Where is the cryptocurrency world headed? Bitcoin and others are down significantly this year. However, practical uses of cryptocurrencies with NFTs, DeFi, the Metaverse, and smart contracts are entering the realm of reality. Cryptocurrencies have been shown not to be hedges against inflation or stores of value as the stock market falls and inflation rages. Anyone who bought Bitcoin when promoters said it would hit $100,000 by the end of the year was badly burned. Nevertheless, there is a future for cryptocurrencies and the task at hand is choosing crypto investments that will prosper in the new crypto era.
Choosing Crypto for the Long Term
Moving away from speculation in the crypto world and into long term investments there are a few questions to ask yourself. What sort of risk tolerance do you have? In that regard, how much can you afford to invest in a potentially volatile investment? Then ask yourself why it is that you are buying a cryptocurrency. The answer should be that you believe you can make money by picking the right cryptocurrency because it is positioned to do well over the long term. Then ask yourself how you are going to go about investing in terms of amounts invested and frequency of investments as well as keeping track of your keys so that you don’t lose everything due to forgetfulness. Once you have thought this through, which cryptocurrency do you choose? There are thousands to choose from.
Engines of Profit in the Crypto World
When Bitcoin was invented, it was meant to be a means of exchange in the digital world, free of government and regulatory oversight. The huge increases in value of the cryptocurrency led to rampant speculation as well as taxation of capital gains and attention from regulators. Going forward Bitcoin and others will assume their places as a means of exchange in the digital world with decentralized finance with things like smart contracts, non-fungible tokens, and activities in the Metaverse.
Your Crypto Investment Strategy
Cryptocurrencies may be a brave new world but the general rules of investing apply as much to Bitcoin and others as to stocks, real estate, or investing in a business. Investopedia discusses investment strategies. Read what they say for a good starting point. No matter if you are willing to pursue an aggressive and risky strategy or a conservative and safer strategy, knowing your investment is crucial. Warren Buffett is a famous investor who assesses intrinsic value of stocks before investing. With this approach the investor investigates the likely return on investment in the coming years, uses that to determine a fair price for the investment, and only invests when profits are likely for years and years. Buffett only invests in companies when he fully understands what they do, how what they do makes money, and how their business plan will continue to make money for years and years. When looking at cryptocurrencies that are tied into NFTs, DeFi, or the Metaverse it is a good idea to adopt the same approach and invest where profits are likely now and forever.
Practical Aspects of Crypto Investments
The majority of investors have “day jobs.” They want to put their money to work for a rainy day, a secure retirement, and to get rich. A practical approach to investing is called dollar cost averaging. Every paycheck, month, quarter, or year invest the same dollar amount. When stocks or crypto are high in price you will not be buying too much and when prices are low you will be buying more. Start early and continue to process for years with a good investment and you will be on your way to financial security.
Choosing Crypto Investments – SlideShare Version
Choosing Crypto Investments – DOC