everything you need to know about crypto (5 minutes or less)
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Today’s issue of The Profit Zone is about a space that gets a lot of love but also a lot of hate. A space people have many different opinions on and can’t seem to figure out.
In this issue, I’ve invited my friend Martin Dasko to come and write about crypto. But more importantly, what you need to know about investing in crypto, the scams attached to it and if it’s even worth investing in.
Let’s dive in.
What you need to know about investing in crypto… (Ft. Martin Dasko)
“This guy became a DOGE millionaire.”
“They keep quitting their jobs after putting $5,000 into a meme coin.”
During the last few years, we’ve seen many ridiculous success stories pop up about cryptocurrency and the returns that people have seen. You can’t scroll through social media without hearing about some absurd crypto success story.
This leads to a few questions…
What’s the deal with cryptocurrency?
Is cryptocurrency worth the hype?
Is there really money to be made in crypto?
There are people who invest in crypto because they believe in the utility of the coin and the functionality of a digital currency. Then there are other folks who invest in cryptocurrency because they believe that this is the key to riches. They see it as an investment that’s going to provide astronomical returns.
The gains in cryptocurrency are like the stock market on steroids. To be quite honest, getting into cryptocurrency almost destroyed my expectations as an investor.
You’ll see a coin go up 100x in a matter of a few days, but when your stocks go up 5% in a week you tend not to get as excited. With that being said, you don’t have to worry about your dividend stocks crashing on a SUNDAY NIGHT!
Here’s exactly what you need to know about investing in cryptocurrency…
Crypto is still a volatile investment
Go through any price chart and you’ll see some wild swings. A friend recently purchased some Ethereum and then it shot up 60% in a week. He was clearly loving crypto at that point. However, the person who bought it at $4,000 isn’t too excited about the price falling to $2,000.
Beware, crypto is a volatile asset and there are some major swings at random times.
There are many scams in the crypto space
There’s always someone trying to sell you the dream or looking to promise you absurd returns in the crypto space.
I follow this one crypto guy online who’s always bragging about his wins. He talks about how he made 200x and so on. I don’t hear him mentioning how his Luna went to zero (look up the story of Luna and that entire disaster).
How can you get scammed in crypto? Here are some common examples of this:
Pump and dump - Whales/rich people/scammers will promote a coin to make it go up in value only to sell it at the top.
Rug pulls - This is where the coin just disappears.
Random celebrity endorsements - Many celebrities will promote coins in exchange for payment. As a general rule, I don’t recommend investing in any crypto that’s promoted by a random celebrity.
If you Google “crypto scams” you’ll find many horror stories about people who lost their life savings in one of these schemes.
There are different ways to make money in crypto
While some investors hope that the price of a coin will go up, there are a few other ways to make money from crypto.
Staking it - You take your crypto off the exchange for a set percentage. Some platforms like Binance will offer you fairly decent returns (easily over 10%).
Mining crypto - You can mine your own cryptocurrency.
Promoting it - You can promote crypto since most platforms offer some sort of an affiliate program.
I’ll be brutally honest: mining crypto is a full-time operation and very few folks will actually make money with this. Staking crypto is worth it if you find some decent rates. Promoting crypto is a worthwhile venture if you have a huge following.
The most common way to make money from crypto investing will be to buy low and sell high. I personally only invest in the main forms of cryptocurrency (Bitcoin, Ethereum, and a few other ones).
The most promoted way to make money from crypto will be through buying meme coins/shit coins. These are coins like Safeman or Doge that get hyped up through social media. Just like Elon Musk promoting Doge.
Your risk tolerance is often challenged as a crypto investor
The weirdest (and most challenging) part about the crypto market is that it never closes. When I first started researching crypto, I was shocked by the swings that would occur on a Sunday night. You don’t get any rest from crypto and your risk tolerance will be challenged on a daily basis.
With all of that being said, there’s one question we have to address…
Should you invest in crypto?
It’s worth looking into this technology. We can’t ignore that digital currency is here to stick around in some form for the foreseeable future. We also can’t ignore that many scams are going to pop up.
I just want you to remember that when someone promises you 100x returns on a coin, this investment could just as easily drop to ZERO.
High risk = high reward.
Here’s how you can start investing in crypto right now:
Look at the price chart of any coin. Can you handle these swings? If yes, continue.
Invest a small amount through a trusted platform. Start small and only buy well-known coins.
Don’t chase ridiculous returns. Don’t get caught up in the hype.
Learn more about cryptocurrency. Keep on learning more about digital currency.
Stay safe out there!