Yes, I admit it. After the price of Bitcoin soared, I decided to join the cryptocurrency bandwagon to see if I could make a quick buck.
Those shoes aren’t going to pay for themselves!
While my story might not be as romantic or inspirational as that of the guys that sold two pizzas for 10,000 bitcoins in 2010 (now worth just over US$145 million), it’s still worth telling.
But first, a warning. While the right cryptocurrencies aren’t as bad as going down to the casino and putting all your money on the roulette table, they are not like term deposits at the Commonwealth Bank.
Don’t buy if you can’t afford to lose.
Over the Christmas holidays, I took the advice of a friend who started investing in cryptocurrency in September.
By the end of October he had a tidy sum in his CoinSpot account.
I made around $2,000 investing in cryptocurrency. At one point it was $3,500, but I didn’t get out fast enough. My total “investment”, if that’s the right word, was $1,500.
The best piece of advice I received was to buy units that are not too expensive, as I’m a novice.
Invest in everything but Bitcoin, I was told. But if you do want to jump onto the bandwagon, you can buy parts or shares in a Bitcoin to add to your portfolio.
They invested in Litecoin, Ripple, Cardano and Safe Exchange, with Litcoin being the most expensive. There are lots more currencies, but it’s better to buy those that have proven their longevity. So make sure you do your research.
Here are some tips to ensure that when you’re investing, you don’t go overboard.
- Use an exchange and not a broker
You’ll save money on fees so buy with exchanges like GDAX and Coinbase.
- Buy low, sell high
It may be an obvious one but look at the price trends of the currencies before you invest, just like the stock market. When a currency is at the highest point its been in the last 24 hours, that is obviously the riskiest time to buy.
- Diversify your wallet (but not too much!)
Don’t put all your eggs in one basket, just in case one of the currencies goes belly up. Make sure you do your research and choose wisely – use coins with high market capitalisations and trading volumes that have shown their longevity.
- Don’t invest more than you can afford to loose
Another piece of obvious advice, but there will be lots of great investments in your lifetime. Cryptocurrencies are incredibly speculative and like the stock market, it’s not a get rich scheme. They are volatile and can go up or down.
- Watch the news
Keeping up with financial news, especially since cryptocurrencies have garnered a lot of attention lately. You might be able to predict the fall in price of one of your investments if you see a big backer pull out their money eg. Litecoin this week.