Could cryptocurrency be the best investing opportunity of your life? Find out below!
Crytocurrency… one of the hottest topics in the investing world right now for many polarizing reasons. Some people love it, others despise it, but the question “Is cryptocurrency a good investment for 2021 and beyond?” is an important one to consider.
What is Cryptocurrency?
A simple description of cryptocurrency is it is a technology that allows digital transactions to occur through a decentralized system. That essentially means that many “cryptos” are used as an exchange of value (like money) that governments cannot control (unlike the current Fiat monetary system), but aside from this there are many different use-cases for the various cryptocurrencies that exist.
The most notable cryptocurrency is Bitcoin, created in 2009 by an anonymous party called Satoshi Nakamoto, and it is currently the coin with the highest market cap in the world. Its ticker symbol is BTC and many people refer to it as “digital gold” because it has a finite amount of coins that can be released over time. As a result, the supply of available bitcoin decreases and its value increases because there is less of it out there. Think of it like a piece of apple pie at your Thanksgiving dinner. If your mom makes the best apple pie, there are only 6 slices for the 30 attendees, everyone cannot have one. Because the pie is so good and people will do whatever they can to get a slice, they start bidding on a piece and the price of the slices goes up.
Now take that and multiply it thousands of times because at the time of writing this article, one bitcoin is valued at 33,858.97 USD. Other coins and tokens like Ethereum, XRP, Cardano, are a few of the top cryptocurrencies currently, but since the markets trade 24/7, 365 days a year those top spots are always changing.
Is Cryptocurrency a Good Investment Right Now?
When people heard about the price of bitcoin skyrocketing in late 2017, they started to look into how they could make money from it. This lead to many people throwing money into the markets because they had a case of F.O.M.O (fear of missing out) and many people lost money because they did not have a plan.
So, with the current rise in cryptocurrency seeing bitcoin reaching an all-time-high, people are again asking “is cryptocurrency a good investment right now?”
I believe the answer to that question comes in a few parts.
Cryptocurrency might currently be a good investment opportunity if:
- The market is trending upward. If you look at the chart of bitcoin over the past two years, there is a definite upward trend. There is a saying in the investment circle that “the trend is your friend, until the end” and it is even more true in the crypto space. The daily rises can hit 25% during these trends, but hit the same in the negative direction when they reverse, so be careful when examining a cryptocurrency’s patterns.
- If you have money to invest. Whenever someone asks me if they should invest in crypto, my first question is “do you have the money to?”. If they do, I go on the explain why I believe it’s a great investment, and if they don’t, I challenge them to figure out how they can get the money to start investing, but this is the first question people should consider.
- If you believe in the project, technology, or service. Since there is a wide variety of uses for the different cryptocurrencies that exist, I recommend that people do their research and learn what each project is trying to do. Some are related to the financial sector, some use a blockchain, others simply poke fun of the crypt-industry as a whole, and many other purposes, so it is very important to know and understand what each project is. Identify their leadership team, reading their whitepaper, and examining their results are a few key steps I use when determining whether or not I invest in a specific cryptocurrency, or not.
- If you have a well thought out plan. Given the recent rises, it might not be a good idea to place a large investment for the short-term, but it you have a long-term target, the price variation might not bother you. The crypto space can be extremely volatile and when it is going up, that is in your best interest, but when that inflection happens, it can be scary. By having a solid, well-researched plan, you can protect yourself and your investments.
Cryptocurrency is not a good investment opportunity for you if:
- You do not have money to invest. If you do not have any money to invest, investing it into the wrong crypto could be disastrous, but if this is you, do not stop considering investing in crypto here. Instead, I challenge you to think about how you can get the money to invest in crypto. You could take up a new part-time job. Do some cryptocurrency-freelancing. My favorite income stream is an online business because there is tremendous potential to scale it up and create another income stream.
- If you cannot control your emotions. This is a general rule for investments of any type, but especially when it comes to investing in crypto. In the past 24 hours, some of the top cryptocurrencies have increased 62%, 21%, 15% so those are tremendous increases in one day, but those ups can just as easily be downs, and some people find it hard to regulate themselves during these times and can panic sell, losing a lot in the process. I find creating a solid investment plan and learning from experienced mentors are a few things that have worked for me when it comes to controlling my emotions and not letting them control me.
How Can I Buy Cryptocurrency?
To get started investing in cryptocurrency, there are many different exchanges you can use. Two of the most common ones that I use are Coinbase and Binance.
Coinbase is an introductory exchange that allows users to bell and sell a variety of cryptocurrencies easily and quickly. It is great for most people looking to accumulate crypto and they make investing easy. Click to start investing on Coinbase here.
Regardless of the cryptocurrency exchange you decide to use to make your investments, it is important to research how you can protect yourself when it comes to crypto investing. Please do the appropriate research before making investments.
To learn more about investing in cryptocurrency, click here to watch our YouTube video.