There is no magic formula for successful cryptocurrency investment, but there a few conclusions about altcoins and the market that can help you make money.
Some of the best pieces of advice about cryptocurrency investing to keep in mind include:
There is no fast big payoff.
If you want to make serious money, you will have to wait for years or longer. The Winklevoss Twins did not see a major payoff from the $11 million they invested in Bitcoin in 2013 until the great rebound in 2017.
Most people still do not know what cryptocurrencies are.
The vast majority of the population is either totally unaware of altcoins or only vaguely aware of Bitcoin. This can be an opportunity because it prevents mass investment.
The legal status of cryptocurrencies is still unclear.
Governments, courts, and legislatures have not decided whether altcoins are money, investments, commodities, or technology. Until that is decided there is a risk that cryptocurrencies might be banned or suppressed.
Cryptocurrencies are vulnerable to inflation.
All currencies are subject to inflation – that is price growth without value growth. The skyrocketing price of Bitcoin in 2017 looks a great deal like inflation or hyperinflation. Therefore, diversifying your portfolio with more than one cryptocurrency is a good idea.
Cryptocurrencies are not widely accepted.
Most altcoins are only accepted by a few retailers and online merchants. Bitcoin is accepted by many online merchants, but many major retailers including Walmart and Amazon refuse to accept it. This means you should think twice before putting any money you might need in the near future in an altcoin.
Most altcoins will not survive.
The cryptocurrency boom is very similar to the internet-driven dot.com stock boom at the turn of the 21st Century. There were thousands of dot.com stocks back then, but only a handful of them survived. It is safe to assume that only a handful of cryptocurrencies will survive.
It might take many years for cryptocurrency to gain mainstream acceptance.
Widespread acceptance of new technologies by the public takes far longer than the geeks like to believe. Amazon was launched in 1994, but online shopping did not become part of average people’s lives for 20 years. Therefore, it is likely to be a decade; or even 20 years, before everyday people are using cryptocurrencies.
The technology behind cryptocurrencies might be more valuable than the altcoins themselves.
Blockchain, the encrypted data storage technology cryptocurrencies, are built from has many potential uses besides altcoins. These include making permanent, tamper-resistant, records and contracts, and greatly speed up the transmission of data and payments. Some blockchain-based systems; like Ethereum, might become more valuable than the coins associated with them.
The media knows almost nothing about cryptocurrency.
The ignorance of most journalists about cryptocurrencies is astounding. Some of them confuse Bitcoin with cryptocurrencies, and others assume that Bitcoin is the only altcoin. Always be skeptical of stories about cryptocurrencies – even ones that appear in “major, mainstream, news outlets.”
Most cryptocurrency “experts” know just enough to be dangerous.
We are only scratching the surface of cryptocurrency. That means everybody; including altcoin inventors and designers, knows very little about them. Therefore there are no real cryptocurrency experts out there, only people who know a little more about the subject than you do.
There’s always more to learn about cryptocurrency.
The exciting news is that there is always far more to learn about cryptocurrency and blockchain. Keep studying, reading, and doing research because exciting new developments are occurring each day. Never stop learning about cryptocurrency, because exciting new money making opportunities might be around the corner.
There’s one final piece of cryptocurrency investing advice: think for yourself. Form your own opinions and trust them until the evidence proves you wrong.