Long touted as just hype, investors are still making money from bitcoin. Here’s what they know and you don’t.
Making money off of bitcoin may not be as simple as it once was. In 2009, when the coin was released, it was selling for basically nothing. In fact, up until 2011, you could snag a full bitcoin for less than a dollar.
Which means if you spent $1,000 in bitcoin in 2011- you’d have millions now. In today’s market, you’d need a bit more start-up capital than just that grand to really make some serious money in bitcoin, but it doesn’t mean that this widely embraced cryptocurrency isn’t still churning out millionaires. They just happen to know things that you don’t.
For starters, using a known exchange like Bitvavo could save you a bunch of cash on fees. These exchanges are also often geared towards newbies in the market, making them rife with great information and deals. Beyond the exchange, there are five basic things that every crypto savvy traders know well.
Bitcoin is Speculative
Sure, there’s still a number of stores and businesses that will accept bitcoin in exchange for goods and services. Since the FBI shut down the infamous “Silk Road”, people are no longer hoarding coins for heroin, but some are still using them for legal exchanges. However, not the bitcoin millionaires.
Anyone making money on bitcoin will tell you that using it as any sort of currency will leave you seeing a loss of value. That’s mostly because the price of bitcoin is so incredibly volatile, but more on that later.
While hoarding all your coins isn’t a great way to get rich quick, engaging in some speculative day trading could well be. Because, essentially bitcoin works as a speculative value- but for geeks. Where many people consider stocks & bonds as the gold standard for getting gold- any IT nerd will readily admit that bitcoin is even better.
Bitcoin is Highly Volatile
The reason that bitcoin is such a lucrative investment for some is largely because of its extreme volatility. The market price swings of bitcoin are still, over a decade later, wild.
This means that if you can stay on top of market trends, and get a solid feel for the largely irrational behavior of the coin- you may be able to make a mint. Prices crash and rebound, and then surge, rather quickly- far quicker than the prices of traditional stock values.
So taking some risks can really pay off in a short amount of time if you’ve got a good feel for bitcoin’s behavior. However, the downside to all of this is that- once again- bitcoins value is speculative. Which means the bottom could completely fall out tomorrow- or the market could explode. The thing is, no one really knows.
Bitcoin is Inflation Proof
Unlike fiat currencies and a number of different stock options, bitcoin is largely immune to artificial inflation. Should the dollar take a slump, the US government can just print more money. Improving circulation, but effectively watering down its value.
With bitcoin, there are only 21 million coins in existence. There will only ever be 21 million coins. No one can make more, none can be destroyed. Lost? Sure. Stolen or hoarded? Absolutely. But never created.
This means that bitcoin value is fully dependent on the concept of artificial scarcity. Something that makes the coin susceptible to whale investors, massive coin holders who can influence the market similar to that of insider trading. However, it behooves these behemoths to keep bitcoin prices on the up and up, so whales generally only serve to boost bullish markets.
Mining Isn’t Worth It
There are two ways to accrue bitcoin: by trading it or mining it. Back in the day, bitcoin mining was a fairly lucrative deal. One only needed to set up their computer to be accessed by the blockchain and let the processor do its thing. In modern times, however, the cryptography has gotten so sophisticated that purpose-built computers have been made to solve these problems more efficiently. However, these processors are wildly expensive and require a massive amount of energy and time to run.
Which means it’s unlikely that you’ll receive enough bitcoin to cover the costs of your machine and the electricity it would use. So trading has become the best way to make a few bucks on bitcoin. But don’t just dive in and start buying. Pay close attention to market prices and behaviors and always listen to any advice your exchange rolls out.
Use Bitcoin to Speculate on Other Cryptos
Perhaps the best way to make money off of bitcoin right now is by using it to purchase tokens and coins for up and coming cryptocurrencies and blockchain technologies.
For so many of these emerging networks and technologies, you can easily get in on the ground floor that you missed out on with bitcoin. There are literally thousands of different types of coins and tokens worth speculating on. Some of the emerging technologies are incredibly promising. If you do your research and choose wisely, there’s no telling how much a bitcoin can make you in the future.
