A couple of weeks ago, I decided to dabble in a little cryptocurrency investment in an attempt to add to my freelance income.
Since then, I’ve cashed out a couple of hundred dollars in profit – and still “hold” all of my original stake money in a small portfolio, consisting of Bitcoin, Ripple and a few other “altcoins.”
Unless you’re a techie or a Bitcoin enthusiast, you may well wonder what on earth I’m talking about. Cryptocurrency investment is risky, complex and incredibly hard to explain. I found this out over the weekend when I tried (with no success whatsoever) to explain my new hobby to some friends.
In fact, some years ago, I was commissioned to write a 1000 word article, explaining to non-technical people what Bitcoin is and how it works. Although I had a reasonable understanding myself, I eventually went back to the client, and said that I didn’t actually think it was possible to explain Bitcoin in 1000 words!
So…I’m not even going to try to explain it now. Instead, here’s a link to an article where I feel it’s explained rather well (but it did take the writer 3500 words to get there.)
What this article is about is whether you should consider cryptocurrency investment as a way to supplement your income.
If you want to get started, you can get $10 worth of free Bitcoin if you buy $100-worth or more on Coinbase, IF you sign up via this link.
The Bitcoin Millionaires
It is genuinely possible to make serious, life changing money from cryptocurrency investment. The internet is filled with stories of Bitcoin millionaires, such as this one, who turned a $3000 investment in 2010 into a $25 Million fortune.
While it’s fair to say that that particular boat to riches has now left the harbor, people are still making big money and will likely continue to do so. Some cryptocurrencies can go up in value by 100% or more in one day – but they can do down just as much too. If you look at how much Bitcoin alone has gone up and down in the past three months, you’ll see what I mean.
Investing in cryptocurrency and Altcoins is volatile, complicated and not for the faint hearted. There’s no other investment where the old adage that “the value of your investment can go down as well as up” is more brutally relevant. This is something you should only do with money you feel you can afford to lose. That said, the potential rewards are arguably greater than you could find anywhere else.
Is Cryptocurrency Investment Going Mainstream?
Throughout the month of August 2017, the value of each Bitcoin went up by nearly $2000 – almost doubling in value. People who’ve held Bitcoin since the start of the year have made over 200% in 2017 at the time of writing. In these times of low interest rates, this makes a traditional savings account looks like a pretty crap place to put money.
Unsurprisingly, this huge rise in value hit the mainstream news in a big way, and caused many people to hear about cryptocurrency for the first time. Furthermore, investment banks started to show serious interest in the currencies as a way to help their customers to make money.
A quick glance at a Google Trends report for the phrase “cryptocurrency investment” shows just how much interest has picked up in recent times:
So, if the idea of putting a little (or a lot) of money into Bitcoin, Ethereum or other cryptocurrencies is starting to appeal to you, you’re not alone. Everyone from fund managers to smaller investors are paying attention. People are undoubtedly going to make big money – but others will lose plenty too.
Is Cryptocurrency Investment a Good Side Gig for you?
As I admitted at the start, I’m very new to all this. Although I’ve been aware of Bitcoin, currency mining and trading for a long time, I’m an absolute beginner. My gains so far could very fairly be put down to nothing more than beginner’s luck.
However, I already know enough to state quite categorically what kind of person you need to be to make any success of this endeavor:
1- You must be willing to spend DAYS researching online about the currencies, coins, and related companies you plan to invest in. You also need to be able to engage in some serious critical thinking – because for everyone who tells you a specific coin is a good investment, there’ll be someone else calling it a “shit coin” and telling you to run a mile from it.
2- You must have a small amount of money to invest that you’re willing to lose. (I’d personally say a minimum of about $500 if the profits are to make the time worthwhile).
3- You will need strong computer skills. Cryptocurrency investment requires you to sign up to online currency exchanges and purchasing platforms (see later in this article), and deal with security checks, complex passwords and authentication apps.
While there’s a lot of help available online, there are also tons of scams – and ways to easily and inadvertently lose your money, simply by introducing a typo when you’re transferring some funds, for example. This is currently an unregulated market, so you can’t call your bank or broker to rescue you if something goes wrong.
If you can’t honestly tick all three of these boxes, Cryptocurrency investment really isn’t for you.
Things that Will Help
1- A work situation that allows you to keep a constant eye on your investments. (I’m lucky in this respect as I work from home and can monitor things all day long).
2- An obsessive personality. (This is a hobby where an OCD-level of attention to detail will help. If you already spend hours reading reviews, forums and Facebook groups, you’ll be well suited to following all the rumours and gossip around these currencies, and may even enjoy it).
3- Well developed mathematical skills. (Maths is not my strong point, so I’m constantly doing currency conversions and banging numbers into a calculator – as such I’d be too timid to really do any kind of “day trading” for fear of making an expensive mistake).
4- A keen interest in business, technology and financial markets. Knowledge of psychology and intuition is useful too, especially when trying to predict peaks and dips.
Getting Started with Cryptocurrency
If you’re tempted to have a flutter (and I would call it that, as essentially this IS gambling, albeit in a rather more informed way than staking your money on a roulette wheel), this is what I’d suggest to get started.
1. Get some money “in”
Most currencies are traded in Bitcoin, so that’s what you’ll need to get started. I used Coinbase initially (which made it very easy to deposit using a card), and then BitPanda (which had a complicated yet reassuring ID verification process, and allowed me to put larger amounts in more easily).
2. Research your coins
You need to set hours and days aside to do this. I spent several nights researching just one of the currencies I eventually opted for – looking at the company’s plans, their executive team, their Twitter feed, and dozens of Facebook groups and Reddit threads. It’s also worth subscribing to free Google Alerts so you can see when anything’s posted about the companies of interest.
3. Start trading
I’ve been transferring my Bitcoin to Bittrex and using that for buying and selling. The interface is complicated (but so is crypto trading!) There are plenty of other options, but Bittrex seems popular.
4. Work out where to keep your “coins”
It’s not a wise idea to keep your currency in an exchange. There are numerous choices of online wallets and offline options (some based on USB keys). I’m not yet experienced enough to provide a recommendation for an offline wallet, but have been using CryptoPay as a “cloud” wallet, and also to get a debit card with which to spend my profits (see below).
5. Work out how to get money “out”
Something that came as a surprise to me was that it’s not actually that easy to turn Bitcoin and other cryptocurrency back into cash. Coinbase withdrawals are a convoluted process (especially in the UK) involving lots of verification. Some people use LocalBitcoins to arrange direct sales to individuals when they’re ready to “cash out.”
As I’m only dealing in small amounts, don’t really day trade, and intend to hold onto most of my portfolio in the hope of making “real” profit, for now I’ve got myself a rather cool crypto debit card from CryptoPay. I’ve put this to the test with some real-life withdrawals and it all works as expected. There are some fees, but they’re not extortionate.
As CryptoPay operate a referral scheme, you can get 25% off one of their debit cards if you use this link.
What Cryptocurrency Did I Invest In?
From spending MANY hours on crypto-related forums, I understand that the etiquette is that people don’t tend to discuss exactly what they have in their portfolios. This is especially relevant in terms of how MUCH – as this is not only tasteless bragging but leaves people open to targeting by hackers.
However, I’m happy to share details of a few of the currencies I’m interested in after researching them.
Once again, it’s really important to emphasize that every single currency has fans and haters. I’ve had good friends tell me that some of the coins I’ve chosen are “based on meaningless hype” and “lacking any promise.” All you can do is do your research and make your OWN judgment on which coins you think will be successful.
This short list should give you an idea of the kind of thing you have to look for, and the level of research required. This should NOT be in any way construed as investment advice.
Litecoin (LTC): Litecoin is one of the most established cryptocurrencies, and seen by some as a competitor to Bitcoin as it’s more technologically advanced and capable of processing transactions faster. However, it’s not yet set the world alight and is seen by many as either a boringly stable or straight-up pointless investment.
That said, it’s also risen in value by 60% since a friend told me it had “no promise!”
Ripple (XRP): Ripple is highly controversial as the company already has partnerships with banks, and is seen by many as the “establishment” cryptocurrency. However, unlike some currencies, it has a definite real world application, in that it can be used for almost instantaneous global money transfers that currently take days using the SWIFT system.
Ripple has a big conference coming up at the time of writing, with keynote speakers including the inventor of the internet and the ex-head of the Federal Reserve. Many people think that Ripple is the cryptocoin that could bring them untold Bitcoin-style riches – and just as many think it’s a scam, especially after marketing hype has seen the value of the coin rise and fall erratically.
Golem (GNT): Golem is a company with grand plans to set up global supercomputers, where unused processing power can be pooled for complex tasks. It’s a huge ambition, and one that’s seen recent setbacks, with developments taking longer than expected. I include it here because it’s a great example of the volatility of cryptocurrency investing. If the developers continue to hit major snags, the whole thing could crumble to nothing – but if they suddenly go live with something earth-shattering, fortunes could be made!
As you can see, it’s essential to really dig into the the detail about the companies behind these coins to make any kind of informed investment. There are also over 900 different coins on the market at the time of writing with more being added all the time.
Finally, it’s crucial to note that all kinds of global events and new pieces of legislation can and do affect the market as a whole. The legality of Bitcoin across the world can affect the value of all coins in a matter of hours. So, once again, only invest / gamble what you can afford to lose.
Tools to Get Started
I’ll finish off by listing what I suggest you might need to get started, should you decide that cryptocurrency investment is something you want to try:
- An account with Coinbase or BitPanda as a way to deposit your money.
- An account with Bittrex or another well-regarded crypto exchange.
- A debit card and wallet account with CryptoPay to (hopefully) help you withdraw your profits.
An Important Final Word
Cryptocurrency investment is an area where you’ll find a lot of people with a lot of strong opinions.
I’ve made a point here not to overstate my knowledge or experience, but I still have no doubt there are plenty of people who would argue with my choice of investments and even the platforms I’ve used to trade.
None of this is investment advice – it’s merely information on what I’ve learned so far. This is a volatile and risky way to make money – but it IS possible to make a substantial profit. Just don’t forget that it’s possible to lose the lot too.
Don’t forget: if you want to get started, you can get $10 worth of free Bitcoin if you buy $100-worth or more on Coinbase, IF you sign up via this link.
Founder of HomeWorkingClub.com – Ben has worked freelance for nearly 20 years. As well as being a freelance writer and blogger, he is also a technical consultant with Microsoft and Apple certifications. He loves supporting new home workers but is prone to outbursts of bluntness and realism.