Should You Invest In Cryptocurrency?
3-minute readSeptember 21, 2020
Bitcoin can be credited with starting the cryptocurrency craze in 2010. What started as a type of digital asset for a small group of investors has turned into a worldwide phenomenon.
Remember when it seemed like it was all over the news when prices skyrocketed? Perhaps it’s left you feeling behind and thinking, “Should I invest in cryptocurrency?”
The answer depends. Sure, there’s potential for big gains, but given cryptocurrency’s history of price fluctuations, it also means you’ll need a high tolerance for risk. In other words, you can make a lot of money or lose a lot of money.
Let’s take a look at some of the questions you need to ask before investing in cryptocurrency.
Should I Invest in Cryptocurrency?
The truth is, if you’re looking for a get-rich-quick method, you’re out of luck. Bitcoin, for example, has fallen from its highest peak at $17,000 to around $3,500. All this to say, it’s a volatile way to invest.
That’s not to say you shouldn’t invest in cryptocurrency. Like all investments, you need to weigh the pros and cons and how they factor with your wealth-building efforts. Think carefully about your own risk tolerance and what else you already have in your investments. In other words, putting all your money into Bitcoin, for example, may not be a safe bet.
Remember, nobody can predict with 100% accuracy what any type of investments will be like. That being said, there are methods such as investing in stocks that tend to grow more consistently over time.
What Cryptocurrency Should I Invest In?
After Bitcoin’s arrival, a bunch of other cryptocurrencies have popped up. The same cautionary warning exists: make sure you do due diligence before investing in anything. This means conducting your own research as well as seeking the help of reputable resources.
Here’s a list of some of the more significant cryptocurrencies aside from Bitcoin. Keep in mind that it’s not possible to have a comprehensive list (there are more than 2,000 different types of cryptocurrencies floating out there):
- Binance Coin (BNB)
- Ethereum (ETH)
- Litecoin (LTC)
- Libra (LIBRA)
- Ripple (XRP)
- Tether (USDT)
- EOS (EOS)
- Bitcoin Cash (BCH)
- Bitcoin SV (BSV)
- Monero (XMR)
Is Bitcoin A Safe Investment?
Unfortunately, there are no guarantees with any types of investments. Sure, there are plenty of companies that look to Bitcoin as a legitimate form of currency and as a form of investment. In fact, there are plenty of investors that believe that cryptocurrencies are a great way to invest for retirement.
Like mentioned before, there’s really no such thing as sure bet or a safe investment. Sure, there are some that are probably less risky than others. However, all forms of investments involve some type of risk. That means whatever amount you put into any one type (including Bitcoin), you’ll need to understand that you could lose money, even the original amount you invested.
If you want to invest, you can give it a try – the key is to not invest more than you’re willing to lose, just in case. Considering Bitcoin has been in existence for around 10 years, it seems to be a form of worldwide currency system that might be here to stay.
Again, make sure to do your own research, including asking the advice of a reputable investment professional before proceeding.
How To Invest In Cryptocurrency
Figuring how to invest in Bitcoin or other types of cryptocurrency is relatively simple. First, you’ll need to find a place to purchase it, then another to store it. Most people tend to purchase cryptocurrency at special exchanges – most popular are Coinbase and GDAx. You can use your debit card to purchase currencies.
Cryptocurrency exchanges earn money by charging fees each time you make a transaction. There are websites like LocalBitcoins where you can connect directly with sellers, but you could risk dealing with someone who may not have legitimate currency.
Once you complete your purchase, you can then “send it to your wallet.” What this means is that you’ll store your currency in what’s called a cryptocurrency wallet. It’s a place where you’ll be able to securely keep the code for your cryptocurrency portfolio. There are two options: a hardware or software wallet.
Hardware wallets are physical items that look like USB drives and tend to be more secure. Think of it like a physical savings account – you can use it if you don’t expect to trade frequently. Software wallets, on the other hand, allow you do more active trading – these are like accounts you access with a password.
Will You Invest in Cryptocurrency?
Investing in Bitcoin and other forms of cryptocurrency can be an interesting way to invest for those who are willing to take on more risk. That being said, as with all investments, it’s best to diversify as best as you can with other options such as stocks or bonds. A trusted and reputable financial advisor can help you with recommendations that are the right fit for your needs.
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