A potential client contacted me and asked if she should start with cryptocurrency Investing. She saw that bitcoin was approaching 50k per share, so it may be time to get in. I ask her what she was currently investing in. She said nothing.
Whoa! All sorts of red flags went off in my head.
Even though she was a high-income professional who worked long hours, she hadn’t taken the time to understand basic equity investing. I told her it would be a good idea if she started studying low-risk, low-cost equity investing first.
Cryptocurrency has not been around for a long time, and it can be very confusing for a new investor. Some older seasoned investors even think it is a scam. Cryptocurrency is a type of virtual currency.
Call it what you want, you must understand what simple investing is first, and your available options.
Why was she confused about Cryptocurrency?
There are many different cryptocurrencies, this is one reason beginning investors are confused about cryptocurrency. One is bitcoin, which is number one. There are also many places to buy and manage cryptocurrency like Coinbase Global.
The most confusing part about cryptocurrency is the constant media scrutiny of this type of virtual currency. It is a digital currency, not actual coins or dollar bills.
There are many conflicting ideas about the different types of currency also.
The confusion comes with the massive amount of cryptocurrency media information. Some say it is the next best thing to apple pie. Some say it is a massive fraud.
Is Cryptocurrency a paper currency or virtual currency?
Many seem to think it is terribly confusing because it is not an actual coin or paper currency. It is a type of virtual currency. That in itself makes it confusing. In addition to that many individual organizations are creating their own cryptocurrency.
There are thousands of different cryptocurrencies, here is a list of the top 10. Bitcoin is one of the first and number one. Just over 10 years ago it was 50 dollars a share, now it is over 43k dollars per share.
- Cryptocurrencies (courtesy of CoinMarketCap)
Early Investing in Cryptocurrency, Like Early Internet Investing
Early investors in cryptocurrency, who took the chance and got in when the cost to invest was low, are benefiting handsomely now. In my humble opinion it is still like early internet investing, a lot of companies did not make it, and some did. Many got rich when the dusk settled on the best companies such as Amazon, Google, Microsoft, and Apple.
Proceed with extreme caution if you are interested in cryptocurrency, it is not for the faint of heart. You must do your homework, read, and research everything you can find about cryptocurrency before you get started. It could take months to understand the basics of cryptocurrency. Also, there are many fake cryptocurrency companies, so buyers be aware.
And of course, make sure that you are invested in low-risk low-cost investments first, which have been around for decades, so you can protect your hard-earned money. Understand both stock and mutual fund investing before you think about cryptocurrency investing. Know how to invest properly in your first home.
Investors who were successful with early internet investing first invested in simple low-cost, low-risk investments, and secured their first home usually. Know how virtual currency works before you get involved with cryptocurrency.