Investing in Bitcoin and Altcoins: Better Late Than Never?
By now, I'm sure you've heard the story: if you had invested just $100 in Bitcoin on January 1st, 2011, it would be worth over $1 million today. By now, you've also seen the news articles of people striking it rich seemingly overnight, of 1000%+ ROIs, and of governments, business leaders, and celebrities diversifying their investments with cryptocurrency. And then, it hits you: FOMO, or the Fear Of Missing Out.
But you've also heard of the inherently volatile nature of the current cryptocurrency market, and the spikes and subsequent crashes. Have you missed the boat? Have all the profits and gains already been taken? Is it too late to invest in Bitcoin and altcoins?
Think Long-Term
Before investing in anything, having confidence in its long-term value is a must. Would you purchase stock in a company with poor leadership, dwindling revenues, lack of innovation, and no sign of improvement? Of course not. In this way, the decision parameters to invest in Bitcoin and altcoins are much the same. So, what is the long-term viability of cryptocurrencies?
In today's world, we've seen global trade and commerce reach all-time highs. The internet and easy access to connected devices have enabled products and services to be exchanged across continents at a volume never before seen in human history.
Yet amidst this incredible boom in e-commerce, modern monetary theory still powers an economy that is no longer backed by a gold standard. And since 1971, we've seen the effects of these policies play out, as outlined through a series of infographics on WTF Happened In 1971? and alluded to in David Perell's What the Hell is Going On? that reveal the disconnect between productivity growth and livelihood.
In an interconnected and global economy, the future lies in decentralized, immutable currency. Blockchain technology has the power to increase efficiency, security, and accessibility of commerce and transactions at scale. And with that in mind, the long-term viability of cryptocurrency looks promising.
Dollar Cost Averaging
Buy low, sell high? Easier said than done. In the post-mainstream world of Bitcoin with skyrocketing valuations, it's easy to believe the get-rich-quick ship has sailed. Well, it has. But that's okay when thinking long-term.
Could this be the height of the market in the short-term? Quite possibly. But considering the real potential for adoption and use at critical mass, Bitcoin has barely scratched the surface.
With this in mind, I believe embracing a disciplined approach for long-term profits is necessary for entry into the cryptocurrency market.
Instead of buying in with a lump sum at today's price, I schedule small, consistent investments each week or month despite its valuation at the time. Whether it's $25, $50, $100, or $1000, these weekly or monthly investments help to defray the short-term losses (and possibly short-term gains). But long-term, the real-world usage of cryptocurrencies will increase, and so will their value.
Eyes on the Prize
Keeping a level head in the cryptocurrency market is no easy feat. But keeping up to date with news, while also keeping everything in perspective, can help make blockchain currencies a worthwhile investment.
Ignore the fear, uncertainty, and doubt, and stick to your principles. Zoom out, and watch blockchain adoption increase over time. Cryptocurrencies are here to stay.
Disclaimer: The above references an opinion and is for informational and entertainment purposes only. It is not intended to be financial advice. All opinions expressed on this website should not be construed as an inducement to buy or invest in Bitcoin, altcoins, cryptocurrency, securities, or any financial instrument. Seek a duly licensed professional for investment advice.
Last updated on 30 April 2020.