Kia Ora! Welcome back.
I've had a lot of questions regarding NFTs, crypto, bitcoin, etc.
So, What is a crypto currency?
Crypto currency is a virtual currency which is based on a ledger which is decentralized and secured by cryptography. Currency is just a medium of exchange. Back in the day we used to trade kai from our maara kai for pig from the uncle. It's about sharing value. Today, we use cash or internet currency. Virtual currency however, is something which isn't real. It is digital and a digital form of trade. When bitcoin first started, people were skeptical and did not believe that it would actually be used. Crypto is essentially a big spread sheet. This spreadsheet shows who owns what. Bitcoin is a giant spreadsheet which holds all of the information regarding how much bitcoin they have brought and sold. This is a ledger system controlled by one entity of centralized authority. Everything is in some way controlled by a centralized authority such as banks etc. However, with crypto it is decentralized. It is being maintained by millions of people all around the world, through their computers. Only the sender and the receiver can read the transfers which are 'cryptography'.
Elon Musk says that people should not invest their own lifesavings in crypto.
"If you wanna sort of speculate and I don't know, there is a good chance that crypto is the future currency of this earth - and then it's like which one will it be and maybe it will be multiple"
NFT stands for Non Fungible Token
An NFT is a unit of data which is stored on a blockchain. It can be sold and traded. NFTs claim to be more authentic because they have a 'certificate of authenticity' or a 'proof of ownership'.
There are different ways to make money through crypto. Like stocks, you can hold them, trade them, day trade, invest for the long term etc. Here are some of the ways in which you can make money through bitcoin:
Mining. It is one of the best methods of earning a lot of money with Bitcoin. ...
Buy & Hold Bitcoins.
Accept Payments in Bitcoin.
Earn Bitcoin by becoming an Affiliate.
Lending Bitcoins.
Micro Earnings.
Trading.
In total, more than 5000 cryptocurrencies are being traded with a total market capitalization worth more than $200 billion. However, the top 3 cryptocurrencies that are considered most powerful include:
Bitcoin with a market capitalisation of over a billion dollars
Ethereum with a market capitalisation of close to 400 million dollars
Binance coins with a market capitalisation of around 100 million dollars
Bitcoin is the biggest, but it's also the first Cryptocurrency introduced in the market. It's hard to tell though if people are buying bitcoin because of the rave or because of it's actual value. Bitcoin has been around since 2009.
One of the best methods to make money through cryptocurrency is by mining bitcoin. Your earnings are solely based on the plan you have chosen and the electricity bill raised at the facility where the cloud mining service is based. The only thing required is the knowledge and proficiency before you dive into the pool and pour your money into a mining company.
Please, Always ensure to verify the credibility of the cloud mining company before investing your hard-earned money.
Another way to make money is to buy and hold. Buying and holding is when you buy crypto and hold it until it reaches an increase of which you would sell it, and make a profit.
Some businesses take crypto as a form of payment which is another way to earn an income through crypto.
One way others make money through crypto is by advertising it, using affiliate marketing, etc.
You can also day trade crypto so for example buy it in the morning and sell for higher price. This takes a lot more research and skill than some of the other options.
There are also a few things to consider when analyzing the price of crypto:
Supply: Bitcoin has around 21 million at its supply. If the supply of bitcoin gets maxed out, then the price of bitcoin will increase in value.
Integration: If bitcoin is integrated world wide, more people use it then the value will increase.
External Factors: If laws change, security breaches occur then it could either become unlawful or more regulation will take place making it harder to use. Alternatively, it could become used more and could be seen as a safer option. It's hard to predict.
News and Media about crypto influences it's value.
Prices of Cryptocurrency since April 14 2021:
So, now that you know the basics of crypto and how different things influence the value of it, I guess deciding whether or not to invest in crypto comes next. As always, I am not qualified in finance and I am not a financial advice, so please seek your own financial advice before making any financial decisions. I'm sharing my own experiences but am not giving advice.
So, Important things to consider:
How diverse your portfolio is
So, 1. How diverse is your portfolio?
Diversity of your portfolio is exactly the same as real life. Diversity of people allows for more growth, better ideas being circulated, and more friends which are different. Same with investing: a diverse portfolio mitigates risk which in turn allows you and your portfolio to grow more.
If you have 100k invested, you don't want it all to be in crypto. I'm not saying this because I don't like crypto or something, I'm saying this because no matter where you are investing, it may cause issues to have 'all of your eggs in one basket'. What this means is that if someone steals your basket, you'll have no eggs left. In investing, if crypto decided to plummet and no one uses it anymore - the issue if all of your money is here is that your whole portfolio will be wiped out. Alternatively, if you dabble in different investments and have small bits in:
property
stocks
crypto
business
assets
The benefit of having a diverse portfolio is the safety which this provides.
This post was merely an overview for absolute beginners on what crypto is and how it can create money for you. Please drop a comment below if you would like a part 2. on How to invest in Crypto.