Index Funds & Buy And Hold
Yes, yes, yes. This is where Iâve found the most success.
In this section Iâm going to bring across a lot of learnings that I experienced in the real world.
Just like buying and selling stocks, itâs super hard to pick stocks. And itâs also very common to buy and sell at the worst time.
So how do investors try to solve this?
Two main things:
Letâs start with index funds.
An index fund is a type of mutual fund with a portfolio constructed to match or track the components of a financial , such as the Standard & Poor’s 500 Index . An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover. These funds follow their benchmark index no matter the state of the markets.
Index funds are generally considered ideal core portfolio holdings for retirement accounts, such as individual retirement accounts and 401 accounts. Legendary investor Warren Buffett has recommended index funds as a haven for savings for the sunset years of life. Rather than picking out individual stocks for investment, he has said, it makes more sense for the average investor to buy all of the S& P 500 companies at the low cost an index fund offers.
So instead of investing your money into one stock which you think will go well, youâre investing in the top 500 companies in the S& P 500âs case.
This reduces your risk a lot.
This is super simplified but essentially the thought process behind it.
So how does this relate to crypto?
Diversify Your Crypto Portfolio
It doesnt pay to have too much invested in one single cryptocurrency.
As with stocks and shares, spread your money out among different digital currencies.
This means you dont risk being over-exposed should one of them plummet in value especially as the market prices of these investments are highly volatile.
There are thousands to choose from, so do your research.
Theres No Guaranteed Future
Even if you pick the right cryptocurrency, buy at the right time and plan on getting rich over the long term, that purchase doesnt come with the promise that the coins are going to be around forever.
Even Bitcoin, which is considered the most legitimate cryptocurrency, could potentially be banned, or at least highly regulated. Treasury Secretary Janet Yellen said earlier this year that the U.S. government may need to curtail the use of Bitcoin, adding that its mainly used for illicit financing.
Investments like this are just simply running on speculation any headlines of regulation will take the wind out of their sail, Horneman says. It will cause significant volatility across the board.
Hard as it is to believe right now, investors could also lose interest in cryptocurrency. Think of AOL, which was once hailed as the king of media but has since become something of a relic. And there are plenty of other examples too, from Betamax to minicomputers.
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Cryptocurrency Investment Strategy #: Passive Income From Dividend Payouts
Passive income is defined as a source of income collected on a regular basis that requires no maintenance. The traditional dividend payouts received from holding stocks is a source of passive income.
Not many traders know that you can actually earn dividends from some cryptocurrencies as well.
There are some coins like NEO coin or VeChain cryptocurrency that pay dividends anywhere between 5% to 10% per annum. The dividend payout is received in cryptocurrency. You have the potential to compound those profits if the coin price goes up over time.
For example, NEO crypto holders earn their dividends in the form of GAS. It is used as a fuel on the NEO blockchain.
If you think about it, thats more than the 2-3% per annum interest rate offered by your local bank.
If you really want to diversify your cryptocurrency portfolio, consider including cryptocurrency that pays dividends in your crypto portfolio.
Lets explore other ways to make money with crypto.
How To Create Your Own Cryptocurrency By Making A Blockchain
A coin runs on its own proprietary and independent blockchain. So, to make a coin, you will have to build your own blockchain from scratch.
Creating an entirely new blockchain requires experience and understanding in coding, blockchain technology, and encryption. This option is not suitable for new developers, as many errors can occur, and it will require a lot of time, even for experienced programmers.
However, creating your own blockchain enables you to have full control over the underlying code.
A simpler option to create your own cryptocurrency is to fork from the code of an existing coin. You just copy the code of Bitcoin or another chain, add a new variable, modify some values, and you will have your own blockchain. Many top coins have come into existence by forking from Bitcoin, such as Bitcoin Cash, Litecoin, Zcash, etc.
So you will have to know exactly where to modify the codes parameters in order for the chain to function properly.
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Secret Ways To Make Money Online With Cryptocurrency
Cryptocurrency in recent times has become the center of attention for many. Despite hundreds of cryptocurrencies available in the market, bitcoin remains the most prominent one and the leader of the space. Little wonder why everyone wants to buy bitcoin.
With more people falling into the hands of scammers and fake crypto investment schemes, learning the right way to make and scale up the profits of crypto trades has never been more important. For a fact, most people only know the simplest way to earn from crypto. This process involves buying bitcoin at a specific price, holding it for a while, and eventually selling it for a higher price. The truth is, there are a handful of other secret ways you can increase your earnings in the crypto space.
Maybe youve been thinking about what these other ways are, and you cant wait to explore them, dont fret! Here is a list of secret ways you can make more money online with your crypto investment. These are less popular, less used, yet highly profitable earning strategies. So without much ado, lets dive right in.
1. Leverage on Bitcoin Affiliate Programs
Many people understand how affiliate programs work, but only a few know that they are also available in the crypto world. Affiliate programs reward you for doing one thing referring customers to their business. This means the more people you refer, the greater your reward.
2. Become active in the Crypto Industry
3. Try day trading
4. Mine Bitcoin
What Makes Cryptocurrencies Different From Fiat Money
Fiat money money like the American or Canadian dollar is issued by the government, meaning theres a central authority that controls its value, interest rates, and supply . Many view this degree of government involvement in the mechanics of the free market as manipulation and as an archaic attempt to manage a vast and complex economic system. A noble intention at best, a catalyst of hyperinflation that makes wealth building very difficult for the average person, at worst.
Cryptocurrencies, on the other hand, are decentralized all transactions are done peer-to-peer or through smart contracts and theres no authority overseeing them. Many people consider this a massive advantage over traditional money, because it gives them full control of their assets.
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Investors Buy And Sell Cryptocurrency On A Crypto Exchange
A crypto exchange is simply a digital service where you can exchange your CAD for crypto or, more likely, exchange one crypto for another. Though other ways of buying crypto exist , these methods arent currently available in all countries. For that reason, when investors are looking to buy or sell crypto, they will probably do it on an exchange.
As investors are scanning the market of crypto exchanges, theyll come across three different types: centralized, decentralized, and hybrid exchanges.
Some of the top crypto exchanges in Canada include:
Centralized exchanges are nearly identical to traditional stock exchanges. Investors give money to your CEX, place an order for a certain crypto, and the exchange finds a seller to match that order. The investor will pay the CEX various trading fees, and then they can store your crypto directly on the exchange itself.
The biggest shortcoming with CEXs is, well, theyre centralized, meaning investors have to use a middleman. In the minds of crypto enthusiasts, that pretty much defeats the purpose of cryptocurrency.
Security can also be a problem. Because investors give a third-party private information investors can open themselves up to a potential cyber-attack. Most of the biggest crypto hacks, in fact, have happened on CEXs.
As of now, most of the big crypto exchanges, such as Gemini, Robinhood, and Coinbase, are centralized exchanges.
Mining To Prevent Double Spend
Miners are getting paid for their work as auditors. They are doing the work of verifying the legitimacy of Bitcoin transactions. This convention is meant to keep Bitcoin users honest and was conceived by Bitcoin’s founder, Satoshi Nakamoto. By verifying transactions, miners are helping to prevent the “double-spending problem.”
Double spending is a scenario in which a Bitcoin owner illicitly spends the same bitcoin twice. With physical currency, this isn’t an issue: once you hand someone a $20 bill to buy a bottle of vodka, you no longer have it, so there’s no danger you could use that same $20 bill to buy lotto tickets next door. While there is the possibility of counterfeit cash being made, it is not exactly the same as literally spending the same dollar twice. With digital currency, however, as the Investopedia dictionary explains, “there is a risk that the holder could make a copy of the digital token and send it to a merchant or another party while retaining the original.”
Only 1 megabyte of transaction data can fit into a single bitcoin block. The 1 MB limit was set by Satoshi Nakamoto, and this has become a matter of controversy as some miners believe the block size should be increased to accommodate more data, which would effectively mean that the bitcoin network could process and verify transactions more quickly.
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Become A Liquidity Provider
Skills: Intermediate to expert
With the growth of DeFi, become a liquidity provider is another handsome way to make money from your existing crypto holding. By becoming a liquidity provider, you will be earning a cut in every transaction happens on a particular decentralized exchanges.
One of the challenges of becoming a liquidity provider is impermanent loss, which is something you have to be mindful of. However there are platforms like Bancor which let you provide liquidity without worrying about impermanent loss. My guess is, in 2021 and in coming years we will see more Dexs coming up with their own ways to handle impermanent loss.
Here is a quick tip on how to become a liquidity provider.
You can use any popular DEX to become a liquidity provider. The only thing you need to have is holding of cryptocurrencies. For example, lets try to provide liquidity on Bancor.
- Connect it with your wallet using Wallet connect or Metamask.
Once connected, you can click on Stake, select the pair and provide the liquidity.
Here is a screenshot which shows how this liquidity provider works:
There are three advantages of providing liquidity:
- Rewards in the form of platform token
- Appreciation of price over time
Ways To Make Money With Cryptocurrency In 2021
What are the best ways to make money with cryptocurrency in 2021? In this short guide, we are going to go through the top 5 proven ways how you can earn with cryptocurrencies today.
Surely you have seen, heard, or read about millionaires who have become rich earning and selling cryptocurrencies. For the most part, these individuals are the ones who made the breakthrough with Bitcoin in the early stages.
You may be wondering, is it still possible to make money with cryptocurrencies? The answer is yes, and here are five ways to make money with cryptocurrency in 2021.
But watch out! Trading and investing in crypto, just like trading and investing in stocks, remains very risky! Many people have just heard about cryptocurrencies and dont really know the dynamics of how everything works.
To have a crash course, and get the basic knowledge about cryptocurrencies and trading with them read our article How Do You Trade With Cryptocurrency?.
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How Do I Guess At The Target Hash
All target hashes begin with a string of leading zeroes. There is no minimum target, but there is a maximum target set by the Bitcoin Protocol. No target can be greater than this number:
The winning hash for a bitcoin miner is one that has at least the minimum number of leading zeroes defined the mining difficulty.
Here are some examples of randomized hashes and the criteria for whether they will lead to success for the miner:
To find such a hash value, you have to get a fast mining rig, or, more realistically, join a mining poola group of coin miners who combine their computing power and split the mined Bitcoin. Mining pools are comparable to those Powerball clubs whose members buy lottery tickets en masse and agree to share any winnings. A disproportionately large number of blocks are mined by pools rather than by individual miners.
In other words, it’s literally just a numbers game. You cannot guess the pattern or make a prediction based on previous target hashes. At today’s difficulty levels, the odds of finding the winning value for a single hash is one in the tens of trillions. Not great odds if you’re working on your own, even with a tremendously powerful mining rig.
Good Reasons To Invest In Cryptocurrency
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How Hard Is It To Make Your Own Cryptocurrency And How Long Does It Take To Create A Cryptocurrency
Once again, it depends. If you choose to hire a whole team of professionals to help you, it wont be that hard to create a cryptocurrency. However, if you choose to do it yourself, you will have to do a lot of research and learning. Unless you are an expert in developing, the legal field, marketing, writing and more all at once, you will likely have to study to be able to create your own cryptocurrency.
The time it takes to create a cryptocurrency is hard to define. It can be done in anywhere from a few weeks to years it all depends on how you go about it and the difficulty of the project.
Why Does Mining Use So Much Electricity
In the early days of Bitcoin, anybody could simply run a mining program from their PC or laptop. But, as the network got larger and more people became interested in mining, the difficulty of the mining algorithm became more difficult. This is because the code for Bitcoin targets finding a new block once every ten minutes, on average. If more miners are involved, the chances that somebody will solve the right hash quicker increases, and so the difficulty is raised to restore that 10-minute goal. Now imagine if thousands, or even millions more times of mining power joins the network. That’s a lot of new machines consuming energy.
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Make Money With Bitcoin & Cryptocurrencies
That is all from my side. But before I go, I want to address one thing:
There are a lot of scams and illegal MLMs going on out there that promise you high returns. My recommendation would be to not get involved with these schemes because they are not worth the time if you want to earn legally. A recent example was the Bitconnect MLM scheme that came down crashing in one day.
I will be back soon with some more secure and legit ways of earning from cryptocurrencies. Until then, stay tuned to CoinSutra and dont get caught in trouble.
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About Cryptocurrencies Predictions/ Statistics
Always keep one thing in mind that in cryptocurrencies, the predictions are not always right. Therefore, investing in a cryptocurrency is a risk, and sometimes that risk gives you profit, and sometimes it leads to a loss.
The prices of cryptocurrencies change within seconds, and if you want to invest your money in this, you have to ready to bear the risk.
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How To Get A Cryptocurrency Wallet
Cryptocurrency is all digital, so you dont really store it in a traditional bank. Instead, you have your own secure digital wallet where your coins are held. The wallet could be a file on your computer, a USB stick, or even printed out and noted as a barcode on paper for access. Youll need a wallet to transfer any coins you make, so we recommend you read this article and set up a wallet with any coins youre interested in.
How To Create Your Own Cryptocurrency
Do you want to create a cryptocurrency? Then youve come to the right place!
Ethereum, Ripple, Polkadot, and many, many more There are thousands of cryptocurrencies out there, and quite a lot of them have made their creators exceptionally rich. And thats not all: their developers also got to realize their craziest ideas. Crypto and blockchain make it possible to design and launch projects that have the potential to change the world without requiring that much of an initial investment. Business owners can also choose to support their project with a token that will provide them with the additional security of funds, customer loyalty, expand their customer base, and more.
Today, we will tell you everything you need to know about how to make a cryptocurrency. Lets dive in!
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