How To Make Money With Cryptocurrency
It's no secret that people who invested in Bitcoin and other cryptocurrencies years ago are millionaires today. Regardless of which way the market goes, there is a considerable amount of money to be made with cryptocurrency. The secret to making money is just knowing where to invest and when.
Here are the terms and tactics an investor needs to know, as well as how to buy and store cryptocurrencies so that even a newcomer will become confident in investing.
The Crypto Lingo
Any crypto investor needs to know the lingo, especially if they are planning to follow an online community (and they should). The basic terms, also used in other markets, include:
- “Bull market” and “bullish,” which represent a belief that the market will be going upward.
- “Bear market” and “bearish” denote the opposite – that the market will fall.
- “Shill” refers to someone who promotes a coin to drive its price and popularity up.
- “FUD,” which stands for “Fear, Uncertainty, and Doubt,” is something spread to drive the price down and potential investors away from a coin.
- “HODL,” which many believe is an acronym for “Hold On for Dear Life,” just means “hold,” as it originates from a popular post which misspelled the word.
Every investor needs to know how to acquire cryptocurrency. Coinbase seems to be the most used exchange, enabling users in many countries to purchase Bitcoin, Litecoin, Bitcoin Cash, and Ethereum using debit cards or bank accounts. Many other exchanges allow the purchase of cryptocurrency with money such as Kraken and Bitstamp.
However, with the sudden increase in mainstream attention surrounding Bitcoin and the like, exchanges are swamped with signups. That means you may have to wait for months before being able to get into cryptocurrency trading.
Luckily, there is an alternative to exchanges: localbitcoin, along with many other websites which you can find by searching for “local” along with the cryptocurrency name. On these sites, you can buy or sell coins from and to individuals, bypassing exchange fees, and the website provides an escrow service for your protection. Of course, the coins on these sites are slightly more expensive, but by circumventing fees, you end up getting the same amount you would on an exchange.
How To Research Cryptocurrencies
Research is the most critical part of the entire investment process, and it will make the difference between becoming rich and losing everything. The best way to do research is to join trustworthy crypto communities, such as various subreddits on Reddit, specialty forums or even 4chan. While these will have their usual hired shills, browsing them for a while and becoming a part of the community should help you get a picture of what you should invest into and what is just a scam coin.
Of course, investors should be wary of “research” done for them by mass media. These often are backed by big-time investors who orchestrate FUD and shill for profit. Ripple and Tronix, once heavily shilled on television, saw a sudden surge in price before taking a plunge that caused many people lose their investments.
Investors also should avoid YouTube videos as sources of reliable information. The story of Bitconnect best exemplifies this warning. The Ponzi scheme, which involved buying Bitconnect tokens which paid dividends, promised up to 92% yearly return for large sums invested. Additionally, people who invited friends to spend received a certain percentage of their profits. Heavily promoted by YouTubers, the scheme pulled in a lot of people and made a few people rich. In January 2018, the Bitconnect platform was shut down; the token plummeted in price, and people lost all their money.
Purchasing Cryptocurrency Using Cryptocurrency
Many new investors find a legitimate project to buy into, but then become confused about how to obtain the desired coin. Because most coins do not offer USD pairing, people cannot purchase them with money.
The best way to acquire coins in this situation is to sign up for an exchange such as Binance, KuCoin or EtherDelta, which allow trading between cryptocurrencies and Ethereum. You buy Ethereum with money, and then send it to the ETH wallet on any of the previously mentioned exchanges, which will let you trade it for the desired cryptocurrency. Ethereum is recommended over Bitcoin, as Bitcoin has long transaction times and prohibitive fees.
The last step of investing in cryptocurrencies is securing your investment. This step is crucial, as leaving your coins on an exchange or a poorly secured wallet can result in the loss of all of your money. In 2014, a large number of people lost all of the coins stored on the Mt. Gox exchange. The scandal, which was enormous for the market at that time, led to a crash that lasted two years.
To secure your investment, you need to download a trustworthy wallet that can store your coins. You can often find recommendations on the online communities of fellow investors of the coins you bought.
Follow the instructions on the official website to set up your wallet and then transfer the coins from your exchange to your wallet. To ensure your investment is safe, you need to remember your public and private keys (especially the latter) or the passcodes you received when setting up your wallet. If you lose them, you lose access to your coins.
Once you are secured, you can sell the coins whenever you want by reversing the process.
Initial Coin Offerings Details
Lastly, every crypto investor should be aware of the ICO, which stands for Initial Coin Offering and is akin to crowdfunding a new cryptocurrency. A legitimate ICO usually ends up doubling or tripling its value once the coin is listed on its first exchange, and when held for a long time can turn investors into millionaires.
However, as with any investment, ICOs pose the risk of illegitimacy. The team behind the coin, who might be running a scam, can run away with the money. One recent example is Prodeum, a coin purportedly created for buying vegetables and fruit. Instead, the team disappeared with the funds, wiped all related social media accounts, and left the investors with nothing.
Buying into cryptocurrency is a somewhat complicated process that is worthwhile for serious investors. However, participation is not worth taking a bank loan. Do not let emotions drive your actions, and don't spend more than you can afford to lose. It may be wise to consider the money gone as soon as you invest.
How To Make Money With Cryptocurrency Conclusion
Always keep a close eye on the market by staying up to date with the community and the news. It's essential to note, however, that you should not take everything on the internet at face value, and that many people want to manipulate others with their statements.
Warren Buffet said: “You should be fearful when others are greedy and greedy when others are fearful.” Use your common sense and do not fall for obvious scams, such as people impersonating celebrities on Twitter who ask for a significant amount of money transferred to an address, promising to return double the amount afterward.