Bitcoin, Ethereum, Litecoin, Zcash: There are hundreds of cryptocurrencies out there. The rapid rise of their value is turning out to be a real investment for people. Naturally, the question arises is: How to invest in all these blockchain technology and cryptocurrency?
Before we look at the methods, please note that cryptocurrency, like any real currency is subject to pricing fluctuation and no model can predict an accurate future value. Invest wisely and securely. Actually cryptos are known for their volatility with over 100% fluctuations in 24 hours. That requires someone to have a stomach for the market and be able to withstand it.
In day trading cryptocurrency, you actually are dealing directly with an online exchange to buy and sell cryptocurrencies on a daily basis. This is just like the stock market, where you keep an eye on a stock that is rising in value, buy it, sell it off when you feel it cannot go any further, and using that earned to buy other sticks that will increase in value.
Day trading is one of the riskiest yet most rewarding way to make money. You can never time the market so even trying can make you lose money. Many people try to trade and look for those small daily returns.
Mining cryptos is done by solving complex mathematical equations with brute force. It also helps the blockchain as miners are the one who record all transactions on the digital ledger.
To mine, you can either buy expensive hardware that is dedicated for mining with specific algorithms which are called ASIC (application specific integrated circuit), or you can use your computer’s GPU (Graphical Processing Unit). Dedicated systems have a bigger payout but the cost of the hardware and the electrical consumption sometimes negate that. Profitability matters with the coin you’re mining and the hardware you use. GPU mining is going to be the easiest and cheapest one to start out with.
Some cryptocurrencies do not let you mine coins, but after offering initial coins, let you put them in your wallet for a decided period and pay you interest in that cryptocurrency. This is like putting your traditional money in a fixed deposit account and after a certain period, the bank pays you interest. It can also resemble a dividend type stock where you get a certain percentage back, depending on your holding.
This is a good passive way to invest as not only the coins you own increase in number, but their value also rises. The downside to staking is that your wallet usually needs to be open but people work around that. You can use programs and hardware to place the wallet elsewhere. You can cash out of your holdings at any time so there is no penalty or maturity date.
Mining in recent years is becoming difficult for ordinary people as organizations with access to large funds have set up banks of computers dedicated to mining and your average PC or laptop just cannot fight in the ring anymore, even the coin is as not asic resistant. There are now companies out there who actually use investor money to buy expensive hardware to mine and pay out dividends, just as if you would own shares in a company.
What do you do when you have money to invest but lack the time and knowledge of the stock market? You contact an investment firm and let them take care of the daily hassle. Hedge fund companies for digital form of investment firms of the cryptocurrency market exist too. You simply invest your money and these companies do trading for you.
Stocks and cryptocurrencies don’t exactly go hand in hand but more companies are starting to deal with the blockchain that are already public on wall street. You can even invest into companies that are opening up to blockchain or cryptos. For example, Overstock and Newegg recently announced that are going to be accepting cryptocurrency as payment. Google Ventures also invested into Storj and Veem which play an important role on the blockchain. MGT Capital is another one that is building a mining empire with a projection to generate over $2million in monthly revenue.