Yahoo Finance The step-by-step guide to making a profit on crypto
These days, everyone wants a piece of the cryptocurrency cake, but it's not as simple as cutting the perfect slice.
Firstly, we need to talk about FOMO (or fear of missing out).
Many people invest simply because they are scared of missing out. It's very tempting, but you should never invest your hard-earned cash on a whim, or because your friends are investing.
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Investing in crypto is akin to gambling, and not many people are aware of how to invest properly. The real trick is making money, not losing it.
The basics of Bitcoin
Let's start with Bitcoin (BTC). This is what you need to familiarise yourself with.
Cryptocurrencies are a form of payment that use blockchain technology to send data into cyberspace.
Bitcoin must be mined and it is finite, meaning there are only a certain number of coins that can be mined - 21 million in total.
Cryptocurrencies are “decentralised”, meaning they are not regulated by a financial jurisdiction, such as a government or central bank.
Bitcoin is very volatile, but if you are willing to take the risk, ensure you understand what you are investing in and have a crypto investment plan.
There are several questions you should ask yourself before jumping on the Bitcoin (or any other crypto) bandwagon:
Do I understand what I am investing in?
Am I comfortable with the amount of risk involved?
Is there any indication the price of this coin could increase in value in the future?
How much more costly is this coin now compared to a few months ago?
If an asset is so solid, why was I disinterested when it was more affordable?
Have I convinced myself that I know what I'm getting into?
If you don’t have answers to these questions, it’s a wise idea not to invest just yet. You need to research some more.
If you do buy a coin, ensure you are not spending money you can't afford to lose.
Buying and holding
Let’s talk about the most popular method for making a profit in Bitcoin.
The best way to make money with Bitcoin without much effort is always to buy and hold.
Buying and holding BTC is one of the most straightforward ways of earning money with crypto. This is how it works:
Sign up for a Bitcoin Wallet—Coinspot and Paxful are the simplest and most trustworthy apps to use
Buy Bitcoin (with whatever you can afford to lose)
Hold on to your BTC and wait for the price to spike - no matter how long that may take
You could very well be waiting a long time. Buying and holding is all about patience.
This method has become so popular that there’s even an internet name for it: HODL.
The term HODL originated in 2013 with a post to the bitcointalk forum. The price of Bitcoin had surged to a high of over $1,100 at the beginning of December 2013 from less than $15 in January 2013.
In the 24 hours to 10:00am UTC, on 18 December that year – possibly in response to reports of a Chinese crackdown – the price of Bitcoin fell 39 per cent, from US$716 to US$438, according to CoinDesk's Bitcoin price index.
So, if you decide to use this method, learn to hold on to your BTC for dear life.
Experiment with altcoins
In regards to other coins, or altcoins, here are some tips and tricks if you're planning to invest in crypto for the first time.
As with Bitcoin, it is imperative to be knowledgeable of the new venture you are entering.
Bitcoins are only the first chapter of the novel when it comes to cryptocurrency. Don't place all your eggs in one basket. You could very well end up losing much more than you gained.
Do your research and see which coins are advancing well, with growth expected in the next few months.
Also, look for new or trending coins you might not know about.
Find reliable and trustworthy news sources
In the crypto industry, there are a lot of opposing views and many so-called 'professionals' who aren't all that professional.
Many think crypto is just a fad, and those who invest will only find dissatisfaction and lose money.
Bottom line: If you want to be a prosperous investor or altcoin owner, stick with the facts, not fiction.
Be combat-ready for volatility
As with Bitcoin, no cryptocurrency is as stable as standard currencies.
You must be flexible with your decisions and think about what the best choice will be for the number of assets you have in the long run.
Bottom line: Even experienced crypto traders and owners find it challenging to comprehend the trends of these virtual coins, so don't be too hard on yourself.
Be observant
If you want to trade or own large amounts of altcoins in your mobile wallet, you have to be prepared for the odds that come with being vulnerable.
Start by examining the various ways of managing your newfound coins and experiment with how you can manage your money in a way that is both efficient and convenient for you.
Just like learning to drive, mastering the sphere of cryptocurrencies isn’t going to happen overnight.
Be patient and vigilant.
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