Ok, I’m making this post for all those that wanted it… so be happy. Bitcoin and cryptocurrency are exploding all over social media, it’s a hype; it is a bubble, and it will pop, I just don’t know when.
I think cryptocurrency has amazing potential I do believe in the blockchain technology but I must say, most of the coins are WAY overvalued and some are scams.
So you should know that this is extremely risky and I don’t even consider what I do as investing rather speculating. I do not have a perfect understanding of cryptocurrency either, it is still foreign to me. I am NOT responsible for anything that happens when you purchase cryptocurrency. This market is so volatile and completely unpredictable it is crazy. Do not invest anything you are not comfortable with losing when you purchase cryptocurrency. Also, please don’t make this your main source of investing, don’t put all your eggs into a crypto basket. That would be very unwise.
Alright with that out of the way, let’s begin.
What Is Cryptocurrency
Satoshi Nakamoto, is a Japanese guy who no one knows much about. The guy quite literally created Bitcoin and blockchain technology and that’s all the info we got. He said Bitcoin is “A Peer-to-Peer Electronic Cash System”, but supposedly he never intended it to be a form of world currency. The fact that not much information is found on this guy is a little intimidating.
However, it did turn into a form of currency and the popularity of cryptocurrency has sky-rocketed. The blockchain technology has also improved since its introduction.
The way it works is basically an off-grid system that allows a transfer of encrypted codes, which are coins, from one computer to another. The reason why this works is that the coin cannot be copied in any shape or form unless extreme conditions are met (I don’t know what they are). So there isn’t such a thing as a counterfeit Bitcoin, it’s supposedly impossible.
Also, with blockchain, there isn’t any way to make more. There is a set number and there won’t be any more than that given number, for bitcoin that number is 21million coins. I’m not too sure as to why this number was chosen but it was.
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
-Bon & Alex Tapscott, -Blockchain Revolution (2016)
Again, my knowledge of how all this works is extremely basic. Just like how my knowledge of the iPhone is basic but I still use it day to day. You don’t need a complete understanding to use something.
How To Buy Crypto
Who cares about that stuff I said previously right? C’mon lemme buy some BITCOIN!
…Yeah ok, I hear ya.
So just like stocks and how you need to purchase them through a broker, you have to buy cryptocurrency through some type of middleman. The most popular currency exchanges are Coinbase and Kraken (they’re the ones I use). Also, so it isn’t a surprise when you click on the Coinbase link to sign up, it will give you and me $10 in bitcoin after you have made a purchase over $100. (Congratz, you’ve made a 10% gain already).
Even though Coinbase is the most user-friendly, it is also the most limited. Actually, it is extremely limited because you can only purchase 3 cryptocurrencies: Bitcoin, Ethreum, Litecoin.
You can buy the cryptocurrencies provided with US dollars… it’s extremely simple.
Now you have an account to buy Bitcoin and you see that one coin is $10k! Whoa hold up, I don’t want to spend $10K for a digital coin. No worries you can buy portions of the coin, for example, you have $1,000, but a single bitcoin costs $10,000. You can buy 0.1 of a bitcoin.
So don’t let the total value of the coins intimidate you.
This is actually true with most crypto coins, you can buy portions of them if you don’t want to buy a whole coin.
Now with other exchange sites, you generally need bitcoin in order to buy other cryptocurrencies (some coins you can’t buy with cash) and that can be a little daunting, but really it’s not complex.
After you have purchased your coin(s) they will end up on a digital wallet. The wallet acts like a bank, just instead of dollars, it holds cryptocurrency. This wallet has its own special code so that you can use it to exchange the coins with others. (That’s really all I know about it).
Then there’s this thing called mining… somehow you help with transactions and at the same time receive “payment” (a portion of the coin) for helping with that transaction. Not sure how that works either. I just know that it isn’t really worth trying to get into mining. From what I understand you need a fairly advanced computer and would pay more for electricity than you would receive for mining the coin.
I’ve Made How Much In Two Months??
This is probably why I’ve been receiving so many questions about how to jump on this crazy train. Because I have made over 300% in just 2 months!!! [UPDATE: Well this has changed since I have posted… I have now made over 1,000%. So that has happened]
That is freaking NUTS!
I’ll be honest with ya, the coins I bought, I thought “yeah maybe they will increase by 40% by the end of the year.” That was with high hopes also. Lo and behold though, they well surpassed my expectations… By 260%!
I heard about bitcoin during my undergrad. It was a small discussion that quickly ended and no follow up occurred from the conversation, roughly the year 2013.
I was later reminded of it when I read an article that said bitcoin is now at $1,800! This was back in May 2017. Because of this article, my interest peaked and I decided to watch it for a while.
Later in September my colleague and I decided to buy some cryptocurrency.
Boy oh boy, is it a thrill.
The thrill is something I haven’t experienced before. Watching my purchases increase by 20% in a weeks’ time is something else. This excitement actually scares me. Sometimes I can’t believe that I actually have “invested” in something so unpredictable and volatile.
But I put in an amount I was comfortable with losing. I took a risk. (Which is crazy because I’m in dental school with debt and money is tight. I really shouldn’t have been comfortable with losing anything. I shouldn’t be taking crazy risks…buuuuut I did).
Now I actually have withdrawn all of my initial investments and everything that is in cryptocurrency is strictly my gains, nothing else. So if that money I have in cryptocurrency falls by 80% it was technically money that I never had in the first place. I’m at no loss.
I am not going to advise you on which coins you should purchase, nor am I going to tell you the coins that I have bought. This way you cannot point the blame at me if everything goes south.
This is something you need to investigate and do your own research if you want to get involved with it.
Now heads up, like I said at the beginning, there are a TON of scams out in the crypto world. Don’t go buying every coin that sounds good because some of them are not real at all. There are over 1,300 different crypto coins, there is no way they are all good. Make sure to do your research on the coins, read their white paper and really understand their goals before purchasing the coin. Also, check for spelling errors on their site or white paper… that’s usually a red flag.
It is possible to make money on cryptocurrency, I have done it. Heck, I have made more in 2 months’ time then I did working two jobs as an undergrad for a year.
Whether it will continue at the rate it has been going, I have no clue.
It’s fun, it’s new, and it is exciting. Don’t become overly obsessed with this. Don’t put all your investments into crypto. No one knows what is going to happen. It is receiving a ton of hype from the media and the world. Be smart.
Also if you have a better understanding of how blockchain works or if I said something incorrect please share it with me. I would like to learn more about this tech so I can really explain it well.