The Future Of Cryptocurrency
We can speculate on what value cryptocurrency may have for investors in the coming months and years , but the reality is its still a new and speculative investment, without much history on which to base predictions. No matter what a given expert thinks or says, no one really knows. Thats why its important to only invest what youre prepared to lose, and stick to more conventional investments for long-term wealth building.
If you were to wake one morning to find that crypto has been banned by the developed nations and it became worthless, would you be OK? Frederick Stanield, a CFP with Lifewater Wealth Management in Atlanta, Georgia, told NextAdvisor recently.
Keep your investments small, and never put crypto investments above any other financial goals like saving for retirement and paying off high interest debt.
Risks Of Investing In Ethereum
While Ethereum utilizes blockchain technology, it only has one lane for conducting transactions. This can lead to transactions taking longer to process when the network is overloaded. Transaction fees are also high, reaching a peak of $71.72 in May, according to CoinMarketCap.
In 2016, a hack that took advantage of a security flaw led to the loss of more than $50 million worth of Ether.
How Cryptocurrency Investing Works
If you want to invest in cryptocurrency directly, then you can use a cryptocurrency exchange. Here’s how to buy cryptocurrency through an exchange:
As an investor in cryptocurrency, you need to decide how much of your portfolio to allocate to digital assets.
A best practice among investors is to periodically review your entire portfolio to perhaps rebalance your holdings. That might mean increasing or scaling back your crypto exposure, depending on your investment goals and other financial needs.
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Why I Still Dont Invest In Cryptocurrency
Cryptocurrencies like Bitcoin have done really well, but I prefer banks like Toronto-Dominion Bank .
Image credit: Photo by CIRA/.CA.
In the three-and-a-half years Ive been writing for The Motley Fool, I have seen crypto prices rise and fall many times. I first started writing here in 2018, when a Bitcoin crash was underway. Shortly after that, Bitcoin and other cryptocurrencies rallied a trend that continued through 2020 and the first half of 2021. Then in the second half of 2021, crypto started falling again. Today, Bitcoin is down about $20,000 from its all-time high.
Its been a wild ride. At several points throughout this adventure, I considered buying a little cryptocurrency. Around August 16, just when Bitcoin was starting to recover from its summer 2021 rout, I wrote an article where I said that I had come around to BTC and was considering taking a position. I was pretty serious about getting into crypto then, but I ultimately backed out. In this article, I will provide two reasons why I made that decision.
How Much Is Bitcoin Worth
How much is one bitcoin worth? Well, it depends on the day. Bitcoin has value because enough people believe bitcoin has value. That may be no different than gold. Gold is really just a shiny rock but because it was decided centuries ago that gold was desirable , it is considered a store of value. It became a currency and also a store of wealth, and a portfolio asset in modern times.
While no one knows with any certainty how much gold might be discovered, the algorithm for bitcoin release is capped at 21 million coins. To date, just over 18.5 million bitcoins have been created, and there are almost 2.4 million coins left to be released. Currently, 900 coins are released each day, and the last bitcoins will be released around 2040. Bitcoin miners are rewarded with the new bitcoins, in payment for their verifications of the transaction on the blockchain.
It is the scarcity of bitcoin, and its finite quantity, that offer the greatest appeal to those who reject or question the value of fiat currencies such as the US dollar, the euro or the Canadian dollar. Certainly, bitcoin, as well as fiat currencies, are created out of thin air. But while central banks can create as much new currency as they see fit, there is a hard limit to the amount of bitcoin. Thats why those who favour bitcoin often call it the hardest currency on earth.
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What Are The Risks Of Investing In Cryptocurrency
Governments and financial regulators in almost every country have warned investors of the risks posed by buying cryptocurrency.
Extreme volatility is a defining factor of cryptocurrency. While you may make high returns, you could lose everything.
Read the experiences of one Times Money mentor reader: Buying bitcoin instead of spending on nights out has made me $16,600.
In November 2021, around £1 millionworth of cryptocurrency scams were being reported to Santander UK by its customers each month. The real scale of fraud is much larger.
One of the most common types is when a criminal hacks into your computer and freezes you out of your account.
3. Fake promises of high returns
Cryptocurrency firms may also be overstating how much investors could receive from investing in crypto, while minimising the risks.
4. No compensation scheme
UK bank deposits are almost always covered by protective schemes such as the Financial Services Compensation Scheme, this is often not the case for cryptocurrency investments. If a cryptocurrency exchange goes bust, there is no guarantee you will get your money back. If you lose your password, again, there is no one to go to to get it back.
If you are wanting to get to grips with crypto investing check out our article: Six cryptocurrency tips .
Fluctuations In Bitcoin Bitcoin Stocks
The price of Bitcoin currently stands at below $48,000, well up from where it was at the end of 2020. But it’s down from about $58,000 at the start of December and a record $68,990.90 in early November. It’s also slightly below its 200-day moving average.
Bitcoin has taken multiple hits along the way, due most recently to worries about the Federal Reserve and other central banks taking a more aggressive approach to ending pandemic-era economic aid. But after the U.S. central bank on Wednesday signaled the possibility of three rate hikes next year and a quicker end to its bond-buying program, Bitcoin followed the stock market higher.
The Fed, as a reason for accelerating its tapering of bond purchases, cited “inflation developments” as a reason, as global supply chains remain cramped and gas and labor costs increase.
The Fed raises rates to stem inflation and keep the economy from overheating. Bitcoin advocates have argued that higher inflation is a reason to buy the cryptocurrency, since rising prices weaken the buying power of traditional currencies.
The digital asset hasn’t always tracked with inflation or risks of inflation. But the growing sense among investors on Wednesday was that the Fed would keep inflation in check without tightening up too quickly.
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How To Buy Cryptocurrency
You may be wondering how to buy cryptocurrency safely. There are typically three steps involved. These are:
Step 1: Choosing a platform
The first step is deciding which platform to use. Generally, you can choose between a traditional broker or dedicated cryptocurrency exchange:
- Traditional brokers. These are online brokers who offer ways to buy and sell cryptocurrency, as well as other financial assets like stocks, bonds, and ETFs. These platforms tend to offer lower trading costs but fewer crypto features.
- Cryptocurrency exchanges. There are many cryptocurrency exchanges to choose from, each offering different cryptocurrencies, wallet storage, interest-bearing account options, and more. Many exchanges charge asset-based fees.
When comparing different platforms, consider which cryptocurrencies are on offer, what fees they charge, their security features, storage and withdrawal options, and any educational resources.
Step 2: Funding your account
Once you have chosen your platform, the next step is to fund your account so you can begin trading. Most crypto exchanges allow users to purchase crypto using fiat currencies such as the US Dollar, the British Pound, or the Euro using their debit or credit cards although this varies by platform.
Some platforms will also accept ACH transfers and wire transfers. The accepted payment methods and time taken for deposits or withdrawals differ per platform. Equally, the time taken for deposits to clear varies by payment method.
Is Bitcoin A Good Investment
Bitcoin appears to trace previous bubble patterns. After rising more than 1,300% in 2017, bitcoin began 2018 with a precipitous decline, losing over half its value in the first month of trading. Bitcoin’s rise in 2017 far surpassed previous bubble peaks, such as the dot-com bubble of the late 1990s and the recent U.S. housing market bubble, and bitcoin’s rapid recent decline are tracing the decline patterns of those bubbles as well. While predicting the near-term or even long-term direction of bitcoin is impossible, we believe extreme volatility is likely to continue.
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What Is Edward Jones’ Guidance
We believe cryptocurrencies are highly speculative and don’t offer a way to purchase or hold cryptocurrencies or future contracts on cryptocurrencies. Additionally, Edward Jones doesn’t offer a way to purchase cryptocurrency-related funds, exchange traded funds or exchange traded notes that own cryptocurrencies directly, or cryptocurrency-related over-the-counter traded securities.
We recommend following time-tested investment principles and – not letting the fear of missing out negatively impact your long-term investment strategy.
Remember to always do your homework before deciding on any investment, including emerging technologies and markets. Working together with your Edward Jones financial advisor can help you determine whether a particular investment is suitable for your portfolio.
Etoro Overall Best Place To Invest In Cryptocurrency
eToro was launched in 2007 and the platform is home to a wide range of asset classes. In addition to cryptocurrencies, this covers everything from ETFs and index funds to forex and commodities. You will have access to 59 cryptocurrencies here all of which can be purchased from a minimum investment of $10.
This is ideal if youre looking to explore crypto assets for the first time and you dont want to risk too much money. Moreover, at a minimum trade size of $10, you can invest in expensive cryptocurrencies like Bitcoin and Ethereum both of which are now worth thousands of dollars per token.
When it comes to fees, eToro allows US clients to deposit USD on a fee-free basis. This is the case irrespective of which deposit type you choose. Options here include ACH, e-wallets like Paypal and Neteller, online banking, and debit/credit cards. Trading commissions when you buy cryptocurrency cost just 1% which is built into the price that you see when you place an order. This way you can buy Bitcoin and other cryptos with a credit card from the comfort of your own home.
If you are interested in gaining exposure to cryptocurrency but you dont know which tokens to add to your portfolio eToro offers a duo of passive trading tools. First, there are professionally managed smart portfolios, which allow you to diversify across more than a dozen digital currencies through a single investment.
|Number of Cryptos|
Cryptoassets are a highly volatile unregulated investment product.
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Reasons Why You Shouldnt Invest In Cryptocurrency
For the last 3 months, the cryptocurrency market has been on a tear reminiscent of the 2017 bull market.
While Im happy to see a resurgence in price because it means good business for us here at HodlBot, Im also very wary. Times like these inspire FOMO and pose a dangerous invitation for those wanting to invest in cryptocurrency for all the wrong reasons.
Theres enough material out there to tell you why you should be investing in cryptocurrencies, so here are some of the biggest reasons why you shouldnt.
1. You have high-interest debt
Once my crypto portfolio moons, the first thing Ill do is pay off my student loans and credit card debt.Anon Trader #385
If you have credit card debt or any debt with high interest rates, do not purchase cryptocurrency until youve paid it off. The same applies if youre borrowing money to purchase cryptocurrency.
Cryptocurrencies are extremely volatile. They are not going to dig you out of debt and liberate your life. Its possible for all cryptocurrencies to take a nose-dive for the next 10 years.
If you cant afford to pay off high-interest debt, then you cant afford to invest in cryptocurrency, period. Better to miss a potential opportunity, than to fall into financial ruin. Dont be this guy.
2. You want to day trade crypto because you think its easier compared to other assets.
I heard I can achieve financial freedom by learning how to daytrade Bitcoin because its way easier than Forex.Anon Trader #1335
Cryptocurrencies Smash Through Stock Market Gains
While cryptocurrencies are inherently risker than traditional stocks, the former continues to generate significantly higher gains.
For instance, over the prior five years, the S& P 500 has increased by 94%. Moreover, the NASDAQ Composite has returned 144% over the same period.
- In comparison, consider that over the past five years, Bitcoin has increased by more than 3,600%.
- Bitcoin isn’t the best-performing cryptocurrency though, as many other tokens in this marketplace have generated even higher growth levels.
- For example, Ethereum has increased in value by over 7,000% during the same period, while as noted earlier, BNB is up 10,000%.
When you look at some of the best Metaverse coins in the market – gains are even more impressive. For example, Decentraland and its MANA token have grown by over 25,000% since launch.
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How To Invest In Cryptocurrency In 3 Steps
If youve decided that youre willing to take a risk on crypto, you might be asking yourself, How do I invest in cryptocurrency?Every cryptocurrency is a little bit different, but assuming you want to purchase for-profit, lets cover the steps for how to start cryptocurrency investing for currencies like Bitcoin and Litecoin:
Choose a cryptocurrency exchange
Store your cryptocurrency in a wallet
Is Bitcoin A Good Long
Bitcoin is easily the most popular of cryptocurrencies. Because of this, its value is one of the highest on the market. Though it is owned by so many, the item recently had a huge drop in value thanks to the words of Elon Musk.
There is a lot of debate about whether or not Bitcoin is something that is going to last. However, the fact that it has stayed around for so long at such a high value is a testament to what it is.
Bitcoin is a good Long-Term investment because:
- It could become the first cryptocurrency to act as an official currency in the world
- It has the potential to gain value the longer it is around
- It is popular with a lot of people and thus it has sped up the process of moving into the real physical world as a format of currency
Bitcoin is one of the best cryptocurrencies to invest in for the future. Even if it is just a small amount, this item might be beneficial to your finances. It could be good to hang on to this while you still have a chance. You dont even need to invest in a single bitcoin. You can put your money into a fraction of one and see where it goes.
Though the bitcoin market tends to ebb and flow, it easily shows the largest potential. This is one that anyone interested in the future of cryptocurrencies should hang on to.
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What Is Cryptocurrency And Should I Invest In It
10 Minute Read | September 27, 2021
Cryptocurrency. Its the hot buzzword of the investing world these days. But what is cryptocurrency really? Ever heard of Bitcoin, Dogecoin, Litecoin, XRP or Ethereum? Nopethey arent embarrassing rock band names from the 90s. Theyre actually types of cryptocurrency . And theyre trending everywhere you look.
But the million-dollar question here is, should you invest in cryptocurrency? Despite what every loudmouth on the internet yells at you from their digital soapbox, buying cryptocurrency isnt a safe bet for your investing future. But well get to that in a minute. Lets unpack what in the world crypto is first.
Choose Which Cryptocurrency To Invest In
If your eToro account is funded, you can now decide which cryptocurrency to invest in. eToro lists 60 digital currencies – so click on ‘Discover’ to see what markets are supported.
Alternatively, you can use the search bar at the top of the page if you already know which cryptocurrency to invest in. In our example above, we are searching for BNB.
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How To Pick A Cryptocurrency To Invest In
Before you go ahead and buy some coins or tokens just because somebody says it’s a good investment, it will pay to do some research.
First of all, it’s important to understand that picking a good cryptocurrency is not like picking a good stock. A stock represents ownership in a company that creates profits for its shareholders, or at least has the potential to do so. Owning a cryptocurrency represents ownership in a digital asset with zero intrinsic value.
What makes a cryptocurrency increase or decrease in price is simple supply and demand. If there’s increased demand and a limited supply increase, the price goes up. If supply becomes constrained, price goes up, and vice versa. So, when evaluating a cryptocurrency, the most important questions to answer are how the supply increases, and what will drive demand for the coin higher.
You can answer those questions by reading the white paper that a cryptocurrency team publishes to attract interest in their project. Look at the roadmap for a project and see if anything could spark an increase in demand. Research the team behind a project and see if they have the skills to execute their vision. Try to find a community of people already investing in the cryptocurrency and gauge their sentiment.