptations that exist also with more traditional investments.
The aim of this article is to provide some high level points that I consider myself before parting with my own funds:
Understand your Investment Objectives
Before investing in digital currencies it is important to assess for yourself whether you are looking for an element of stability in a very volatile world, or whether you are perhaps backing a newer coin that could potentially yield a significant early growth explosion. Some may argue that there is no such thing "stable" within this space, however, one could argue that Bitcoin and Ethereum have managed to withstand many years of uncertainty, and as such provides at the very least a small element of stability. One should also consider that the up-side of newer coins may be higher in the short term, and as such may require a smaller up-front investment in order to capitalize on them.
Do your research and select one or two coins at most when starting out:
It could be a challenging task to decide which coins you may want to invest in. A good starting point may be to refer to the list at: https://coinmarketcap.com
Make use of Google in order to do some further research around your chosen coins. Also visit the provider's website in order to truly understand what they are all about. This level of fundamental analysis can be very valuable when separating those who do their research from those who purely speculate (gamble) on price. Attempt to determine whether the provider solves a global problem as part of the underlying Blockchain solution.
Last but not least, providers who take their work seriously are more likely to present you with a clean, professional and informative website, such as: www.steem.io
Subject yourself to the End to End Investment journey
Unlike traditional investments, most "companies" who offer services within this space are not regulated and many cannot be trusted with your money, however, this is not true for all organisations operating within this arena. It is absolutely key that you understand both how to purchase your initial coins, but also whether a process exists that will allow you to convert your coins back into traditional money should the need arise to do so. Once again, do your own research in order to find what you feel is a reputable exchange. This will require an element of judgement, but this is also why this E2E Investment Test is very important. Make you initial purchase very small, en ensure that once your coins arrived in your wallet that you understand and test the process for converting these back into traditional cash. Do not invest any amount worth flinching about until you have successfully passed this test.
Keep your emotions in check
All investments, whether traditional or alternative have some form of psychological drama attached to them. One current and real issue I see with investing in digital currencies is that there will be a ton of people who will chase huge gains out of the fear of having missed out, unlike the many reported "Bitcoin millionaires". The truth is that this industry is still very young, and upping your stake in the game in order to play "catch-up" with those who got in earlier could result in schoolboy investment errors. By investing too much, you are unlikely to be able to hold the investment during inevitable drawdowns.
Be honest with yourself regarding the risks
Although many of us have our investment biases, we need to remember that these are personal biases based on our own research performed. There are very few investments (possibly with the exception of certain bonds and futures contracts) that have no risk attached. It is therefore prudent to be honest with yourself and those around you who are dependent on your investment decisions regarding the risks taken.
I therefore see contributing to posts on https://steemit.com/ as an exceptional opportunity to be able to invest in this space, where most of the risk at this stage can be attributed to the time I spent writing a post such as this.
Please note that this article does not constitute investment advice and you are responsible for your own decisions.