3 things to know about cryptocurrency

Cryptocurrencies let you purchase services and goods or trade them for a profit. There is more to understand about what cryptocurrency is, how to buy it and more importantly how to protect your investments.

What is cryptocurrency?

Cryptocurrency in its simplest form is a digital or virtual currency. One defining characteristic is that cryptocurrency isn’t issued by any central authority, the idea behind that is that the currency isn’t controlled by a government.

The most known cryptocurrency is Bitcoin. Crypto is wildly volatile reaching it’s all-time high this year of nearly $65,000 back in April. Pretty wild to think that just 10 years ago Bitcoin was valued at 4 cents. Imagine throwing a $10 at it then! We could all have spared a $10 investment back then and not blinked an eye.  

But alas, hindsight is 20/20.

Here are 3 things to know about cryptocurrency.

Cryptocurrency is a digital payment form that can be traded for goods and services. Cryptocurrencies work using a technology called a blockchain to handle its transactions. An interesting fact about blockchain is its security. The benefit of how the blockchain keeps data safe is how it verifies transactions using many different computers spread across the world. This is known as decentralization. A decentralized currency is one that isn’t controlled by a government or group of people. This is the appeal of cryptocurrency is that it is made by the people for the people.

There are tens of thousands of different cryptocurrencies at this point that can be publicly traded. This can seem daunting for a beginning investor looking to put their money into cryptocurrency. In fact, the total (current) value of all cryptocurrencies right now is up to $2.1 trillion dollars according to CoinStats. One interesting thing to note is that the total amount of money invested into Apple stock is about the same.  If we are comparing the total money invested into the stock market versus all of cryptocurrency, investing into crypto can be considered early.

how to invest in cryptocurrency

Wondering how to invest into cryptocurrency? Here are two links to companies I use to invest into crypto.

Disclaimer: These links are no cost to you. We both get a small sign-up bonus if you sign up. See details while registering.

https://blockfi.com/?ref=f27fe12d

coinbase.com/join/adams_2kd?src=ios-link

Cryptocurrency

Total invested ( Market Cap )

Bitcoin (BTC)

$ 864 Billion

Ethereum (ETH)

$ 391 Billion

Cardano (ADA)

$ 87 Billion

Binance Coin (BNB)

$ 69 Billion

Tether (USDT)

$ 68 Billion

Solana (SOL)

$ 55 Billion

XRP (XRP)

$ 51 Billion

 

Are Cryptocurrencies a smart investment?

cryptocurrency how to buy

Bitcoin has outperformed the stock market and real estate since its inception. If you put a few dollars into BTC in 2011 you’d be a millionaire because that is abundantly clear. The question now is, will your investment perform well if you put money into cryptocurrency now?

I personally a have done incredibly well with my cryptocurrency investments. At this point I’ve seen the wild volatility and have seen it enough that I can spot the patterns it frequently makes. There are behaviors that occur frequently in the world of crypto currency that you can learn to spot too.

Here is an article I wrote on that topic if you’d like to read more, this article is great if you have an understanding of crypto already but would like to take your knowledge to the next level: https://theinvestordash.com/blogs/required-investing-skills-explained-simply/why-crypto-is-in-the-red

Cryptocurrency basics

Let’s keep going if you’re here to learn the basics of cryptocurrency. One big problem that I’ve seen is that most millennials hold too much cryptocurrency. There is huge risk involved in crypto. Like is said with every investment that you have as much upside potential as there is risk. When I read articles about people having 50%+ of their whole investing portfolio in crypto, I feel uneasy about that.

The percentage I feel comfortable with is somewhere in the 5-10% range of your over all portfolios. I personally don’t invest into new coins that are obscure and unheard of anymore. If I were new to crypto I would use my 5-10% to invest into the top 3 cryptocurrencies ( BTC, ETH, ADA ). Anything beyond that should be money you are willing to lose.

If you ever do drop some money into a different coin you need to do research. In the early days I would spend hours reading white papers for each cryptocurrency. This was super fun for me, and it helped me land on one coin that has returned 2,900%.  I’m not the typical investor though, I’m the weirdo that reads company quarterly reports for fun.

Be very wary

My number one don’t is to yolo your life savings into crypto. If you decide to start dropping money into crypto you should treat it like your other investments where you dollar cost in and strategically drop large amounts in once you can spot a opportune dip in the market.

Be aware there is a lot of scams out there surrounding crypto. Be logical, nobody will ever give you free crypto if you give them crypto. Never give your wallet information to anyone for any reason.

Cryptocurrency is highly volatile which means it is inherently risky. Small unheard-of coins are astronomically risky. Be very wary of these smaller coins. I personally don’t even think about them as I don’t want to take on that risk anymore.

Conclusion

I believe it isn’t too late to get into cryptocurrency. It will be an investment that could continue to outperform traditional investment. Like with any investment you make, do your due diligence. Cryptocurrency can in fact become an everyday currency and we are seeing this happen today in El Salvador.

Be sure to treat crypto with respect and don’t get scammed. If you ever question something, take a few days to think it out before making a decision.

 

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