If you’re thinking should you invest in Cryptocurrency like BitCoin, Ethereum or Ripple, it helps to know a little about this booming market. Our cryptocurrency investment expert, Joe Black gives you the low down.
Unless you’ve been hiding under a rock of late most people should be aware of the Cryptocurrency craze taking the investment world by storm. Initially hailed as a pure speculative bubble by many well regarded veterans of the financial world, the cryptocurrency markets are evolving at such a rate that previous critics are being forced to take note and in turn diversify their portfolios accordingly.
Last December we saw the Chicago Mercantile Exchange list Bitcoin futures, a move that many consider to be the first step, by the financial giants, in acknowledging cryptocurrency as a solid investment. Even so in January George Soros called Crypto a speculative bubble, soon after the markets took a plunge with many believing that there could be merit to Soros’ words. However, while all coins, in the first few months of the year, were devalued by percentages that most traditional investments would never recover from the Crypto market refused to relent and its investors strengthened, evidently Crypto is here to stay. Motivated by this realisation governments have seemingly begun to relax somewhat with their initial heavy handed ‘ban it all’ approach and have started working with exchanges to provide regulatory clarity.
Now the big boys are back, the Soros Fund Management venture just approved the trading of crypto currency and the Rothschild family have been taking positions in Bitcoin for the past few months. Further to this The Rockefeller family’s venture-capital arm Venrock is partnering with the cryptocurrency investor group, CoinFund, to help entrepreneurs launch blockchain based businesses. Not wanting to be left out investment banks are also making moves to participate with Goldman Sachs recently hiring a VP of Digital Assets and Santander implementing Ripple’s technology for cross border payments.
Far from being merely an investment opportunity the main aim of cryptocurrency and blockchain technology as a whole is to solve real world financial, logistical and economic problems. A prime example of this is the DASH currency which has teams across South America, Africa and Southeast Asia helping to provide financial solutions to those who maybe haven’t even had a bank account in their lives. One of their major successes has been in Venezuela where they have provided an alternative currency to the massively depreciated Bolivar something which the Venezuelan people have embraced with open arms.
The adoption in some areas of the country has been so swift that now you can pretty much pay for a whole night out from the taxi, the meal at the restaurant to drinks afterwards all with DASH. This is merely one example among hundreds if not thousands where cryptocurrency is providing positive change for the future. When you delve a little deeper and research the types of projects that are unfolding you find that with this technology our lives will be transformed for the better.
While there are solutions that will benefit the conglomerates most of the technology will equally help the average person to financial stability and potential freedom. Whether it’s removing the domination of major record labels allowing artists to profit directly from their music, or it’s buying and selling unused phone data so that it doesn’t go to waste at the end of the month a majority of these projects have benefits for you and I.
At the moment the space is still very much in its infancy. Although the technology is advancing and being implemented at an incredible pace, from an investment perspective the market is still very much like the Wild West. While the exchanges are doing a pretty good job of regulating themselves they are still victim, sometimes on a daily basis, of market manipulation. This of course makes trading in cryptocurrency somewhat akin to a rollercoaster. This, if your stomach can hack it, is not strictly a bad thing, as it provides a possibility to make very healthy profits on relatively small investments. That said, as with every investment it’s important that you do your due diligence as there are many scam artists just waiting to take your money.
Another factor you have to take into serious consideration is the security of your assets. In the digital space, unless you are investing with the futures exchanges, you are in control of your investments and their security, the exchanges can only do so much. My advice is to implement 2FA on every account you have and change your passwords regularly. If you are not trading your coins on a regular basis then the best thing you can do is invest in a hardware wallet such as Trezor or the Ledger Nano S. Most importantly never store your passwords for anything to do with crypto insecurely on your computer rather write them down or at least get a secure password manager such as 1Password, LastPass or KeePass and enable 2FA on it.
At the moment and in the foreseeable future Cryptocurrency and blockchain technology provides a real opportunity for smaller investors enjoy healthy gains provided they do their research and implement a sensible trading/holding strategy. However, it must be noted that while gains can be great the market, due to its volatile nature, can and often does swing drastically in a downwards trajectory. If investors are not careful then the value of their portfolios can be wiped out in no time at all. The real beauty is that you can operate from anywhere in the world with an internet connection making it ideal for someone on the move.
With regards to Crypto the future certainly looks rosy, let’s hope it stays that way.
You can sign up and trade Cryptocurrency (or if you’re feeling like keeping it traditional, FX and stocks too) with our affiliate partners Plus500.
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