Three Critical Questions You Must Ask Yourself if You are Looking to Invest into Bitcoin & Cryptocurrencies
If you would like to get involved in the emerging world of cryptocurrency, there are three questions you should answer “Yes” to before you get involved. Keep reading to understand wise decision making when it comes to making these digital investments.
1. Can I Truly Afford It?
The average household in the UK, Europe, or America does not have the funds available to make significant investments. Typical households will live paycheck to paycheck with a majority of their income going into paying off the expenses necessary for living in an advanced society.
Because of this, it’s very unlikely the average person will have funds available to purchase. When you ask “Can I afford to invest in cryptocurrency?” you might consider a certain savings account or a loan you have. These are not good ways to acquire investment income because they intrude on very sensitive areas of finances. For example if you were to withdraw money from a savings account, will you have enough leftover if an emergency were to arise? Or if you took out a loan, what if the price of your investment cryptocurrency plummeted shortly after you bought in? You must always assume the worst case scenario when making an investment!
The recommended question to ask when you make your first investment is, “If I lost this investment money, would it significantly impact my life or well-being?” If the answer is yes, then you cannot afford to get involved. If you instead answer yes to “Can I truly afford it?” then you might be ready to make your first cryptocurrency purchase.
2. Do I Truly Believe In The Future Success Of Cryptocurrency?
Do not consider the price of cryptocurrency as the terms of success. Instead think success in the terms of, “Is cryptocurrency going to integrate into central aspects of society?” Take into consideration the Internet as it relates to domain names (dot coms). If someone were to purchase, for example, business.com back in the 80’s and 90’s, it’s as if they made a statement that this domain name would be valuable many years in the future.
Sure enough, business.com was eventually sold for $350 million! This only became a reality because the Internet became heavily integrated into society. Had the Internet not become ‘mainstream’ then business.com would have very little value.
If cryptocurrency becomes as widely used as the Internet of today, then it’s likely that every single cryptocurrency coin on the market will likely have a very bright and prosperous future.
3. “Can I Explain The Basics Of Cryptocurrency To My Friends And Family?”
It’s not absolutely necessary for you to understand cryptocurrency before you purchase it. However, it’s extremely helpful. If you couldn’t explain cryptocurrency to someone in, let’s say, an elevator, then how will you know if it’s something worth investing in?
Even Warren Buffett himself admitted that he would not invest in cryptocurrency because he doesn’t know anything about it. Smart investors simply do not touch investments that they know nothing about.
It’s a great practice to learn enough about a cryptocurrency coin to be able to explain it in 30 seconds to a friend or family member. The very act of rehearsing this quick speech will do well at reinforcing this knowledge into your mind. It’s very likely that the original owner of business.com sure knew a lot about the Internet before he/she purchased that domain name!
If you can afford it, if you believe in its future, and if you can explain the basics to someone, it’s very likely that you’re ready to dive into the crazy world of cryptocurrency. Just don’t let your emotions cloud yoru judgement, and you’re sure to do well!