Just a Bit More — How to Invest in Bitcoin & Other Cryptos in 2021
Who could have guessed that in 2021, a virtual token would be driving the global economy crazy with its extreme fluctuation? It is popular to think that Bitcoin and other cryptocurrencies’ success is a result of COVID-19. Well, allow me to present you with a different point of view.
Bitcoin’s first dramatic rise had been, as we all remember, all the way back in 2018. In that sense, the pandemic served as a driving force, pushing investors away from conventional assets and toward crypto, seemingly much less affected by the economic crisis. Thus, it is possible that, had it not been for the virus, cryptocurrency rates would have spiraled up anyway (although maybe not at such an astounding velocity).
The question remaining is whether this is a good time to invest in crypto and how exactly should one do it ideally. Let me share some popular methods with you, including their pros and cons. Remember, though, that this is not advice regarding which coins you should invest in or how much funds you should allocate to that purpose. This demands a more thorough and specific analysis, of course.
HODL
Have you ever seen this strange word and wondered what it means? Well, it is a typo of the word HOLD. This is as simple as it sounds: You buy Bitcoin, Ether, Ripple or other cryptos and hold on to them for the long term. At the core of this strategy is the belief that these coins’ rate keeps rising over time, so looking ahead, profit is most likely.
On the other hand, nobody guarantees that this trend is going to continue. Had you bought Bitcoin at the beginning of 2017 for less than $1,000, you’d probably be thrilled right now. However, today this upward surge isn’t so evident anymore. Also, defining ‘long term’ is very tricky — how do you know when it’s time to pull out and reap your profits? No one can tell.
What’s mine is mine
You don’t have to buy cryptos; you can generate them. Many tokens, with Bitcoin being the most popular one, are generated by updating a virtual database. These cryptocurrencies are not linked to one bank or entity but are somewhat decentralized. That way, anyone with the proper infrastructure can add to this extensive database — and it’s all free of charge.
But wait, it doesn’t mean that it’s simple. Constantly scanning the database and updating it is an energy-consuming process, and that itself isn’t cheap at all. A regular computer probably won’t be able to carry the burden, so you also need proper hardware, as well as the technical know-how and a whole lot of time and patience. And that’s without even mentioning the environmental damage caused by such a process.
What’s at stake
This method may seem more friendly to you because, in a sense, it is very similar to depositing money in a bank. You put your crypto coins in a unique wallet, maintained by a licensed operator, which will then give you a particular interest in the amount you put at stake. This means that the more crypto you stake, the larger your projected gain is. However, this method will not make you rich fast — again, just like with a regular deposit.
But wait, there’s more. These are the basic methods of crypto investing — crypto 101, in a sense. Expert crypto enthusiasts also enter the fields of ICOs and forks, but this demands a lot more knowledge of how cryptocurrencies work.
A look ahead
What does the future hold for these digital wonders? It is too soon to tell. Talk of regulatory moves made by national authorities could be a real game-changer, eliminating the current hype around crypto. However, the revolution itself is already past the point of no return. Cryptos will be a significant part of our lives — so why not find a way to make a penny or two off of them?
