Opinion Wisdom and Pitfalls of 2021 Individuals Bitcoin Investment

Wisdom and Pitfalls of 2021 Individuals Bitcoin Investment

December 26, 2020

With only days remaining in 2020, it is hard not to notice the fact that cryptocurrency markets took to the sky in recent weeks. This period was marked not only by the breaking of the previous bitcoin records on several occasions, including that of 26,000 USD, but also a dramatic shift in the way the cryptocurrency space is perceived by the general public. Now, like it or not, millions across the world are thinking about Bitcoin in a different manner. That applies not just to the cryptocurrency network in particular, but the entire space of crypto and its long-term value that it might provide them with.

Furthermore, that is the reason why so many people are also thinking about the possibility of investing their own individual savings or liquid funds into one or more cryptocurrency tokens. Like always the wisdom and the potential pitfalls of that decision is something on a very loose scale. However many are noticing that it is becoming increasingly difficult to simply ignore this possibility. So, in the coming 12-months is the decision to either invest or to stay out of the crypto market a real dilemma or simply one more aspect of regular investment headaches many experiences when they want to enter a particular domain? Here is the breakdown of that answer and its crucial factors that still make it a unique process when compared to the traditional investment opportunities.

Earning Money Fast

There is an old notion in the domain of investment and stock trading and it states that dumb money follows start money. In other words, when a person who otherwise does not follow the stock market might decide that now is the time to invest, chances are that the same moment would be one that any actual opportunity already passed. In other words, the influx of investments that follow any single previously successful one will likely lead to the loss of money. In 2017, that notion was demonstrated clearly enough. Back then, a huge number of individuals who had very limited knowledge of the digital currency field – or even not any knowledge at all – decided to place their money in a particular token.

To make things worse, the notion that bitcoin is all bought up, whatever that actually should mean was also ginning in relevance. People decided that BTC token investment has passed with the same digital currency being on the top of its record in 2017, so they actively began searching for other locations for their funds. That did not include only other top digital currencies like ethereum, but novel networks including tron or cardano tokens. The result was devastating once the Crypto Winter began and most sold off their holdings with substantial losses, learning once again that there is a big obstacle to the possibility of earning a lot of money fast and without huge risks.

Saturated Market

The idea that bitcoin, for example, is too expensive for an ordinary person to invest in it is probably the best example of a truly systemic inability or lack of effort to understand both cryptocurrency and trading as well. It is most similar to the notions that are often repeated in the small entrepreneurial domain where people tend to shut down any straightforward idea as something that is located in an oversaturated market. For example, a person might want to start a YouTube channel but others in the same venture or startup community would comment by saying that this market is already too tightly packed to allow anyone to succeed.

That mindset is reminiscent of the stars-or-bust mentality where any venture needs to become worth at least a million USD or it is deemed pointless. In cryptocurrency investment as well, no one who does not own a number of whole BTC tokens seems to be worth mentioning. Yet, anyone can just as easily buy 0.01 BTC and see their fiat money double in value over a particular point in time. The moment when someone takes 50 USD and invests it into bitcoin just to become a millionaire in a decade is truly likely over. However, that does not detract from the overall ability of the same market to generate profits for those who are engaged in it.

No Debt

The creator of the ethereum network had an incredible piece of investment advice for anyone who is thinking about investing in cryptocurrencies. It added up to more value than many other, much longer discussions about where and how should a person put their fiat funds into crypto. He simply advised that no one should consider taking a bank loan to fund their cryptocurrency investment.

This seems like common sense, but even he admitted that he sold half of his substantial BTC holdings at some point to make sure he has enough fiat funds to never again be close to bankruptcy. That is the direct advice from a man who made ethereum, the second-biggest crypto network in the world, and who is one of the most prominent advisors when it comes to all things crypto, not just ethereum. It is likely that many today would be a lot better off if they knew these words of wisdom in 2017.

Risk and Reward

Just like in esports and many other facets of the modern digital domain, there is no absolute assurance when it comes to any kind of investment or business decision. The same has been, arguably, true ever since time began, but today, thanks to the interconnected nature of reality, the same concept is even more hyperbolized. That is why anyone looking to invest in crypto must realize that chances are there for them to lose that money.

Even bigger chances are that they might want to turn their holdings into fiat and find that at that particular moment, they lost half or more of their investment. That is the reason why any crypto investment has to take on the form of any appropriate stock, commodity, or security investment. In other words, people have to invest in crypto in 2021 only the money they can easily gamble away and then fully compensate. Anything else could turn into nothing more than a blind gamble.