So you say you want to invest in cryptocurrency, do you? While that idea might have gotten you laughed at a few years ago, these days, that type of statement is met with inquisitive looks and questions of “why?”
To be sure, your reasons for investing in cryptos have to be rock solid. Not only is the marketplace incredibly volatile, but with new cryptos arriving every day, you have to be sure about your intentions so that you don’t get sidetracked chasing every new coin that comes on the market. Enlisting the help of a mentor, like Mark Dukas Charlotte, might be a good way to get started.
Still, there are both advantages and disadvantages to getting into this market that you would do well to consider.
Why Should I Invest In Crypto?
The simple answer is, to make money. That’s the main reason anyone invests in anything, whether it be stocks, startups, or cryptocurrencies, but there are a few other reasons to consider crypto instead of traditional marketplaces.
1. Quick Returns. Initial coin offerings are all the rage these days, with some coin startups raising as much as $150 million in only a few hours time. Most startups that raise investor funds are lucky if they’re able to provide a decent return on investment in few years, but investors in some coin startups can cash out in hours with a sizeable return if they choose.
2. Very Liquid. Unlike a traditional marketplace where you have to wait for someone else to buy your stock in a company or for an eventual buyout, coin investors can liquidate their holdings almost whenever they choose. If the coin has a strong enough network of investors, that transaction can happen almost instantaneously. An experienced crypto investor like Mark Dukas can help you decide when the time is right to sell.
3. Full Transparency. While there may be some confusion over what exactly a cryptocurrency does, for those who are familiar with the idea, cryptocurrencies look and act very similar, with the main difference being the network that they operate in. When you invest in a startup, you invest knowing that the company that emerges several years down the road will most likely look drastically different as they pivot to adjust to the market. That’s not the case with crypto: you know what you’re getting and how it operates the moment you buy in.
4. Massive Wealth. It’s not too great of an exaggeration to say that there is an opportunity for such rapid and monumental wealth creation that has never before been seen by mankind. If you had invested $1,000 in Bitcoin around 2010, that investment would have been worth over $100 million today. Mark Dukas has seen several rags-to-riches stories in his time as a crypto investor, and can testify to the heights wealth can reach.
Why Should I Not Invest in Crypto?
It’s not all roses and tulips, however. Before you decide to take the plunge, consider these potential drawbacks.
1. Reliant on Network. Every coin is only as effective as the network that it operates in; if the community doesn’t rally around it, then the network stalls and the coin ultimately fails. Before you invest, take a look to see how many people have bought into the network and whether or not that will continue into the future.
2. High Floor to Entry. Before a coin can even come to market, it has to have a certain amount of capital to develop and implement the coin into the network. If they don’t raise enough money, the coin fails and the company goes belly-up. Be careful that you don’t buy into a coin that will hold no value in a couple of months.
3. The threat of Poor Leadership. For purposes of investing, it’s best to think about every coin as a start-up in and of itself. It needs capital to get started, solves a problem within the community, and has a team of managers that oversee operations. If those managers don’t do a good job of shepherding the business, expect to see a coin that falters and doesn’t reach its full potential. Or, even worse, goes under completely. Every business is only as effective as it’s leadership, and crypto is no different.
4. Incredibly Unstable. This is perhaps the biggest issue facing cryptos on an hourly basis, as Mark Dukas Charlotte can testify to. A coin that seems to be doing really well can tank within a matter of minutes, and skyrocket to 4,000% its initial value an hour later. It’s the most unpredictable commodity on the market today, so if you’re one of those investors that doesn’t like to take huge risks, crypto investing might not be for you. If you can stomach the volatility, however, there’s a lot of money to be made.