06.08.2020
Investments in cryptocurrency

Investments in cryptocurrency in 2020: how not to lose everything

Not learning other rules means missed opportunities to earn colossal money quickly like The Winklevoss twins, Jeremy Gardner, and even 50 Cent. See the list of Bitcoin millionaires here if you still have doubts you need to invest! 

Not Bad for a kid from South Side. — 50 Cent

Why invest?

Investments

Investments in cryptocurrency are famous for colossal wins in record time. After Satoshi Nakamoto put together the code that has the ultimate power to give you the power to be anything and do anything you want, Bitcoin itself is the ultimate proof of its worth. 

Naysayers can discuss temporary teething problems like scalability but you can’t deny the ultimate truth: something that started off costing 5 cents and rose to $20 000 is valuable. 

Despite temporary ups and downs, which are all a part of the natural cycle, Bitcoin has only been going up in price.

If you’re still doubting whether you should invest in Bitcoin, ask Tim Draper who was smart enough to buy 29,656 Bitcoins in 2014 for $18 740 000, at $632 per piece. That was a good investment: now they’re worth $261 210 048.

Do you need another opinion? Forbes lists a list of companies that use blockchain today, which includes most major companies everyone has heard of today, from Google to JP Morgan Chase. 

But why now?

Bitcoin Halving

It gets a little techy, so here is an article in case you need details, but in a jiffy in a couple of weeks an event is happening that the whole crypto industry is waiting for called Bitcoin Halving. 

Without getting into too many details, there will be dramatic changes after which the price of Bitcoin will extremely likely change. These changes (block reward size) were programmed into Bitcoin by its creator, Satoshi Nakamoto. They happen every 4 years. Historically, after every halving, the price of Bitcoin jumped (a lot). Here’s Hackernoon: 

The first halving occurred on November 28th 2012 when one BTC was worth around $11. A year later, bitcoins price surged to a mouth-watering $1,100 in 2013, a price never before seen with Bitcoin. The second halving took place in July 2016. Bitcoin maintained a price of around $600–$700 before flying to $20,000 in the great bull run of 2017.

What will happen after the third halving? Now Tim Draper’s $250 000 per Bitcoin prediction starts to look a lot like the truth, doesn’t it? Almost without a doubt, whatever you invest in Bitcoin in the next couple of weeks will see a colossal increase in the months to come. 

Best investments in cryptocurrency this year will highly likely begin with buying crypto before the halving and watching the prices increase dramatically over the course of the year. 

Still uncertain? 

What other alternatives are there? 

Banks

Alternatively, you can go to banks, with Barclays offering guaranteed returns of 8% by splitting your investments into an FTSE 100-related product and a fixed rate cash bond. This is called a Barclays Guaranteed Equity Savings Bond. 

Though it’s guaranteed, ironically, it comes with an emergency cash withdrawal facility, which seems to suggest that the investors into the current banking system have so little money they may need some emergency cash at any point. Find out more about using crypto to fight back the global banking cartel here: 

Are banks safer than crypto?

If you’re happy with an 8% yearly ROI, don’t forget to subtract inflation of 2.5% and the average cost of cashing out money (including fees for overseas transfers), which comes to a total of around 12%. 

Are banks safe

Compare that to the financial gain you would have made purchasing Bitcoin a month before the first halving and selling it a year later. Better yet, selling it a few years later. If you think the problem with Bitcoins are that they’re riskier (after all, banks have so many risk management strategies), check out FDIC’s statistics on bank failures between 2001 and 2020. 

There were 558 bank failures from 2001 through 2020. — FDIC

Interestingly enough, according to this data, there were 4 bank failures in 2001 which resulted in the loss of $2 358 000; in 2019 failage of 4 banks cost $214 100 000, nearly a hundredfold increase. 

So far there was only one fail in 2020 that was documented, but that bank alone flushed $100 900 000 down the loo, which is quite an increase. Do you think the banks are doing better as time goes on? Of course, they will tell you otherwise but statistics don’t lie. 

Social trading

If you’re so bad at trading that you even admit it to yourself, you can try social trading (the best known is perhaps eToro; Naga Trader features more advanced options, and Ameritrade is considered one of the safest and balanced options). 

For instance, while some like eToro and Zulu Trade pay too much emphasis to Copy Trading, Ameritrade seeks to leverage social media and industry influencers in helping its clients make more informed investment decisions. — LearnBonds

That way, you handle all the responsibility for your money to a stranger you’ve never met who doesn’t care about you, doesn’t want to talk to you and in some cases doesn’t even know you exist. Way to learn to be accountable for your life choices! That way, if they fail, you fail. What could possibly go wrong?

A great advantage to social trading is you can communicate easily with other traders through comments or private messaging and learn from them. If you are confused as to why a trader did something, you can simply ask why. That said, not all traders are sociable and will want to share information with you. — Investingoal.com

And if you’re especially keen to have all your data leaked to unknown third parties so they can identity-fraud you, there’s always Facebook social trading. 

Is Bitcoin a better investment?

As far as top investments in cryptocurrency are concerned, the only one that consistently shows incredible ROI over the years is Bitcoin. 

We’ve calculated the ROI from the beginning on the market (Wednesday, May the 4th, 2013) to May the 4th 2020 (get ready for the inevitable “May the 4th be with you” joke). Rising from $10 to $8 811, it’s an increase in the price of 88 010%. Now, people will complain to you about the problem of buying high and having to sell low (for example, during panic sells) but, face it, they should have HODLed and everything would be fine. 

What is crypto for?

Although a few years ago this would have been a surprise, now booking plane tickets, buying movies and games from Microsoft, groceries, electronics and personal care products and goods and services from individual merchants is easy, cheap, and comes with a plethora of other advantages that next-generation payment systems provide. 

Other than that, you can pay for anything you want, create a real democracy, restore bombed countries, or hire 5 female monks to change the world – all using crypto. 

So what do I need to start before my first crypto investment?

HODL

Just basically HODLing and forgetting about Bitcoin isn’t a bad idea, as history shows in the case of 50 Cent and one student, Kristoffer Koch. He bought some Bitcoins to write a thesis on encryption for $26 and forgot all about them for some time until he heard on the news that they are now worth $886 000. His story, however flukey, will teach you three things. 

  • HODL
  • Price crashes are fine, and you will still get rich: 

In April 2013, the value of bitcoin peaked at $266 before crashing to a low of $50 soon after. Since then, bitcoin has seen large fluctuations in its value. , Koch exchanged one-fifth of his 5,000 bitcoins, generating enough kroner to buy an apartment in Toyen, one of the Norwegian capital’s wealthier areas. — The Guardian

The Rules

1. Watch the news

This is probably one of the more important points. News and events have a colossal influence on the price of crypto, which is still a speculative market by and large.

Watch the news

A small (but important) detour. Some will make the case that the US dollar is more stable than crypto, which is a speculative niche. This is erroneous for two reasons. 

First, after the abolition of the gold standard by Nixon, the USD is not exchangeable for gold and only acts as paper as long as the government is willing to exchange it for goods and services. If it should stop that tomorrow…well, ask the Russians what MMM is. 

Second, one of the reasons why the Dollar is so popular is that the US government has the monopoly to print unlimited money. A smart move, it seems at first, but the more money you print, the cheaper it becomes, which is really bad news in the not-so-long run. Bitcoin, the туче step in evolution, has a built-in-mechanism designed specifically to counteract that. That is why at every halving, which happens every 4 years, the price rises. Now that is smart. 

Back to cryptocurrency investment news. Because there is a lot of ado about crypto, a massive user base is still uncertain about its future. If you’re a pro like Andreas Antonopoulos, you only get paid in Bitcoin because you know that’s where the future is. However, most people don’t know enough about Bitcoin to learn it’s here to stay (although if the 50 Billion Dollar Babies list should really speak for itself). 

That’s why it’s genuinely important to have a news source nearby that you can track in real-time (don’t forget about push notifications: get email news alerts on your desktop). When news come out, you can be the first to know. That’s how you make the right best cryptocurrency investment decisions. For example, a complete ban on Bitcoin in China will hurt the price, and so on. Constantly monitor related publications like INvesting.com and Forklog to stay up to date. 

Where to start? 

As far as investment crypto platforms are concerned, cryptocurrency exchanges are a fantastic way of getting into the business. Or so the customers of MT Gox thought until it exploded in their faces (not literally). 

One example of a recommended platform is Nominex — a top-notch security platform with exceptional tokenomics and a binary tree affiliate program. 

The problem with exchanges is that whoever created them completely ignored the principles Satoshi Nakamoto built his network on. Decentralization (or thousands of users and PCs spread around the globe) means that there is not one single point you could visit and close down or hack. You can’t defeat water with a sword. 

Someone obviously very smart decided to put a centralized exchange on top of a decentralized network. Exchanges normally store all the valuable data in one place. Which (duh) then gets hacked. Think of it as in someone building a military-grade nuclear-resistant bunker 3 miles underground to store gold and then putting all the gold on top and placing one guard next to it with a scheslong, glittery sunglasses, and a pina colada. 

Unless you’ve a dedicated investment crypto fund manager, we strongly recommend researching your exchange of choice, getting an account with an “old” exchange with an established reputation — and making sure to read plenty of reviews! 

The community (e.g. Reddit) knows the truth. Just make sure you learn to be able to tell authentic reviews from the fake ones. Here’s an example of a good review of a trustworthy system. 

Beginning trading

We’re assuming you know something about trading since you’re reading this article, so we’ll make this section quick and to the point. Here’s how the procedure usually goes with exchange registrations (give or take different entry verification mechanisms different exchanges prefer).   

  • Go to the main page and click “Register”, which will normally be in the top right corner.
  • Pick an infuriatingly long password with plenty of special characters.
  • Put a piece of the puzzle in its place and find out how many people you beat (because you’re better).
  • Confirm email.
  • Absolutely ALWAYS use 2FA (if you lose your phone, get in touch with the support).
  • Note: 2FA won’t guarantee protection from threats but it’ll get you a substantially higher level of protection).
  • Remember that to withdraw certain amounts of you to pass KYC (usually 1-2 BTC but lately less).

Now that we’re trading, there are strategies to take into consideration. Don’t make these mistakes!

2. Use a hardware wallet 

Hardware Wallet

When it comes to cryptocurrencies, don’t store a lot of them at exchanges! These can get hacked. Getting a Ledger Nano or Trezor One will save you a lot of nerves. Plus, give subdermal wallets a chance. They’re not as far out as you might think. 

Examples of good online wallets include blockchain.info, Electrum, Robinhood, and Exodus. 

3. Always research cryptos you’re involved in

Ideally, read every book you can find on a certain currency. This is time-consuming but useful in the long run. Here you are, enjoying a coin and then it turns out it has a major design flaw no-one ever thought about. Oops! 

Food for thought:

Don’t go for scams and jokes like PonziCoin. Why everyone decided to invest in that is still a mystery. 

4. Don’t buy the Hype

Look for facts and statistics when you’re choosing a coin. Real technology and quantifiable performance is what matters. Slick phrases and promises are great, but they won’t pay rent. Stick to publications with a reputation to uphold. 

5. Diversify 

Needless to say, don’t put all your eggs in one basket. Get a few wallets, choose a few currencies. Don’t invest too much in emerging coins (they may not be worth a thing) but remember – they have a huge potential. Bitcoin once was a new and experimental coin. So watch the news and do your research. 

6. Check out trading courses 

See if you can find decent trading courses. First, take a look at crypto trading but studying trading, in general, is a great idea. It’s an immensely complicated process. Some people study it for decades on Wall Street and still have to guaranteed strategies. The more you know, the better. 

7. Risk management 

Risk Management

This is a separate discipline which you probably should study on its own – but what happens if the market collapses? How much of your money do you have in crypto? Do you need to divide all your income into piles – tax, savings, play money, investments, kids’ university money, emergency money? 

Don’t ONLY live on Bitcoin unless you know exactly what you’re doing. On the other hand, are you paying enough homage to Bitcoin? If after halving the price goes up tenfold or more like the last time will you regret not investing more? 

You’ll be surprised but pro traders aren’t that hard to find. Pay them for advice. That’s a worthwhile investment. 

8. How useful will the crypto be for the community? 

What does the future hold for any particular coin? It all depends on how useful it will become. We’ve done the Bitcoin usefulness analysis for you (although you will want to do a lot more, like researching if their flaws will affect global adoption). The price is directly proportional to how useful a crypto coin is. 

9. Protect your assets

And we’re not being rude. The less other people know about what you’re doing, the better. Crypto investments are famous for associated risks. Ideally, you shouldn’t mention anything to anyone unless necessary. Don’t write down data, don’t store it on your PC or send over unencrypted, use TOR, password-protect your PC, use 2FA, don’t store too many assets at an exchange, and the more precautions you take, the better. Researching hackers is a great idea. 

10. Research attackers

Protect your assets

This is what happens. With incentives like unlimited wealth to whoever breaks the code, hackers are constantly evolving. Crime statistics are more than alarming. You thought hackers would try hard to get into your PC for a few thousand bucks? Try thousands of users’ PCs and untraceable money! There are courses like “Hack the hacker” and so on – and we strongly recommend buying them (pay in cash, wear a tinfoil hat, don’t talk, after purchasing disappear into the shadows). 

11. Cross-reference mentors

People are flawed. Data can turn up incomplete or obsolete or tampered with. What you need to do is find several authorities on a subject (start with Andreas Antonopoulos), take in as much information as you can, find more experts, and check that all the information fits. The more angles you have, the better the chances of getting it right. 

12. Don’t use your child’s university fund to gamble/invest

This one we’ve mentioned before, but again, risk management. Don’t take money out of where it needs to go (bills for example), borrow money, or let people down only so you can hypothetically pay them back later. Always keep a cool head! 

High-level cryptocurrency investment techniques like leverage trading are for professionals. The abyss underneath borrowed funds is immeasurable. The money you invest should be put aside responsibly and with a full understanding of the risks. If you’re irresponsible with money, before you know it you end up one of those guys that sit at casino gambling machines for 14 hours straight and urinate in a plastic cup. You don’t want to be that guy. 

In conclusion

We hope we covered every aspect of investments in cryptocurrency you considered essential. How did we do? Have we missed anything? Let us know by commenting below. Happy trails!

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