“I think the fact that within the bitcoin universe an algorithm replaces the functions of [the government] … is … pretty cool. I am a big fan of Bitcoin” – Al Gore, 45th Vice President of the United States.
Bitcoin and other cryptocurrencies are here to stay. Nothing is going to change this fact. Therefore, the pertinent question is whether to invest in or trade on, one or more of the cryptocurrencies.
According to cyber-currency experts at Olsson Capital, more than ten cryptocurrencies are presently bought and sold on global cryptocurrency exchanges. These include currencies such as Bitcoin, Dash, Ethereum, Bitcoin Cash, Ripple, Litecoin, and Monero.
Bitcoin is without a shadow of a doubt the biggest and most popular cryptocurrency at the moment. On Friday, 6 October 2017, CBNC News reported that Bitcoin was the top performing cryptocurrency in the third quarter of 2017, in spite of a rally by the alternative currencies such as Ethereum and Dash earlier this year.
It has also been noted that a number of investors have sold their altcoin investments and moved the funds back into Bitcoin. Therefore, it makes sense to conclude that, at the moment, Bitcoin is the best cryptocurrency to trade in.
Based on the above statements, I believe that the answer to whether you should invest in cryptocurrencies should be “yes.” So, the next question that needs to be answered is how to get involved in cryptocurrency trading.
Trading or Investing In Cryptocurrencies
By way of answering the second question noted above, here are several tips to help you invest successfully in cryptocurrency:
As with all other online financial market trading activities, it is vital to open an account with a reputable online brokerage firm. The consequences of signing up with a “fly-by-night” or fraudulent operation will lead to the loss of your initial investment, and possibly the theft of your personal information and your banking details.
Knowledge Is Power
Kofi Annan’s statement, “Knowledge is power. Information is liberating,” rings especially true in the cryptocurrency trading industry. In other words, it is vital that you gain an intimate understanding of financial marketing trading and cryptocurrency trading. Without the requisite knowledge, you run the risk of taking the wrong trading decisions, and you will end up losing your investments.
Invest In Bitcoin as Your Primary Cryptocurrency
This tip might be considered a debatable point. However, statistics show that Bitcoin is the most successful and widely traded currency. Not only is it the strongest cryptocurrency, but “it has been the best performing asset in the world every year since 2009 through to June 2017 with the exception of 2014.”
Therefore, should you wish only to invest in cryptocurrencies, it is a good idea to concentrate on Bitcoin trading. It is also wise to diversify your investments. Thus, investing in other cryptocurrencies such as Ethereum and Dash, will satisfy this requirement.
Invest What You Can Afford To Lose
Another investing “rule of thumb” is only to invest what you can afford to lose. This is especially true at the outset of your trading career, and when you are placing short-term trades. Essentially, the higher the risk taken when placing a trade, the bigger the chance you have of earning more money. However, the flipside is that you stand a higher chance of losing your investment.
Stick To Your Trading Strategy
Global financial markets can be volatile. Simply stated, current socio-economic conditions and geopolitical events tend to have a ripple effect on the world’s financial markets. This scenario also applies to cryptocurrency trading.
For example, China has cracked down on the validity of Bitcoin mining and trading. Another scenario to consider is what will happen to the Bitcoin price when all the available Bitcoins have been mined? Should your trading strategies take these situations into account?
I believe that these scenarios should be taken into account, and trading strategies should be implemented accordingly. A bona fide online trading broker will provide a host of statistics and historical data to help you plan your trading strategies based on these scenarios.
Bitcoin and other cryptocurrencies have afforded financial market investors new and unique investment opportunities. However, it is vital to ensure that you trade knowledgeably, prudently and wisely. Otherwise, you could end up losing your entire investment.