Who hasn’t heard of cryptocurrencies yet? Most of you at least heard of Bitcoin, which started the cryptocurrency frenzy.
When Bitcoin hit the market about a decade ago, not many people understood how it works and what the purpose of cryptocurrencies is. However, nowadays, the use of cryptocurrencies is becoming widespread.
You can make online purchases, play online poker, and even make payments at brick-and-mortar establishments with the use of cryptocurrencies. Since people started using Bitcoin and similar coins and they grew in popularity, those with the mind of a businessperson saw tremendous potential for investment.
If you believe that investing in the cryptocurrency market is in your future, you should get familiar with the process and figure out how to make a profit. Are you ready to start investing?
Terms You Need to Know
Before you can even think about getting involved with cryptocurrencies, you need to speak the lingo that experts use. Here are a few terms you might encounter when reading about Bitcoin and additional coins:
- FIAT – a general name that refers to every kind of government-issued currency. For example, you have the US dollar.
- Bullish – the expectation that the value of the cryptocurrency will increase.
- Bearish – the expectation that the value of the coin will decrease.
- ATH – an abbreviation for all-time-high.
- Altcoin – a reference to any cryptocurrency except for Bitcoin and Ethereum (in some cases).
- Arbitrage – Buying and selling the cryptocurrency in different markets to take advantage of the difference in prices.
- ROI – a short for return-on-investment.
How Cryptocurrency Investment Works
A lot of people compare cryptocurrencies to the stock market, and there are indeed some similarities. The market price for a specific cryptocurrency depends on how much people are willing to spend to acquire the said coin.
Sellers set their prices and buyers need to decide if they are willing to pay up. If not, sellers are bound to lower the price, thus affecting the coin’s market value.
When people invest in cryptocurrencies, they do so with the belief that the value of the coin will increase in the future. So after buying the coin, they wait for it to become bullish, which is when they try to sell.
However, the market is risky, as the value of the coin can always decrease unexpectedly.
Since cryptocurrencies haven’t been around for long, it is hard to determine whether there is a consistent pattern that can predict future changes in a coin’s value.
But even though determining what is going to happen is not an easy feat, it doesn’t mean you should consider investing in cryptocurrencies.
Before you place your money on the line, get familiar with the most popular cryptocurrencies on the market.
- Bitcoin – The coin that started it all. When the coin first appeared on the market, no one understood it’s potential. In 2010, the value of 1 BTC was approximately 100 USD, but the value increased steadily, till it reached its peak at the end of 2017 – when it was worth about $20,000. However, merely ten days after reaching this value, prices fell dramatically, and they never were the same. Nowadays, Bitcoin is worth about $4,000 – $5,000.Although the price keeps fluctuating, we’re not talking about the shocking changes that coin saw around its peak value in 2017. If you think about investing in Bitcoin, you should take into account that this cryptocurrency won’t see the same heights it used to, but it is a solid coin that has been around for a long while.
- Ethereum – That is the second-biggest coin on the market. The currency appeared in 2015, and hundreds of companies plan on using the technology behind it to improve their products. At the beginning of 2018, the coin was valued at $1,100, but nowadays it is worth about $160. However, experts believe that the price will rise again – slowly but steadily.
- Litecoin – Another altcoin that has been around for a few years now. The tech behind it is advanced, more so than Bitcoin, but its value is still quite low in comparison, as it is valued at about $78. At the end of 2017, before most existing cryptocurrencies crashed, it was worth about $300, so the change in value wasn’t that dramatic.
- TRON – Even though the coin has never been worth much and is now valued at $0.02, there is a reason to believe that its price will rise in the future. As it turns out, TRON has acquired BitTorrent, which suggests that a new kind of tech is on the horizon. Experts believe that this coin has bullish tendencies, and thanks to its low value, it might be a good investment for people with a low budget.
There are plenty of other cryptocurrencies available online, each with a different potential when it comes to investing. You should learn more about the market before you purchase any of them.
So what rules should you follow when investing in cryptocurrencies?
- If you’ve noticed that the value of the coin has spiked recently, it is not the time for you to purchase it. Wait for the prices to drop again and hope it the prices will rise again.
- Play it safe and don’t invest loads of money in one cryptocurrency. As you’ve noticed, the value of each coin fluctuates, and there’s no knowing if you will be able to make a profit anytime soon. Make sure that even if you lose money, it won’t get hit you too hard.
- If you see that the coin’s value is on the rise, sell it. If you wait too long to sell, you might miss out on an opportunity to make a profit.
Cryptocurrencies are a hot trend nowadays, and even though the market is unstable, that makes the experience even more exciting. Which cryptocurrency caught your eye?