At the junction of 2018 and 2019, bitcoin’s price was at the bottom – the asset was trading at 3200 dollars. This was the price level of mid-2017, when federal television channels just started to talk about cryptocurrencies, and Bitcoin was preparing for its rapid rise to 18 thousand dollars per unit.
After the “crypto apocalypse” in early 2018 and the rapid collapse of almost all cryptocurrencies, only the most consistent optimists believed in a new take-off. However, in April this year, bitcoin increased sharply, and by the beginning of May it almost reached a price of 6 thousand dollars. Moreover, the growth continues.
Is it a good idea to keep investing in cryptocurrencies further? Or is it better to wait for new breakthroughs? Is it possible to count on bitcoin more than on a lottery ticket? We give the answers in this article.
“Crypto thaw”
The cryptocurrency market has warmed up a bit over the past couple of months, but not a single authoritative expert or institution predicts such results as in December 2017. Hype around cryptocurrencies has subsided, it will no longer be possible to buy bitcoin today and sell twice as expensive in a week. However, crypto assets are still in operation, and you can make money on them if you invest wisely.
Bitcoin itself now has no prerequisites for growth. The most likely explanation for the April jump is the placement in Asian markets of an order for the purchase of a large volume of BTCs, that is, tens of millions of dollars. Such a big deal made the market push the cryptocurrency up.
Bitcoin today is a kind of gold in the cryptocurrency world. Most other cryptocurrencies are much more volatile, and the BTC acts as a kind of guideline where the entire cryptocurrency market is moving. At the same time, almost every cryptocurrency has a certain technology that this coin is promoting. While Bitcoin is a “thing in itself”, personifying the very phenomenon of crypto money.
An example of technology is the Etherium coin, which works on the basis of smart contracts, a breakthrough idea for its time. Its essence is that the parties describe the terms of the contract in machine language, and automation monitors their actual implementation. If a party does not fulfill an obligation, it will not receive payment. Thanks to the technology of the distributed registry - when data is encrypted stored on thousands of different computers - it is almost impossible to deceive such a system.
An equally interesting example is the Dogecoin currency, created almost in jest and named after a dog from an Internet meme. The joke turned out to be so successful and technologically advanced that its capitalization exceeded one billion dollars, surprising many of its creators.
The author of the project, Jackson Palmer, stated in 2015, even before the cryptocurrency hype started: “It is worrying that most conversations in the media and between specialists focus on the investment potential of cryptocurrencies, as this distracts attention from the underlying technologies and goals that are set in the basis of this movement.”
Technological basis
Before investing in a coin, you need to study what technology is behind it. Ideally, it is worth talking to the authors of the project – as a rule, they leave their data publicly available. Such investments are not much different from the classic venture projects: an investor studies offers from dozens of startups, selects some of the most interesting, and only one or two make a profit. However, this profit is so significant that it compensates for losses from all other projects.
There are a number of cryptocurrencies that still bring incredible profits. For example, Paragon for seven days showed a yield of 2000%. The Repo coin proved to be much smoother, but no less impressive, having risen in price immediately by 989.32% over the past 6 months. However, it is important to understand that investing in cryptocurrencies is a huge risk. Tokens equally easily add thousands of percent and lose them.
15 minutes of fame
It is equally important when choosing an asset to monitor its media support. The success of a coin largely depends on how much hype its creators can provide in the media. A kind of mini-hype that ensured the explosive growth of bitcoin a year and a half ago.
Simply put, the winning team is the one that can provide a winning PR to its coin and the well as the opportunity to provide quick buy-ups of tokens at the initial stage, so that they show rapid growth. In addition, there are a lot of scammers in the primary token placement market who just want to raise money and disappear.
In any case, do not allocate more than 10% of the total investment to risky assets. Experts will help to create a competent portfolio in which there is a place for stocks, bonds and several tokens.
The most notable cryptocurrencies of 2019
- Quant. It is based on the technology of interaction between different blockchain platforms. At the end of 2018, it cost 1.3 dollars, in February 2019 - 4.5. Now it has fallen to 2.1 USD, but this is not the first major collapse, so we can expect a new take-off.
- Repo.The project was primarily created to solve the problem of non-return of rented cars and the lack of payments from customers. It rose in price by 989% over 6 months, but fell twice in comparison with the level of March 2019. However, the coin shows high volatility, which is convenient for speculation.
- QUBITICA. Advances the philosophy of DAO, a decentralized company owned by all its employees, and decisions are made in a democratic process. It shows a very positive trend - since December 2018 it has grown tenfold and is still striving upwards.
The physical meaning of cryptocurrencies
Cryptocurrencies are virtual money, they cannot be touched or put into an envelope, cannot be credited to a bank account or put into a safe. There is only one way to store digital money - a cryptocurrency wallet. This is a program that stores keys for all transactions carried out, confirming your right to use money. The entrance there is closed with a password and, as a rule, two-step authentication, for example, through an account in Google.
Wallets can be both for one type of currency, for example, only Bitcoin, and multi-currency. Such functionality is offered by the services of Jaxx, HolyTransaction, Coinomi, Cryptonator, etc.
The easiest way to buy and sell cryptocurrency is a wallet. As a rule, it has the function of exchanging for ordinary money or other types of crypto. You can register on cryptocurrency exchanges and trade through their trading functionality. This process is no different from working with a regular exchange, except that these institutions are not regulated by law. There are no shock protection mechanisms that exchanges have learned after various financial crises. The rights of traders are not protected, the safety of the sites is solely on the conscience of their owners. The most famous brands in this area: Bitfinex, Bittrex, Binance, Polonex and GDax.
The lack of legislation and a system to protect cryptocurrencies from shocks make them an extremely unreliable way to make money. Reverse side of the coin: profit of 1000%. In other words, it is possible to invest in cryptocurrencies, this is not regulated by law in Russia and most countries, and the risks are high. You should not bet on such an asset and invest in it a significant part of the portfolio. Moreover, you should not count on such an asset in the long run: you need to enter and exit transactions quickly, within a few days.
Conclusion
- Cryptocurrencies can still generate revenue, and it's not just about Bitcoin.
- When choosing a token, emphasis should be placed on fundamental analysis.
- Do not invest in crypto assets more than 10% of the funds.
