Everyone who starts down the path of investing in digital currency is faced with many choices. What should I buy? Do I want to sell? Should I mine? Do I want to lend? Should I buy several different coins? Should I hold?
Digital currency is being widely publicized lately because of the soaring price of Bitcoin as well as other cryptocurrencies causing more people to look at them as a possible investment vector to add to their portfolios. For those who have been held onto Bitcoins since they were created and bought for pennies on the dollar have seen massive returns on their investments. These kinds of returns are what drives the current crypto market today and is seen as a way to preserve wealth with the potential for massive returns on investment or ROIs. Though holding stocks, bonds, 401ks, mutual funds and precious metals are used in attempt to preserve and gain wealth, some investments such as gold and silver don't fluctuate in price much. Stock, mutual funds and bonds generally have a better ROI however the limitations that owners of these types of investments Through the ages the preservation and increase of wealth
The flow of money into cryptocurrency is more or less
funneled into people buying into the 3 main coins Bitcoin, Litecoin and
Ethereum. From there, the sky is only as limited as the wallet addresses you can send to. There are many people who invest money that buy one of these 3 and nothing else. They've waited, and are watching their investments going higher and higher, but also keep holding when the price takes a downturn.
Holders of specific cryptocoins also have the benefit of not worrying about constantly buying and selling to make additional profit.
They've built their portfolio with specific coins or tokens that they like,
whether being a profit sharing coin like Zephyr or a coin increasingly used for cheaper, and faster transactions like Litecoin. There are thousands of different coins and there use is spread throughout a wide use of applications above financial transaction. There are coins used in cross border transactions, coins used to settle contracts, coins used to profit share from company profits with token owners, and ones that promote and benefit charities and growth in specific fields
like dentistry and farming among many other uses..
There are upsides and downsides to holding digital currency as an investment. The first thing that you need to understand is that mass adoption and trading of cryptocurrency is happening at a rapid pace. The price of Bitcoin has finally seeped its way into world consciousness bringing
with it thousands of other coins with it. Bitcoin futures markets are open on the NASDAQ and other markets leading to billions of dollars in an emerging
market. Simply words of text through twitter can send the worth of digital coin up hundreds of percent above where it was leaving the holders happy and the traders scrambling for more hoping to cash in on quick money.
When you're a holder. You worry about what coins you have, while doing research and most importantly looking for news on the coins you hold. That news can make you much wealthier but on the other side of the token (pun intended) it could also lead to price detraction leading your investment to lose value. A good rule of thumb throughout everyone's life should be never risk more than you're willing to lose. Digital currency right now is akin to the wild west where anything goes including people pushing fake news to manipulate values of crypto to their own benefit and having all the information possible will strengthen, or test your hand.
There are people who have been involved with Bitcoin since its inception that have made tremendous amounts of money. While there are stories everyday of prices skyrocketing, it's tempting to buy more of a hot new coin or one that you've been hearing about in the news or articles but ultimately you are the one in control of your digital currency and what to do with them. It's up to you to stay informed to stay ahead of the curve and the thousands of others who are new to digital currency and begin investing everyday.
Always walk before run, dip your toes into the crypto world before you run and jump in the water in hopes of making a big splash, especially right away. Don't expect massive returns on your investment right from the start, though possible it's good to start investing in small amounts in the beginning, Let yourself get a little acclimatized to the ups and downs of the market while you figure out your own strategy to digital currency investing.
Above all else, don't let the stress of your investments get to you. It's hard not tracking the price daily, or hourly to find out the latest updates to your portfolio but as a holder. You can take a step back and rely on the markets to determine where your coins go. Or if the stress of holding onto a limited amount of coins gets too much, you can consider trading or lending your digital currency to increase your gains.
November 11, 2020
David has a passion for cryptography, collectibles and helping people to form their own opinions.