Should You Invest In Cryptocurrencies? Key Tips, Blockchain Basics & Facts!
Today we are discussing the main cryptocurrencies and crypto world as a whole. We will try to point out the most important things we need to keep in our minds if we want to get involved into this world.
Let’s start with the big script currency – Bitcoin. The thing is that we cannot actually value Bitcoin and its movements are purely fueled by speculation. People just think that it will go high and it goes high, but once this sentiment is damaged and there is panic, it could crush so hard and so fast that it will be very painful. Bitcoin was the first cryptocurrency and is still the biggest one.
However, there are many other participants of crypto space, which are eager to seize the throne. Let’s get into the whole world of cryptocurrencies because there are so many out there, and they are quite different actually.
First, let me begin with the foundation most cryptocurrencies are based
The fist technology is the block chain technology that is, in some way, has the potential to revolutionize not only our financial system, but also the way we treat and exchange value. The block chain technology is based on receiving different transactions, core information and verifing them through algorithms and storing the data into a chain of blocks with full visibility of all of the transactions and information. So no fraud can be made, and no one can steal your money.
This technology can revolutionize the way we exchange value because it makes contracts on the fly, and we know what we are getting. That is actually what money (physical money) is trying to achieve by the only way of exchanging goods. We sell something and receive the money that could be a piece of paper or numbers in the bank account, but it is issued by the government or by the central bank, and its value is guaranteed. However, this financial system has its own weaknesses. There must always be some kind of third entity that controls us and the value as a whole. In the block chain, this third entity’s control is spread across all participants into the system, so we can all gather, decide on the rules that we want to follow and, if we want to trade value, all of us need to obey them. There is no way we can go around those rules because everything is visible and verifiable.
The block chain is not only about money, it’s about contracts; it’s all about applications, about secure services. It is already revolutionizing many important sectors of our life. Many large companies and world governments are supporting it and trying to work on it. Different cryptocurrencies use the block chain technology in different ways, so it’s not to say that all cryptocurrencies are useful or good. Quite on the contrary, there are many coins and tokens out there that basically don’t solve anything, or they want to solve something, but there is nothing yet. There is no innovation, no development and so on.
We looked at the block chain technology, the foundation of most cryptocurrencies, and we know it is a great technology. Now let’s look at the financial side.
Sadly, the money and incredible gains have taken a most spotlight today, which, I believe, tricks a lot of people because investing is not about gambling. It’s not about thinking about money. It’s about thinking about fundamentals and value. No doubt that the block chain technology
and most cryptocurrencies have the potential to absolutely change the way we treat value. However, the shift of cryptocurrency is becoming very fast. New investment sector is developing, and I would definitely say that 2017 was the year of eruption of cryptocurrencies and the cryptocurrency world as of gains. Moreover, it could turn very nasty as many people might get cheated in all their innocence, as it is all like euphoria! One must keep your mind off the gains and money but keep your eyes on the target and technology.
At the same time, no one can deny the shift of money pouring into cryptocurrency and crypto world, and the gains are unprecedented. In the matter of a year or two, people with $500 or with 1000 pounds have or can have become millionaires. There is nothing even coming close to that in stock market or wherever else.
Let’s look quickly at those gains
The second most famous cryptocurrency is Ethereum. On 4th of January 2017, Ethereum was 11 dollars; in a year, on 4th January 2018, it was 959$. That is all crazy, isn’t it? For a year, you could have made gains that could not have been made into the stock market for decades!
Three other points are even more interesting. A year ago, Ripple was 0.0066 $, whereas this year, it is already 3.60 $. I think now Ripple is a cryptocurrency with the biggest game. They have thousands, tens of thousands, even hundreds of thousands percentage gain in a year. Ordinary people with little money could have become millionaires in a year. There are not so many opportunities to be the very beginning of something great. That’s why, looking back to it 10-15 years ago, when things just settled down, people that had not invested into cryptocurrencies, might regret now, as others might have made a fortune on it.
However, successful investment into the cryptocurrency must be smart. First, if you want high returns, you need to put some kind of input, put a lot of work and reading. If you want to invest into cryptocurrency with the possible gains at least 10 times more than notes on the stock market, you need to put 10 times more time into reading. You really must read everything about the technology it’s using. It might be the broke chain, any type of ledger or any other software. You need to know the future of that coin, what it is trying to solve, and look at its development. It is important to know what is behind it to see if there is innovation into the technology and where it’s going. Make sure that it’s solving something now.
The second question is how much you should invest. You should invest as much as you could afford to lose and obviously, and that’s a very variable term. If you have a lot of money, you should probably invest very small percentage of them into something very risky like cryptocurrencies, for example 5%. If you have a mid-range of money, you should invest a bit more, but again as much as you can afford to lose so that you don’t mortgage your house. You must make sure that even if you lose the money, you will not have any problems and you can make them back fast. It could be 10 % or 15%, or it could be even 20% of your savings. For example, if you have very little amount of savings (that could be 500$ or 1000 pounds), you should probably invest most of them, if not all. The truth is that even if you lose 1000 dollars, you can get some free time work for a month and make them back very easily. Whereas, if you put them into the stock market for some real gains, you need to wait a lot of time, so it doesn’t seem so reasonable. In cryptocurrency, you could potentially make 10 times of your money in 2-3 months, or even 20 times of your money into a year. That is when it really starts to make sense because you can make enough money that actually matters for you.
It’s also worth mentioning that there are many immature people in the crypto world. They have no idea about investment, how financial systems work and how governments work. To get into the crypto society, you need to go into some kind of forums, read about your cryptocurrency, read news, read what people are saying. Don’t make your decision based on what other people say, or whatever you see out there. Make your own decisions based on technology and on facts from different news.
The last thing is that when it comes to cryptocurrencies, you should have iron nerves and be ready to leave your feelings out. In the crypto world, your coin might go up 100 % in a day, then go down 30 % next day or be coming down 5 days in a row for like 10% each day, which is very painful, but then it could shoot up. If you’re trying to trade and be smart about it, you must not be worried all the time. Otherwise, it will be very hard for you. Make sure that you are okay to lose because that’s when you can leave it in there and just don’t pay attention to it and enjoy the ride.
information from the site:https://cryptototem.com/should-you-invest-in-cryptocurrencies/