Tag Archive for: cryptocurrency

What is a Cryptocurrency and is it a Good Investment thumbnail

Many people think that crypto is going to be the biggest innovation of our generation, while many others think it it simply a scam.

So, which is it?

Cryptocurrencies have been in the news frequently over the past few years, and more people are becoming aware of them every day.

In fact, over 30% of all U.S. adults now own crypto. However, despite their growing popularity and astronomical gains in value, many people still don’t actually understand what cryptocurrencies are.

In this blog post, I will share everything you need to know about cryptocurrencies, how they work, and whether or not you should invest in them.

 

Infographic What is Cryptocurrency and is it a good investment

What is Cryptocurrency?

A cryptocurrency (or “crypto”) is any peer-to-peer digital currency that uses cryptography to create and manage the money supply and confirm the transactions.

While Bitcoin (BTC) is the first and most well-known cryptocurrency, there are many others available, including:

  • Ethereum (ETH)
  • Ripple (XRP)
  • Cardano (ADA)
  • Solana (SOL)
  • The asset-backed cryptocurrency stablecoin Tether (USDT)

Most cryptocurrencies are decentralized systems based on blockchain technology, which enable transactions to be verified by the network without the need for central authorities, such as banks or governments — in other words, they are not subject to government or financial institution control.

The Difference Between Real Money and Cryptocurrencies

Real money, like the U.S. dollar, is fiat currency. That means it is not backed by a physical commodity like gold or silver but rather by the full faith and credit of the U.S. government.

In contrast, cryptocurrencies are decentralized digital assets not subject to government control or regulation. In fact, Bitcoin was created in 2009 as a peer-to-peer electronic cash system that could function without the need for a central authority.

Also, since cryptocurrency relies on public blockchains rather than banks, transaction fees are lower, allowing you to send funds across borders cheaply and quickly.

Blockchain: Proof of Work Vs. Proof of Stake

Most cryptocurrencies, including Bitcoin, follow a specific pattern called proof-of-work.

Proof-of-work requires miners to solve complex problems with large data sets to find blocks (a group of transactions) with rewards (typically the token).

The difficulty levels vary depending on the type of cryptocurrency, but some standard proof-of-work algorithms include SHA-256, Scrypt, X11, Ethash, Equihash, and Lyra2REv2.

Proof of work can necessitate a significant amount of computing power and electricity. After deducting the expenses of power and computing resources, miners may barely break even with the cryptocurrency they earn for validating transactions.

To limit the amount of power required to verify transactions, some have suggested the transition to the proof of stake verification method instead.

The number of transactions any user can verify with proof of stake is limited by the amount of crypto they are willing to “stake” in exchange for the opportunity to participate in the verification process.

Proof of stake is substantially more efficient than proof of work since it eliminates energy-intensive equation solving, allowing for faster transaction verification.

This is why Ethereum is moving towards the “Ethereum merge”, where it will switch from a proof-of-work to proof-of-stake system.

Is Cryptocurrency a Good Investment?

Since crypto’s arrival on the scene, many people have wondered if cryptocurrencies are viable as investments. Some experts say they will become a global phenomenon, while others say they are an investment bubble destined to pop.

The best thing about them is that once you purchase them, your online wallet gives you control over your assets without any third party being able to intervene. There are no intermediary collecting fees each time a transfer takes place between different digital wallets.

Another significant benefit of investing in crypto is the transparency it offers. All crypto transactions are stored on a public ledger. This means that anyone can view the transaction history of any given cryptocurrency. The identity of all the parties involved in each transaction is hidden, but we know who has made every purchase.

The consensus mechanism (e.g., proof-of-work) used to verify these transactions makes for an open, democratic system where no one party controls the entire blockchain.

Cryptocurrencies offer investors several other potential benefits, including the potential for tremendous growth, short processing time, fraud protection, and international acceptance.

However, there are also some risks associated with investing in cryptocurrencies.

Risks of Cryptocurrencies

Investing in any cryptocurrency comes with many risks, from outright fraud to exchange hacks. You may lose all of your investment or perhaps even more.

For example, Mt. Gox was a popular exchange for trading Bitcoin for fiat currencies like dollars or Euros until hackers stole $450 million worth of Bitcoin from users’ wallets! It shut down soon after, and today Mt. Gox has filed for bankruptcy protection.

In another case of fraud, CoinDash ICO lost out on $7 million in investor money after their site was hacked shortly before their token sale went live.

Another potential drawback is its volatility — cryptocurrencies carry a risk of big swings up or down in value, which means there is no guarantee they can be relied upon for long-term savings.

And since crypto values fluctuate so wildly — sometimes even more than once per day — they are unsuitable for most people’s needs as general spending money. They are better suited to speculative trading, much like stocks and commodities.

So even with the incredible volatility experienced so far and stories about crypto millions made or lost overnight, would a prudent investor still consider putting their money into the market?

Cryptocurrency might be a good investment for you, provided you are willing to take the chance and consider it a risky, high-reward gamble that can net you plenty of dough — but know that you can lose all of it, too.

Many people have lost thousands, or even millions, in cryptocurrency, so always ensure you are prepared to manage your investments before committing any significant amount of your wealth.

How to Start Investing in Crypto?

Many potential investors respond to crypto ads or private messages pushing “get rich quick” schemes.

Instead of making an impulsive purchase, you should use these steps to vet a cryptocurrency before buying it:

1. Research the currency.

Verify that the currency is legitimate, secure, and worth the money before providing personal or financial information.

Review the currency’s white paper.

Check the coin’s security ratings with Crypto Rating Council and CertiK, and use a third-party price tracker like CoinMarketCap to see how it has performed in the past.

2. Choose a platform

Which platform should you go with? It is dependent on how you want to use the currency.

Will you buy and hold? Will you make regular trades or cash out your cryptocurrency now and then?

Each platform charges a different fee for these activities — and some may even limit the type of transactions. Before making a decision, review the fees and limits, as well as the exchange’s security ranking.

I recommend sticking with the top few players in the market, which I have shared under the tools and resources tab.

Thing to Consider when Investing in Crypto

1. Make sure you have enough emergency savings to last at least six months.

Determine what constitutes your emergency funds — will it be six months’ worth of your expenses (for example, food, transportation, and entertainment), or will it be equivalent to six months’ allowance/salary?

Sorry for boring you, but with risk comes caution. Prioritize this and do not dive into something you do not fully comprehend.

You have heard about the one person who earned a fortune overnight with $1000, but you have never heard of the countless who saw their $1000 turn into $0.1.

2. Next, start small and manageable. Passive investing in ‘blue chip’ currencies such as BTC and ETH is safe.

Because of the volatility of cryptocurrency, this is also known as DCA (dollar-cost averaging), and you either average up or down.

A monthly budget of $50 to $100 is a great starting point.

You can also diversify your portfolio with other investments such as Exchange-traded funds (ETFs) and bonds.

Once you have more earning power, you can continue to allocate more. It can be more, depending on one’s current situation.

3. After establishing your passive investment portfolio, you can consider active investing.

Having the first two things mentioned above is critical to avoid crashing and burning. Again, start small, allocating no more than 10% of your risk tolerance to active investing.

To earn a yield on your crypto, you may look into crypto staking or other yield farming strategies. You may even consider performing leverage trading with your cryptocurrency.

These are all mid to high-risk alternatives, and you must be willing to lose them if something goes wrong.

Concluding Thoughts

Some people see cryptocurrencies as an investment opportunity, while others view them as a volatile gamble.

It all depends on what you try to get out of the market.

The cryptocurrency industry is so new that no venture has a guarantee of success or safety.

However, if you are looking for a high-risk-high-return scenario, investing in cryptocurrencies may be worth your time.

Personally, I think crypto is an exciting investment opportunity, but we should see it as a high risk, high reward type of investment.

This means that we can add it to our portfolio to boost our returns, but it should not form the bulk of your portfolio.

Now that I have shared all about cryptocurrencies as a potential investment asset, is this something you would consider adding to your portfolio?

And if you are already a crypto investor, how many percent of your portfolio have you allocated to cryptocurrency investments?

Let me know in the comments section below!

 

thumbnail the ultimate guide to blockchain and crypto assets

If you would like to learn more about crypto & DeFi, also check out: “The Ultimate Guide to Blockchain & Cryptocurrencies”

cmp ad 1

Last weekend, we conducted out first run of the “Crypto Mastery Program”, and it was a full-house turnout for our first batch of crypto enthusiasts!

Based on the feedback we got, this is the first and only fully comprehensive course on Cryptocurrencies in Singapore, which covers:

  • Fundamentals of Blockchain technology, cryptocurrencies, bitcoins, Alt coins, etc
  • Value investing strategies to find undervalued coins for long-term investment
  • Technical analysis & short-term trading strategies to capture smaller price movements, and to time the entry for long-term investments
  • ICOs (initial coin offerings) and how to profit from them while avoiding the scams
  • How to mine for coins with zero technical knowledge (includes free tour to mining farm)
  • How to create a diversified portfolio of crypto assets to ride this next big wave of wealth creation

This course is taught by 2 trainers:

  • Spencer Li – Self-made millionaire professional trader with 10+ years of experience, and specialises in technicals & price action
  • Ong Jun Hao – Crypto trader who made 100x returns in less than a year, and specialises in fundamentals & news analysis

Registration is open for 2018: https://wp.me/P1riws-78a

Crypto Mastery Program

Training Feedback from Attendees:

“Attended CMP on 2-3 Dec 2017. Great course with very resourceful contents, covered wide range of topic from Background, ICOs, Mining, Investing, Trading and Portfolio Allocations. Comprehensive explanation from both Spencer and Jun Hao on fundamental valuation and technical trading perspective. The course contents are suitable both beginners and advanced traders who are looking to step into Cryptocurrency.” – ZT

“Great programme! Really learned alot about cryptocurrencies. As a beginner, it really felt like I took a knowledge express train. Jun Hao & Spencer are also very willing to share their knowledge!” – Aw Jian Yang

“A useful start to those who want to learn more about cryptocurrency investment instead of jumping in blindly.” – Susan Tan

“SL & JH are well verse in their domain. For newbie/noob, it is 2 days well spent to get started in Crypto World.” – Gary Koh

“Great course! Provides a good foundation to understanding & trading cryptocurrencies!” – Ed

“Very informative, easy pace for beginners.” – Al

Opened my eyes to a whole new dimension on cryptocurrencies. Jun Hao is very knowlegeable on cryptocurrency.” – Eugene

“Jun Hao and Spencer are very good teachers, very clear in their explanation, very knowledgeable and professional. They selflessly share their knowledge with students. The course is very good and must attend for anyone interested in cryptocurrency investing and trading.” – Adrian

“Great program for those who are interested to know crypto and want to profit from it. The program content is very useful for both beginner and advanced traders. Definitely must attend couse.” – Kwaw Zaw Than

“A good framework for people who intends to dive into the crypto world, be it investing or trading. The course covers fundamental, technical, behavioral and news analysis, which makes it comprehensive. Thank you Spencer and Jun Hao for the wonderful sharing.” – Darrell Su

“This course is very informative. The instructors are very knowledgeable and open to share their trading experience and tips.” – CW Tay

Highly recommended to those who wants to know what is crypto/invetsment/mining.” – YC

I would recommend this program to friends who are keen in trading/investing into cryptocurrencies.” – Goh Lily

“Attended the first cryptocurrency course and it was extremely informative for a complete newcomer such as myself. The theory behind it was in-depth, coupled with practical examples which helped consolidate what we learnt. Turns out cryptocurrency isn’t as complex as is looks and sounds. Both spencer and jun hao were forthcoming, constantly highlighting the pitfalls of dabbling in cryptocurrencies. Great introductory lesson for those just starting out. What i liked was also how the tools could be employed across all financial instruments will also benefit me as an equity investor.” – Wei Keong

 

Crypto Mastery Program 2

Crypto Mastery Program 3

 

Crypto Mastery Program 4 Crypto Mastery Program 5(click here to see full album)

Register Early to Avoid Disappointment!

All of slots are closed for 2017, but we have opened new slots for 2018, so those who are keen can start registering now to avoid disappointment, as our last course was sold out within a week after we opened the registration.
Registration link: https://wp.me/P1riws-78a

Good luck to all future “Crypto Millionaires”, and see you all at the top! 😀

bitcoin

bitcoin

Firstly, what is Bitcoin and how does it work?

In simple terms, Bitcoin is a cryptocurrency, which is essentially a currency that is not owned by any particular group or person. It allows fast and cheap transactions, and the more people start to use it, the more its value increases. In fact, if you had bought $5 worth of Bitcoins 7 years ago, it would now be worth $4-5M.

And bitcoin could still be in its infancy, since its number of transactions are only a fraction of what the banks and other financial institutions are currently doing. Which means there is a huge potential for more upside. So, how can we get a share of the pie?

1. Investing in Bitcoins

This is the most common way for retail investors to get in on the action, by simply opening an account and purchasing the coins. Some of the common platforms are Coinbase and Coinhako, and it is not hard to open an account and take a nibble. The challenge here is making sure you do not end up buying at the high, so take advantage of price dips (usually happens when there is some negative news about cryptocurrencies) to accumulate more coins.

2. Trading Bitcoin Derivatives

If you are more interested in profiting from the short-term movements in Bitcoin, then you can use derivative instruments that track the price of Bitcoin, for example products like CFDs (contract for differences). The price of the derivative will track the price of Bitcoin, moving up and down in sync with the actual price of Bitcoin, so by buying or selling the derivative, you can profit from the price moves in Bitcoin without actually buying or owning Bitcoin. To do this well, you will need to know how to read charts and price action.

Sharing live on #cryptocurrencies like #bitcoin and #ethereum ? Are you ready for the next big thing? #visionaryinvesting

A post shared by Spencer Li ?? Synapse Trading (@iamrecneps) on

3. Lending out Bitcoins

Lending is perhaps the oldest way to use money to make money. Basically, you loan out money to a relevant party and they pay you back, with interest. Interest rates will vary with the risk involved. If you get collateral in exchange for your loan, interest rates will be low. No collateral means higher risks, but it also means higher interest rates. So if you have already purchased some Bitcoins, you can loan them out for some extra interest instead of just keeping them in your account.

4. Bitcoin Mining

Bitcoins are created through solving complex algorithms that create blocks that are added to the public ledger. The public ledger is the history of all transactions conducted through bitcoin. Basically, miners build the public ledger and allow the whole bitcoin system to function. As they create new blocks, miners are rewarded with new Bitcoins. This encourages more miners to get in on the action, which allows the Bitcoin community to grow. In the past, people could use their home computers to mine Bitcoins, but over time mining has become more difficult as the algorithms have become more complex. Now, you’ll either have to buy a specially built mining rig, or join up with a Bitcoin mining pool that harnesses the power of multiple computers.

5. Bitcoin Arbitrage

This is perhaps the least common way of making money from Bitcoins due to its difficulty level. If you have started dabbling in Bitcoins, you might have noticed that the prices of Bitcoins can vary a lot across different exchanges. For example, if the Bitcoins in Singapore are cheaper than the ones in China, you could buy some Bitcoins here, transfer them to China, and cash them out over there. The challenge however would be bringing your money back to Singapore, and also you would need a bank account in China. But some people have managed to come up with creative solutions around theses problems.

2017 08 25 17.17.38

Recently, Bitcoin prices have crossed $4,800, and year-to-date, its price has surged nearly 400%, making it one of the best investments for the year. And it is not alone.

Other cryptocurrencies, such as Ethereum, have also been making new highs, and many more new products are hitting the market every day.

Which is why many of my friends, followers, and students have been asking me a lot about theses products, and most importantly, “when is a good time to buy?”

 

Sharing live on #cryptocurrencies like #bitcoin and #ethereum ? Are you ready for the next big thing? #visionaryinvesting

A post shared by Spencer Li ?? Synapse Trading (@iamrecneps) on

When I first started trading, I was mainly doing stocks and CFDs, and I developed my “15 minutes a day” price action strategies for these. And as I expanded to new markets, I was pleasantly surprised to find that the same strategies worked perfectly well. To date, I have used them successfully on forex, futures, options, and most recently, on cryptocurrencies.

This means that for a new product like Bitcoin, which behaves very similarly to IPO stocks or some less popular penny stocks, its behavior can be best understood by studying its underlying price behaviour.

Many people who take one look at its prior meteoric rise will immediately come to the conclusion that is it near its high and too late to buy. But many people probably thought the same way about Apple and Tesla’s stock a few years back.

2017-08-25-17.17.38-1030x773

Hands-on analysis and study of Bitcoin chart for precise timing (at my new cafe)

 

This means that there is potential for cryptocurrencies to go much higher, but how do we time our entry into something that is moving so fast?

Turns out we do have the perfect strategy for that, which is similar to the strategy we use to enter fast-moving counters in times of a strong trend. In fact, I pointed this out using the chart of Bitcoin during my last few workshops, and also at Invest Fair.

synapse-network-bitcoin-040917

Snippet from the “Synapse Network” private forum (posted 24 August 2017)

 

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Bitcoin chart today (04 September 2017)

 

How far can this trend continue to run?

To be honest, no one can really tell, but all I know is that whenever there is a good buying opportunity, I will continue to add more positions to ride this strong trend until it ends. And when it does, I will get ready to short it down as well. 😀

But that is a story for another post.

Till then, trade safe, and aim big. Cheers!