Business & Finance

Why you are scared to invest in Bitcoin and Cryptocurrency.

Initially written for a now-defunct cryptocurrency media website.

2009 was a hectic time.

Ever since the GFC (that’s the Global Financial Crisis, for those of you who don’t know), the market crashes, volatile prices and their effect on our lives made us scared to trust the financial world. The biggest banks had major control of the financial space at the time. In a nutshell, the GFC broke our trust with money.

People have become wary of whether or not banks are answering the simple question: are they here to serve us or themselves? This worry ended up bleeding over to other parts of our lifestyle: how we view cryptocurrencies and Bitcoin as another fad, or some sort of scheme.

Why haven’t you, though? Is it because of fear? Is it because you know too little? Or is it because of something else? Let’s explore the first two points, and maybe you can figure out an answer for the third. Starting with:

Your Risk Adversity

What do you fear?

This is one of the biggest factors to consider when putting your money’s worth into any cryptocurrency: What you are scared to lose, and the unknown.

There are a ton of unknowns that most people are aware of, which highlights the scale of risks involved. It could be the coin’s roadmap, or shifts in macro-economic factors. It could be a Twitter battle between 2 influencers, which can put people off from the coin. The scale is so large and unknown, that as a beginner in the Crypto world, you wouldn’t know what to do or who to seek advice from.

If you are the only person in your family that is investing into Bitcoin, Ethereum or other digital currencies, you won’t be able to ask them for advice. Most financial planners are specialised in the stock market or shares, but not cryptocurrency. What about security? How do you know if this ICO is not a fraud?  Are you keeping your coins online or offline? Are the exchanges you are participating in trustworthy?

These are risk examples, and they are amplified: Blockchain had only been recently implemented, so we can’t make inferences from past data. You have close to nothing to refer to except your own decisions to make. This is slowly turning around though, as leaders in the Blockchain space are picking up in terms of their reputation. These leaders, or influencers we may call them, share their investing experiences and failures and do so willingly. We can learn from them. We can learn how to tackle the risks involved.

It’s a positive change, sure. With a quick Google search, you can easily find a link to the top 100 influencers on Blockchain and investing in cryptocurrencies and trading now. Some can outline the risks for you. Some can provide tips. The greatest thing is: most (if not all) information is free online for you to digest.

We need to start somewhere after all. Which brings us to my next point:

Your Lack of knowledge

Where do I start? Who is good to learn from? Where do I trade?

To what extent does social sentiment play a part in your financial decisions? What about technical analysis? Do you make inferences from past prices? What is considered ‘enough’ analysis?

These questions need to be addressed as soon as possible: you are investing and there are risks involved. If you fear that your lack of knowledge is stopping you from investing, there are a few ways to handle this:

  • Become knowledgeable. Read up on different sources. Find out what books do influencers recommend. Do they have a Youtube Channel explaining everything? A cryptocurrency podcast? Information comes in all shapes and sizes, make the most of them.
  • Accept that your limited knowledge you have is enough to start. You will never know it all. That statement isn’t meant to discourage you, but it’s to help you realize that no one can predict the markets 100% of the time. People invest their money into cryptocurrency knowing full well that they can lose it all. It is the same as stocks and FX trading. Once you realize only require a little understanding of the blockchain movement is needed to put even $10 into it, it becomes easier to hold some Bitcoin from your end. It doesn’t bite.
  • Invest with lower capital. Would you lose your mind over $100? What about $50? $20? $10? $5? The minimal entry point for Bitcoin is very low – setting aside spare change from the week can set you up for a very minimal investment for the
  • Mitigate your risks. Like other financial schemes, investing into cryptocurrency can lead to potential losses. Don’t put all your fortune into cryptocurrency knowing you can lose it just like that. This isn’t just financial advice, it’s common-sense advice. Ensure that there are no dependents on the amount of capital you are putting into Bitcoin for example. 

Speaking of risks…

More Knowledge Equals More Known Risks

Which is better: Going in blind, or going in knowing the risks?

The risks are still there, but being aware of them can help you make better decisions according to your profile. By profile, I mean how risky of a person you are.

You can always start with making your own Due Diligence guide! Information is King in the Bitcoin space, and ensuring that your due diligence efforts are superb gives you an advantage over others.

In the cryptocurrency space, all forms of due diligence aim to predict whether or not the coin in interest will rise or fall. It’s good practice to do this before you dedicate capital to the aforementioned coin. As an example, you can start off with the following:

  • Due diligence on the team – Who’s running the business? Are they experienced in blockchain technology? Do they have a vast network, or are they backed by reputable advisors? Finding some good names on the team page can put the investor at ease, as it makes them look like they know what they’re doing.
  • Due diligence on the roadmap and white paper – If you were to invest in an ICO, what will they do with all the capital? What are their plans for the next few years? Is it mostly just marketing? What are their predictions? Roadmaps are guidelines to indicate to the investor in what direction is the team going to. If the direction they are going is in alignment with what you are interested in, then all is well.
  • Due diligence on their marketing efforts – Are they always coming up in your feed? Do they have a large presence in your country? Coins that are highly popular in Europe but not so in Asia may have different reasons why that is so. It could be that they are focusing on getting regional investments. Another could be regulations that prevent them from penetrating another region. Do you think they can sustain a global marketing effort? Do you prefer if they focus on a few key countries before proceeding?
  • Due diligence on their social media – assuming that you are interested in a coin, you would be following their social media. Not only the social media of the coins, but the founders themselves:where are they now, which convention will they be in, etc.
  • Keeping up to date with macro-level events – New regulations in one country? How much of an extent will that affect the coin you are interested in, is another aspect to consider. Whether it be new policies set by an uninformed President, or the closing down of a cryptocurrency exchange, these can affect a coin’s progress in some way. One of the biggest factors would be Bitcoin’s price – as it rises, so does the rest of the coins. This is just an observation though.

Protect your risky ventures with more knowledge. More time to learn, more time to earn.

What coins are you interested in? How do you decide before investing into one? Comment below!

Why you are scared to invest in Bitcoin and Cryptocurrency.

You need to know this before getting into Crypto Trading

Bitcoin, Ethereum, Ripple, Cryptocurrencies. It’s on everybody’s news feeds these days.

Investors, their friends, and their pets are getting into this latest fad. Some people think that it’s going to be a bubble, while others think it’s an opportunity. If you’re just getting started, it can get very confusing.

What about you? Are you prepared? Have you read enough whitepapers? News? Roadmaps? Don’t even know what that is? It would be nice to have a few pointers to take note of before diving into the world of cryptocurrencies.

Just your luck, we’ve got you covered! Here are a few things you should know:

First, you don’t need much to get into Bitcoin.

There are plenty of ways to earn money given enough capital. Some include money market funds, stock portfolios and doing Forex Trading. Unlike other investment drives however, when it comes to cryptocurrency, you don’t need so much capital to dive into it! The entry point to participate is very low (though it is on the rise). This is because you can invest and own a (very small) fraction of a whole coin!

On one hand, trading fiat currencies (aka. Paper money like the Dollar or Pound) may need more than just a few notes in your pocket. Opening a trading account may take a while, and most of the time you need proper identification to even be accepted. It takes time.

As a comparison, Coinbase, a cryptocurrency exchange company allows a low buy-in point for anyone: a minimum of £2 equivalent in crypto! This can also be in USD as well. Did I mention entry point is really low?

That doesn’t take much: you can own a small fraction of Bitcoin from the spare change in your pocket. If you misplace this spare change,  it wouldn’t really affect your day-to-day life would it?

So, you could always start small. By that I mean very, very small. Some people think $10 is enough for you to be part of this. Some people say $50 or $100.

In any case, compared to other investment schemes like stock markets, ETFs and market money funds, they normally have a higher buy-in. With this, it’s easier. Great, isn’t it?

You don’t have to fully understand the tech.

Some people believe that they will never know enough about Bitcoin before they would consider buying it. Most believe that only the most savvy of techies who know the nuts and bolts of blockchain tech can participate. If you’re looking to make a profit or benefit however, you don’t have to know all of it.

We can never fully predict the markets with 100% accuracy, and the cryptocurrency space is no different.

So, don’t be afraid that you’re being left behind on the trends – more and more people are getting involved in Bitcoin and other coins, so its interest globally is on the rise it’s still bullish (translated: on the rise) so you can reap the benefits later on!

Some of the famous investors have noted price estimates of up to 500,000 or more. We’re still in the USD 10k range: is that low or high? We don’t know. However, given that more and more people are buying into Bitcoin, the prices are sure to change!

The faster you decide, the greater the advantage.

2018 is a promising year for these digital coins. As the public gains an interest in it, so does the chance of a rising market price. With hundreds of ICOs emerging, regulations being placed, and crypto drama between key players, these are exciting times for the budding Bitcoin investor. The faster that you dive into this, the greater the chance of you reaping the benefits!

You don’t have to know so much, which is fine. If it scares you, sticking with the main coins is recommended. Main coins in this case, meaning the most popular coins up to date. If you take a look at the top 10 cryptocurrencies for example, the heavy hitters like Bitcoin, Ethereum and Litecoin are up there. Ripple is on the rise too!

Having a little bit in each would minimize your risks. Understand that these coins will work without you thinking about them whether you like it or not. If that is attractive to you, you should consider deciding which coin to invest in soon.

Figure out what kind of Investor are you first.

By injecting capital in cryptocurrencies, your biggest reason for doing this would be to gain value out of the endeavour. Once you start owning any cryptocurrency, you are essentially an investor. But, what kind of investor are you?

Here are some questions that can help you figure out.

  • Do you like to take risks?
  • Do you like to support the latest in tech?
  • Do you like to take advantage of the different changes in market price?
  • Do you have the patience to wait for price changes?
  • Do you know anything about dollar cost averaging?

Consider holding for the long-term.

When you start thinking about long term implications, you won’t have to worry about the different rises, dips or fluctuations that happens in the market. Maybe you don’t even have time for that. Maybe you’d rather spend that time with family and friends, instead of looking at market prices and stock charts. That’s alright!

Maybe long term investing is the way for you. When you’re considering long term investing methods, you only need to think about it once and decide. And from there just hold! #HODL

You don’t want to have your heart broken by volatility all the time. It will hurt you in the end, so parking cash in there also works.

Consider day trading/swing trading.

Let’s say you don’t have to patience to wait for substantial profit. You’d rather get a little profit here and there from price changes. Then trading my be an option for you, although you do have to dedicate more of your time to learning more about cryptocurrencies and Bitcoin etc.

Sure, you need to dedicate more time to consider trading an option, but aren’t all uses of our time investments?

What’s good about this is that you can test out knowledge gained from reading all these articles, or from hearing the latest gossip from influencers on Twitter. The catch is, though you might get more profit, it’s higher risk. Sure, all the losses give us lessons, but really we don’t like losses. we’d rather keep our money.

My Advice.

The sooner that you start learning about your comfort zone and deciding the amount of money that you’re willing to invest (are willing to lose), the sooner that you can reap the benefits of diving into cryptocurrency. So start learning!

There are many different sources online, whether it be through Currency Insider, through tweets from influencers or various apps.

The world is your oyster for learning about Bitcoin, you just need to take the first step.

Resources

You need to know this before getting into Crypto Trading