The investment sector saw a huge boom when the Pandemic COVID locked down the world. The number of people who started different forms of investment is inexplicably huge. From stock markets to mutual funds & Crypto to NFTS, every option has seen a surge like never before. This article is the guide for you to start investing in cryptocurrency.
Why? Because crypto is a relatively new form of investment and has given unimaginable returns over the years. Especially the currencies like Bitcoin, Ethereum, etc. Let us approach the article in the classic blog format, shall we?
Table of Contents :-
What is Cryptocurrency?
These are digital currencies with no physical form. Neither a coin nor a bill. There is an innovative idea of Decentralisation behind these currencies. Like all the currencies around the world are regulated by the government. There is an authority that controls those currencies like the RBI of India. Cryptocurrencies work on the opposite idea, i.e., having no authority or centralized power.
This is why more and more people invest in cryptocurrencies. You can use these to grow your money, make online purchases, regulate online transactions, etc. If you worry about the security of your wallet and transactions, then rest assured.
Cryptocurrencies are secured by cryptography and are nearly impossible to be counterfeited.
How does Cryptocurrency work?
As I mentioned, cryptocurrencies are not controlled by a central authority. Since these are decentralized, cryptos run through computers and servers. The exchange happens via peer-to-peer servers where no middleman is required.
This makes a cryptocurrency utterly void of any authority. Neither any bank nor any government has the power to impact its circulation of value. However, a government can ban its usage across the country. You know what I mean, don’t you?
How, why, where?
Suppose I start writing about every aspect related to its working, buying, and selling. Cryptocurrency is a wholesome topic. From its link with blockchain to all about wallets, thousands of articles can be written. However, apologies, but I won’t divulge this article much. I can start at blockchain, go to web3 midway, and finally drop to all sorts of wallets and different ideas behind different cryptos.
I’m willing to jump straight to the main point. This article is about why you should invest in crypto and how much you should invest in crypto.
Why should you invest in Cryptocurrency?
Crypto is one of the newest and most popular investment options. Not to forget the returns it generates. People have become millionaires in a year or two. That too by just investing in cryptocurrency.
Also, we all know that one’s portfolio must be diversified with all kinds of investment options. Never put all your eggs in a basket, as they say. Hence, it is logical & rational to include one or more cryptocurrencies in your portfolio.
If you are searching for a few specific points of why you should invest in cryptocurrency, hear them out –
Crypto is an excellent long-term investment: Not all, but the few established ones like Bitcoin, Ethereum, Solana, etc. The way these touch new heights every now & then, your $1000 might become a million in only 5-10 years.
24*7 open market: Unlike the stock market, cryptocurrency markets are open every day, every minute. You won’t have to sit idle Saturday and Sunday.
Decentralized: No authority owns your crypto; neither can someone monopolize its value & circulation. The investors have the sole authority of taking a crypto east or west.
How much to Invest in Cryptocurrency?
When we talk about the amount you should invest in cryptocurrency, most people advise you to dump the amount you can afford to lose. It is also very logical in a way. Being a decentralized entity, it also allows frauds to come and distribute their crypto. There have been incidents where people have lost all of their money.
However, there is no need to get afraid and back off. You must invest in cryptocurrency. You see, frauds are everywhere. Moreover, some cryptos are as legit as you and me. For example – Bitcoin, Ethereum, Polkadot, Solana, and many more.
We will take into account two major points –
- Invest the amount that you are ready to lose.
- Cryptocurrencies have generated returns better than any investment option.
Now, if we consider these points, we can conclude that somewhere around 5-20% of total invested money is good.
My Personal Numbers
In my personal opinion, 15% is a good number. I, too, invest 15% of my investment money in cryptocurrencies. If I am to disclose my numbers –
50% into direct Stocks
35% in Mutual Funds
15% in Cryptocurrency
This is what I currently practice. There is no need to copy my or somebody else’s portfolio allocation. You must analyze and choose your own preferable portfolio diversification. If you wish to learn more about diversification, its importance, needs, and the tips for diversifying, I recommend you to read this article –
For any queries or suggestions – Contact me on Twitter @SushrutKM