The Guardian tells the story of a student who bought bitcoins for $27 in 2009. He forgot about his 5.000 BTC, and remembered about them in April 2013, when they were worth $886.000. The latest bitcoin exchange rate fixed at $8000. So, he made $40 million from $27.
The investment philosophy
It does not seem necessary to create a new currency if you want to capitalize on it. Invest in already existing money and earn on their value growth. The cryptocurrencies value is steadily growing. Only in 2017 Bitcoin rose 4.5 times, and Ethereum during four months increased in price to 295%.
Advantages of investing in cryptocurrencies
- it is transmitted from person to person according to the principle of peer-to-peer services; there is no need in banking institutions and payment systems;
- it is an international payment system, you can use it everywhere through the Internet;
- only you can control your crypto-purses – nobody has the right to suspend your account or limit the transfer amount;
- low transaction fees comparing with the bank fees and payment systems;
- the cryptocurrencies value is steadily growing. Only in 2017 Bitcoin rose 4.5 times, and Ethereum during four months increased in price to 295%.
There are several ways of investing in a cryptocurrency – direct purchase, exchange trade, investments in mining. Some techniques require significant investments, and others are available for users with minimal start-up capital.
Disadvantages of investing in cryptocurrencies
We have to say about the cryptocurrencies disadvantages. First of all, this money does not recognize the state structures. The lack of centralized control is a definite plus, but it also means that all cryptocurrencies transactions are at your risk.
Another disadvantage that often turns into an advantage for the speculator is the high cryptocurrency volatility. The course changes every day. Inexperienced investors usually panic and begin to drain the capital, when there is even a small tendency to fall.
The volatility of cryptocurrencies
Cryptocurrency characterizes by various ups and downs of the course. Economists and financial analysts urge caution in transactions with crypto-money. Some speak of a bubble, which is inflating, but at one point, may break. Fortunately, this is not happening, which allows thousands of people to earn fortunes on bitcoin, litecoin, and ethereum.
4 popular ways of investing in cryptocurrency
The easiest investment option is suitable for those who have the initial capital. You just need to buy cryptocurrencies and forget about it for a while. The method is promising but too long. If you have little funds, then the earnings will be modest.
Method 1. Sale or exchange of cryptocurrency through exchange offices
The network has a lot of exchange offices, which operate on the standard exchanger principle. But they give more functionality and a huge number of currencies for exchange. They change not only in rubles, dollars, euro but also in cryptocurrency.
Method 2. Direct exchange
There are particular sites and forums for cryptocurrency analytics, where they share money with each other without any commissions. The advantage of this method is that you do not pay to intermediaries.
Method 3. Cryptocurrency bourses
Bourses are not just a tool for the purchase and exchange of cryptocurrency, but also a way of earning money on the difference in rates. Investing in stock trading for speculative operations is better for those who have a basic understanding of the principles of exchange operation.
It's not passive income. It is a daily work. Professional traders follow the course around the clock. They use special software, read thematic literature, and communicate with brokers and other traders on the local stock forums and third-party resources.
Method 4. Investing in cloud mining
Equipment for classic mining costs big money. It is not enough to find the money and buy expensive GPUs and other hardware, and you should understand how to connect it and configure. Experts say that this equipment will pay off at best 1-1.5 years.
There is a good alternative – cloud mining. Cloud mining is an industrial mining. You are not working alone. Here you become one of the investors in a mining company. This company has professional equipment, and the efficiency is higher in the hundreds or thousands of times. Your income in this area is proportional to the invested funds, and the mining carries out in an automatic or semi-automatic way.
3 golden rules for the novice investor
- Rule 1. Observe the basic deposit rules Follow the universal rules of management of investment funds. Do not invest the entire amount in one direction, do not trust assets control to the dubious intermediaries.
- Rule 2. Be cold-blooded The volatility of the cryptocurrency market is extremely high. Keep calm in case if the course suddenly changes in a bad way.
- Rule 3. Do not be greedy But to wait indefinitely is not worth it too. Even the most extended growth period ends sooner or later. If you miss the moment, you will lose profit.
Investing in cryptocurrency is a real opportunity to get income. But putting assets into digital money, we should not forget about the risks. Cryptocurrency has no official status at the state level and is still considered an experimental way of payment.