So I've been spreading the good word on cryptocurrency and the too-good-to-be-true opportunities to make money.
These are some of the frequently asked questions (FAQ) I get:
1. If it's all digital currency, how do you get money?
You use your fiat currency. That's the paper money that you currently have in your wallet. Through an e-wallet service, you can exchange money to Bitcoin or Etheruem, which is the de facto coin used for trading and buying alternative coins. Think of the bitcoin like your USD and the ETH as the Euro. It's recognised over the world. You can get your money back by using the same function to exchange digital currency to fiat currency. There's a small fee charged for this exchange, of course.
2. How do you make money in Cryptocurrency?
There are a few ways to make money. Contrary to popular belief, trading in Cryptocurrency is NOT the only way you can earn a coin or two, though it it's the most popular because of news of people turning millionaires "overnight". You can trade in bitcoins and altcoins like you would for currencies in Forex. Except cryptocurrency is much more volatile and unregulated. You can also mine for coins using your computer. Though the yield from that from a home computer isn't going to be worth your time or utility bill. Serious miners have specialised systems and run multiple systems in a large room called a mining farm. I will cover mining for the poor man specifically in another article. You can also lend your bitcoin to sites that do margin trading and make a bit of money from that. Lastly, you can take part in activities provided by some of these tech companies that pay you in coins. Like Steem for example. It's like YouTube, but you get paid in coins for putting up content. Or like Gilgam.es which is an e-sport company that pays you coins for playing games.
3. Is it safe? What happens to my money when the bubble burst?
The bubble burst is more devastating to traders. For the casual investor, you can park your money in a safe coin like bitcoin or Litecoin, maybe even Etheruem, Monero or Ripple. Just put your money there and check back a few years from now. The bubble that traders are talking about is the massive fluctuation of money in the Altcoin market where people are pumping in money in hopes to flip a profit when the value rises within a short span of time. Not all coins are good or worth that sort of investment. Some coins never make it past investment stage. The early investors who cash out make it, the late comers die a horrible death. It happened with the dot com bubble of ’98; it happened with the subprime mortgage crisis in 2008. 2018 is looming on the horizon. See a pattern here?
4. If it's that good why aren't more people doing this?
Because people don't trust what they don't know and if something is too new or hard to understand it remains in the realm of the tech geeks until someone makes it mainstream. Remember the days of the internet or social media? How long were they out there before you picked it up? Same as Cryptocurrency. The money making opportunity is too good to be true. We are used to banks giving us lousy returns or insurance companies giving us between 4 - 6% per annum. The more savvy investor makes 9% through other portfolios, the very good ones maybe make 20%. In cryptocurrency, the everyday Joe and Jane like you and me can make 20 - 50% a week. Sounds too good to be true? I've done it on a fairly regular basis, and of course, I have lost just as much in some weeks. However, the market is still bullish and if invest wisely, you can maintain a pretty healthy portfolio.
5. I heard it's a Ponzi scheme. Wouldn't someone run away with my money after they made enough?
Yes and no. There are hundreds of coins with newer ones coming out every other day. If coins confuse you, think of them as apps designed by tech companies with a certain use. Some apps are crap and some are good. If you blindly put money in as an investor to back the the crap ones, you stand a chance to fall prey to scams. That's why I always recommend that you do your research first and don't just follow trends.
6. I don't know how to trade. Can I still profit from this? Where do I begin?
Yes you can. There are sites that help you manage your portfolio for a fee. I tried trading on my own but quite frankly I don't have the stomach for it. It's tough work and time consuming. You also need to be wise in hedging your bets in other revenue generators. Ideally you get yourself into private groups that pool their money and skills for a common cause. These are often based on referrals, so start hanging out in forums and chat groups to get acquainted with people. Or if you like how I'm managing my portfolio, you can join me and my collective for the ride. Connect with me and we can have a chat.
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