Investments in cryptocurrency: why it is worth investing in Bitcoin and how to start?

The most common questions among beginners who are interested in cryptocurrency in terms of investment:

• “Should I invest in cryptocurrencies and Bitcoin?”
• “What are cryptocurrencies?”
• “Is it possible to consider cryptocurrency as a serious investment, or is it just a kind of speculation?”

Before answering "yes" or "no" to the first question, you first need to deal with the last two, which will lead you to make a decision that is right for you.

What is cryptocurrency?

Cryptocurrency is a form of decentralized digital currency that can be used as a legitimate means of payment – for example, to pay off debts or buy goods and services.

You can consider cryptocurrencies as something between a regular fiat currency (for example, the US dollar) and an asset such as Amazon shares.

There are already more than 2000 different cryptocurrencies, among which the first and most famous is Bitcoin (BTC) .

Can cryptocurrency be considered a serious investment? Or is it just speculation?

Yes, cryptocurrencies can be a serious investment. However, there are some key differences between investing in cryptocurrencies and conventional investments. Here are some of them:

• Cryptocurrencies are completely digital, so they are not in the form of paper money;

• Cryptocurrency exchange is not insured at the state level, for example, as it is done with banks. If someone hacks your account or your exchange closes, then the government is not obliged to reimburse you for lost funds;

• Cryptocurrencies are decentralized. This means that they are not tied to any country or government agency, which allows cryptocurrency owners to complete transactions without government oversight. On the one hand, this is an advantage, but on the other hand, you do not have the opportunity to cancel unauthorized transactions;

• The history of volatility (instability) of cryptocurrency prices is not that big, and therefore traditional technical analysis may not work until the market itself “grows up”;

• If you consider cryptocurrencies as an asset, then you rely on the blockchain technology , on which these digital currencies are built. However, fundamental analysis for cryptocurrency will be very different from the fundamental analysis of traditional assets.

About the myths of investing in cryptocurrency

Now you can ask, can traditional investors consider adding cryptocurrencies to their investment portfolios? The answer will depend on the person you are asking. Here are some myths about investing in cryptocurrencies:

1. "Warren Buffett believes that Bitcoin is a fraud, and therefore I should not invest money in it."

More recently, Warren Buffett compared Bitcoin with a button on his jacket, saying that the value of Bitcoin is not really higher.

However, it is also possible to talk about both gold and a $ 100 bill, which people use to trade. And yet Buffett invests in gold, right?

On the other hand, Warren Buffett encourages people to invest only in things that they know and understand well. He himself still uses a folding phone. Probably, he does not understand how cryptocurrencies can be used for the benefit of the “non-banking” world population, who could do without banks using smartphones.

Even JP Morgan CEO Jamie Dimon, back in 2017 called Bitcoin “fraud”, did not refuse to introduce digital currency in his company. Yes, and Buffett did not say anything about the remaining 2000 altcoins , to whom, perhaps, he does not mind!

It seems that now everyone is inclined to think that cryptocurrency (not only Bitcoin) is the future. Perhaps you should invest in them, although for this you need to understand well and be able to choose the right time for purchases and sales of coins.

2. "I do not have to invest in cryptocurrencies because the government or the central bank does not support them."

The whole point of cryptocurrency is that these are assets not supported by the government.

Imagine you have a business, money in a bank and a lot of property. And suddenly the government was overthrown, and the country begins to live according to completely different rules and laws. Most likely, the new government will freeze your bank accounts, take away property. These things will no longer belong to you, because they are easy to capture and say that they are no longer yours.

What from the past wealth you can pass on to children? Almost nothing. But if at least part of your money was in Bitcoins then, to which no government can reach, then another thing!

For example, US citizens are somehow lagging behind in their acceptance of crypto compared to other countries. The reason is a higher level of trust in the government, as a result of which they are not afraid that the government can freeze their assets tomorrow. That is why they do not appreciate the opportunities offered by cryptocurrencies.

Why invest in cryptocurrency?

Now that we have dispelled some of the main myths about investing in cryptocurrency, let's look at some of the reasons why you just need to invest in cryptocurrency!

1. Haters are turning into active supporters. As we have said, JP Morgan CEO Jamie Dimon called Bitcoin fraud back in 2017. However, now his company is creating its own cryptocurrency.

Even the US government is beginning to realize that it will not be able to withstand the global recognition of cryptocurrencies and is currently actively seeking ways to regulate cryptoindustry.

2. Cryptocurrencies recognize more and more. Every day we hear about new trading firms that accept cryptocurrencies such as Bitcoin as payment. Here are some examples:

• Mastercard creates a debit card with bitcoins;
• Fidelity aims to offer crypto trading ;
• The United States is focused on optimal regulation in this industry;
• More and more people are learning about cryptocurrencies thanks to the media and the Internet;
• More and more women in the world are involved in the cryptoindustry. This is the half of the population of the Earth, who loves to spend money, and now – and cryptocurrency.

Tips for investing in cryptocurrency

If you want to invest in cryptocurrencies, here are a few things to keep in mind:

• Find out how tolerant you are for risk taking. The first thing you need to do is figure out how much you want to invest. Cryptocurrencies are unsustainable investments. This is still a relatively new market in which assets can make huge fluctuations in a day. Depending on their tolerance for risk, the amount of investment in different people may vary. Perhaps cryptocurrency can be 15% of the total amount of your investment portfolio.
• Be trained. Before you start investing / risking, you need to know the world of cryptocurrency well, and also understand well what your every move means and what it is aimed at. You need exactly general knowledge about cryptocurrencies, markets and trading, and not what marketers of various coins are pushing through.
• Cloud mining is the most profitable investment in cryptocurrency for 2019. Cloud mining is an opportunity to get cryptocurrency using the computing power of mining farms. At the same time, the miner does not need to buy expensive equipment and software. The user can simply buy the power of equipment that is installed in remote centers and extract cryptocurrency in the “cloud”. This makes it possible to mine cryptocurrency for people who live in countries with a high cost of electricity, as well as for those whose technical knowledge is insufficient to assemble the equipment themselves and set up the software.
• Choose a cryptobirth you can trust. Examine cryptographic information and choose the one you really should trust. This is a kind of research work that should lead you to certain conclusions about these platforms. It can be Binance , Huobi , Coinbase and others. When it comes to exchanges, it is also worthwhile to resort to some diversification, because there are many cases of hacks, and even there are cases when the owners of exchanges die, taking with them the passwords from the wallets.
• Create a diversified portfolio. Next you should decide in which cryptocurrency you will invest. Although Bitcoin is one of the most well-known digital assets, there are more than 2,000 cryptocurrencies, also known as Altcoins, that are also worth exploring. The cryptocurrency market is similar to the dot-com market. In the long run, some of these cryptocurrencies will succeed, while others may disappear. Perhaps, along with the "dying" coin in your hands will be a couple of those tokens that in the long run will make you considerably rich.

Publication date 10/05/2019
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