If the pandemic proved one thing, is that your livelihood is dependent on stable income. A lot of people got caught without any savings or alternate means of earning money when their jobs were put on hold or eliminated. Right now, everyone is scrambling to find a way to ensure that they won’t end up praying for a handout from the government.
There is another category of people – those that are looking at their portfolios with glee. Yes, we are talking about the annoying neighbor/friend/colleague that was going on and on about Bitcoin a while ago. The most popular cryptocurrency in existence has increased in value from 5.000$ when the pandemic was announced in March 2020 to 42.000$ in January this year.
And it’s not just Bitcoin – the cryptocurrency market has now over 8.000 coins and it represents an investment of over 1 trillion dollars. A lot of people that were looking at this phenomenon with suspicion are starting to figure out that it’s now too big to ignore. It’s also stupid to ignore the opportunity, especially since the future doesn’t look very bright for the traditional financial system.
There are millions of detailed articles about what Bitcoin is and what cryptocurrencies are in general. We won’t go into details about that, we want to explain why it’s a good moment to invest in crypto.
The money printer goes brrr
When the economy ground to a halt because of the lockdowns, the governments needed an emergency solution to keep the financial system from collapsing. The easiest way to do it was to print more money. For example, the US Federal Reserve has injected over 9 trillion dollars in the American economy in the last year. Basically, over 20% of the USD in circulation right now were created last year.
The European Central Bank has also implemented several measures to support the financial system and generated 120 billion euros last year. The ECB president, Christine Lagarde, has committed to inject as much liquidity as necessary to ensure that states will be able to issue as much debt as they need to deal with the crisis.
When you generate unlimited money, the value of money decreases, so everything becomes more expensive. Not necessarily a problem, managed correctly, but we also have to take into consideration that the actual economy isn’t getting better fast.
Yes, we have a vaccine for the virus, but it will take months to distribute it and restart normal life. All the industries in the world went through a huge shock and it will take a very long time until they get back on their feet.
So, what does this mean for the regular Joe (or Jane)? You need a safety net. Whether it’s a way to make money in your free time or you want to have some funds tucked away, you need a solution.
Cryptocurrencies are such a solution. It’s an economic system that is disconnected from the stock market or real estate, in the sense that it doesn’t fluctuate in the same way. It also allows you to choose how to invest your money and to have full control over it.
Long term investment or play the market?
There are two ways to use cryptocurrencies. Well, more than that, but let’s start simple.
You can invest some of your money for the long term in Bitcoin, Ethereum or another coin that has proved it can stand the test of time. Like we mentioned before, since March last year Bitcoin has increased in value from 5.000$ to about 37.000$ right now. Ethereum, the second largest cryptocurrency on the market, has risen from 200$ to 1200$.
In the last 2 years, both coins have a growth of over 1000% – how many other assets can claim the same? As a long-term investment, it’s hard to find something that can generate the same yield.
There is also the opportunity to make money in your spare time by playing the market the same way you use the FOREX or the stock market. The crypto ecosystem has the advantage of fast fluctuations, so you can make (or lose) money a lot faster.
Of course, this means you have to know how to invest and use trading bots and many other skills that only some people have. What we are trying to show is that there is something for everyone in the crypto market.
Warning, dangerous waters ahead
If you decide to invest in cryptocurrencies, there are several warnings we have to mention. First, it requires a little technical know-how – something you can learn in about an hour of internet surfing.
For example, cryptocurrencies need to be held in digital wallets (there are hardware versions also).
Second – unlike regular investments that are insured, you have total control over your coins. But like Spiderman said, “With great power there must also come great responsibility”. Total control also means that you are responsible for it. If you forget your private keys and your computer breaks down, you will lose everything.
Third – the crypto market works really fast. Prices go up and down in a blink and the wrong move can mean lots of profit or total loss. If you’re in it for the long haul, this doesn’t matter very much. In time, your investment will most likely grow in value, even if it stumbles a bit along the way.
But if you are interested in day-trading, make sure you aren’t putting all your eggs in one basket and beware of foxes that will try to eat your chicken (yes, this is a metaphor for scams and crooks).
Never invest more than you can lose.
How to start?
So, now that the warnings have been posted, we can get to the practical side. There are several ways to buy your first cryptocurrencies. We recommend avoiding peer-to-peer sites like LocalBitcoins or other similar venues, it’s risky for a beginner. Start with an official exchange platform – there are several types.
Some are straightforward – you have USD or Euro, they sell you Bitcoin, Ethereum or another coin. There aren’t many of those, because banks aren’t very happy with the competition represented by cryptocurrencies.
Other platforms accept fiat money like USD or Euro, but they convert it to a fiat-pegged cryptocurrency like USDT or USDC before adding the funds to your account. Basically, one USDT equals one US dollar.
Vtrader.io is such a platform – its designed to be welcoming and intuitive for both advanced users and beginners. Users can transfer the money to the exchange’s bank account and the USDT equivalent is added to your user account as soon as the deposit is processed. Once the funds are available, you can buy one of the five coins that are available and use them however you want.
There are also exchanges that offer a variety of trading options for those that are interested in playing the market. For example, Binance offers lots of crypto-derivatives, such as futures contracts, leveraged trading, staking options and so on. This type of trading requires advanced know-how, but it can be a very rewarding way to spend your free time.
Overall, the crypto market has room for everyone and it’s an opportunity that shouldn’t be missed considering the challenging days ahead.