11 Bitcoin Lessons From a Cryptocoin Investor

PARIS, FRANCE - DECEMBER 15: In this photo illustration, a visual representation of the digital Cryptocurrency, Bitcoin is displayed on December 15, 2017 in Paris, France. Cryptocurrencies including Bitcoin, Ethereum, and Lightcoin have seen unprecedented growth in 2017, despite remaining extremely volatile. (Photo by Chesnot/Getty Images)

This should go without saying, but we’ll repeat it for emphasis: if you can’t afford to lose it, don’t invest it. Cryptocurrency may seem to have the power to turn anyone into Jeff Bezos, but it doesn’t. Even if you can afford to lose a bit, you should still try to minimize your losses, which can be done by diversifying your investments. In other words, crypto investments are not a sound replacement for your 401k.

Although bitcoin is the most widely-recognized cryptocurrency, it’s not your only option. Bitcoin was simply the catalyst that allowed the virtual currency revolution to begin. Despite its popularity, bitcoin’s crazy growth may not continue into the future, so it’s good to explore all of your options.

Although it has technically been around for a few years, crypto is still considered a new and developing market, so it's definitely worth investing as an early adopter. The last few years presented a huge opportunity for crypto investments, but it’s not too late to take advantage.

In order to purchase bitcoin or other cryptocurrencies, you must first set up an account with a crypto company, AKA crypto-platforms. Coinbase is a great way to make your first cryptocoin purchase, as their website is user-friendly for newbies . There’s also GDX, Coinbase’s platform for more advanced crypto users. Robinhood is another great platform for novices, however it’s only available in select states. Bittrex and Binance are a bit more advanced, but they also offer more coins.

Store your coins in an offline hardware wallet, such as Trezor, Ledger Nano, or Paper Wallets. This storage method keeps your personal cryptocoin information backed up, in case of an issue with your platform.

If you’re worried about crypto-investing taking up too much of your time, consider a long-term strategy. Long-term investments are a more reliable way to expect consistent returns with less stress. According to Dearing, “investors have found more success with this method, as bitcoin’s value raised to almost $20,000 this past year”—meaning if you bought bitcoin when it was just a few bucks and invested long-term, you would have made a fortune.

Day trading—AKA buying and selling within same day—crypto can be very profitable, but the strategy and skills required can take years to develop. But if you’re in crypto for the long haul, it can definitely be done. It’s important to note that morning hours have shown the most volatile trends, meaning lots of volume or price movement; that might sound scary, but it also means that the most profit can be made during those hours.

So what actually causes the daily price fluctuations of crypto that we always see in the news? The news itself. As with anything else, a crypto-coin’s value is determined because many people agree on it. The saying goes, “buy the hype, sell the news.” Typically, by the time crypto advice gets to the news, it’s time to sell.

Fear should not dictate whether or not you buy or sell cryptocurrency. Instead, it’s essential to form a strategy aligned with your own personal tendencies and beliefs. Dearing recommends the book Market Wizards by Jack D. Schwager as a general resource for investing guidance.

Bitcoin is very limited when it comes to features, meaning its main purpose is to be a peer-to-peer currency exchange. But there are other crypto companies that offer more features. One such company is Ethereum ETH, which specializes in “Smart Contracts.” There’s also Monero XMR, which claims to provide complete anonymity when making purchases or funds transfers.

Another currency with different features is VeChain’s VEN Token. VEN Token is a supply chain legitimacy currency that just announced a partnership with BMW. Its purpose is to verify the transportation of exotic goods. For example, if you’re ordering a bottle of wine from Italy, using VEN will guarantee the bottle’s authenticity and proper storage techniques to ensure that you get what you paid for.

According to Dearing, over the next 5-10 years, the use of mobile wallets will continue to increase, allowing users to make crypto payments from their cell phones. Additionally, more large corporations will continue to adopt cryptocurrency payments; essentially, blockchain will be everywhere.