Cryptocurrencies have been around since 2009 when Bitcoin first emerged onto the stage, but are still the new kids on the block when it comes to investing. We’ve all heard the stories of people getting rich almost overnight, but there are an identical number of tales about people losing fortunes equally quickly.
One young investor who has navigated the waters of cryptocurrency investing properly is Joseph O’Connor, who has become well-known in cryptocurrency investing for becoming a self-made millionaire with bitcoin. Investing in cryptocurrency isn’t for the rash or anyone who hasn’t done their research, so we asked O’Connor what the smart way to invest in cryptocurrencies was. Here’s his advice.
Why is now the right time to invest in cryptocurrencies?
- Cryptocurrencies still offer good investment opportunities, provided you are careful and you do your due diligence beforehand. As long as you understand that the market is a volatile one (as is all aspects of investing) and you are circumspect, there are profits to be made. But be realistic – while there’s certainly good money still in cryptocurrency, you can’t go in expecting there to be another boom like there was in bitcoin’s infancy.
- Changing your money into Bitcoin, Ethereum, or any of the other estimated 5000 cryptos may be a wise move to guard against the possible melt down of the almighty dollar, and after the global financial crisis of 2007 to 2008, who would bet against that happening? There’s a lot of talk of fiat currencies taking a nose-dive in the future, so cryptocurrencies are a good way to stop betting on any one government to look after your wealth.
- If 2020 has shown us anything, it’s a good idea to invest in currencies that are decentralized and unfettered by the governments of the world so you can act independently.
- The blockchain is the future, so it’s a good time to get involved as it grows. An early understanding and involvement in blockchain technologies and currencies will set you up for success in the future.
When is investing in cryptocurrencies a bad idea?
- Don’t invest in cryptocurrencies if you think you’ll get rich quick. Sudden growth in prices are almost always followed by drastic declines. In 2017, Bitcoin rose from less than $1,000 to over $10,000, a fabulous 12-month return. The following year, in nine months, it dropped to $6,000 which is still pretty good for those that owned them at the beginning of 2017 but not quite so good for those that had jumped on the bandwagon in December of that year. And what happens to Bitcoin as it tends to be mirrored by the other cryptos?
- Don’t invest if you don’t have the money. Investing in anything when it’s not surplus cash is always a bad idea, and you can’t expect to take it out of the market suddenly and get a good return.
- Don’t invest if you’re fearful. Consider diversifying within cryptocurrency: Bitcoin, Etherium, and Ripple XRP are among the big players in the cryptomarket stakes, but diversifying within crypto could put you at the forefront of another boom, so it’s worth considering. As with a share portfolio, spread the risk to minimize any losses and protect yourself from a sudden drop in price of one particular cryptocurrency.
- Don’t go into the cryptocurrency market without knowing what you are doing. Investigate the different cryptos before plunging in your cash, understand why one is doing better than another and where the smart money is going. It might not be exciting but is vital if you are not just to throw money away. Study the markets. Websites such as Coinranking, CoinMarketCap, and others offer live listings. You should become familiar with these and the price movements before you invest.
Beware of the Scams
Tread carefully, there’s a lot of people out there trying to get your money. Only deal with verifiable sites and currencies, don’t get fleeced by criminals and remember that they are very sophisticated these days. So, check and double-check because the strength inherent in blockchain technology also means that once you have paid, you can’t get your money back.
It is absolutely possible to find at least a fraction of the incredible success O’Connor has found, but you need to go into cryptocurrency investing cautiously. Get advice from those who have already found success, like O’Connor, if you want to find success quickly.