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How To Become Rich by Investing in Crypto – GOBankingRates

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There’s no denying that some cryptocurrency traders have become millionaires thanks to their successful investments. What’s not as often discussed is the great number of people who have lost significant sums trying to become rich by investing in crypto.
See: 4 Best Places To Buy and Sell Cryptocurrency
Find: Cryptocurrency Jargon: A Guide for the Crypto-Curious
Unless you have an enormous risk tolerance, investing in cryptocurrency may not be a good choice for you. However, if you’re the type of investor who is willing to shoulder enormous risk in the hopes of becoming rich, you should at least consider employing some strategies to minimize risk while still offering significant upside. Here are a few ways to accomplish that.
If you’re a believer in the long-term viability of cryptocurrency, you should treat your portfolio like a portfolio of stocks. In other words, when there’s a significant dip in the crypto market — which happens quite regularly — that is your opportunity to scoop up additional coins or tokens. If you select cryptos that prove to be long-term winners, adding to your investment when prices are low can be a great way to build wealth.
There are literally thousands of cryptocurrencies you can trade, but many, if not most, of these won’t ever amount to anything. Although you may get lucky and make money trading any crypto, if you’re looking to build long-term wealth, you’ll have to invest in cryptos that have staying power.
Read the whitepapers on any cryptos you plan to invest in to see how they are tied to the blockchain, what their utility is and how they are better/cheaper/faster than any of their competitors. This is the best way to filter out the long-term winners from the losers.
Careful: 5 Crypto Scams Investors Should Be Aware Of
By their very nature, cryptocurrencies are speculative investments. If you risk your whole portfolio on a single crypto, your risk increases exponentially.
Just as you should with a stock portfolio, diversify your crypto holdings among the handful that you have researched that have long-term viability. This should increase your chances of finding long-term winners and minimize your risk of blowing up your entire portfolio.
If you’re looking for the highest risk/reward option when trying to get rich via cryptocurrency, consider day trading. Cryptocurrency is so volatile that in the course of even a single day you can often earn significant sums. Just realize that it’s also highly likely that you’ll lose a significant amount of your investment.
Stocks are considerably less volatile than cryptocurrency, yet most amateur day traders end up losing money. As crypto is even more unpredictable, the same fate awaits most crypto day traders. But, if you have insight as to the trading patterns of a particular crypto, you may be able to have enough of an edge to make some gains.
Look: 10 Cheap Cryptocurrencies To Check Out
If you’re looking to “earn” your way to riches in the crypto space, rather than speculating directly in the market, one option is to become a miner. Crypto miners are rewarded with coins by validating transactions on the blockchain. To do so, they must solve extremely complicated mathematical equations, which requires extensive computing power.
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These days, most mining is done by companies with vast server farms processing equations 24/7, making it hard for an individual miner to compete. But one way to participate is by investing in a mining pool, in which a large group of investors pour their money into a vast mining operation, which has more chance at succeeding. Just remember there are no guarantees in the mining space either.
Forks and airdrops may not make you rich overnight, but they’re a great way to accumulate excess cryptocurrency, which can help you build long-term wealth. Airdrops are essentially promotions of new cryptocurrencies that developers release to spread awareness and recognition. Forks occur when an existing cryptocurrency changes or upgrades its protocol, which typically grants existing holders free coins on the new or updated network.
If you can participate in either of these handouts, it’s a great way to get free cryptocurrency.
Regardless of the steps you take to minimize your risk, investing in cryptocurrency is an inherently speculative venture. Some well-known investors, including billionaire Warren Buffett, see no utility at all in cryptocurrency, while others think the entire asset class will ultimately crash to a valuation of zero.
While all of these strategies can help reduce your risk, you should only invest money in cryptocurrency that you are willing to lose. Hopefully, solid research and a methodical investment strategy will help you become rich by investing in crypto, but be sure you fully understand the risks involved before you get started.
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