How much am I willing to invest?
With the new hype of cryptocurrency and all the news buzzing around what’s great and what’s not, how does the average investor know what is right or wrong information?
We cannot really attempt to “try” out anything because it would be too late. And if we speculate about the potential, we will also be too late. On the flip side, if we invest and have it crash like the Tulip mania during the Dutch Golden Age or the housing crisis of 2009, then we will be shafted for our investments.
There is all this information about new technologies and brilliant developers that created this currency and how it will be the next best thing. Great and so is a hundred other teams trying to make their currency catch on fire.
There will always be another “new thing” and a new technology that would allow something to have a competitive advantage for a while. Great then what? That is only for a short-term advantage. If this currency wants to be around for a long time, it should be ready to adapt.
Personally, I have invested in cryptocurrency but only to an extent I am willing to lose. Blocking out all the news about blockchain, smartcontracts, etc. You really need to ask yourself if this is something you believe in, not just following the hype. Some understanding (or money)is needed otherwise, you will probably lose all your money.
But ultimately, this is another type of investment where you can only predict as deep as your pockets.
I also feel that there are some standard guidelines before you dive deep into the cryptocurrency hype or any type of investment:
Don’t be greedy – It is going up, up up. But for how long?
Invest the amount you are willing to lose – This will depend on your risk level.
Follow #1 AND #2