Bitcoin and other cryptocurrencies are the center of many conversations these days, from TikTok to the halls of Congress. But, many people are still confused over all of the attention crypto coins get. In an attempt to demystify the topic, we’ll delve into both the psychology and practicality of Bitcoin.
Part of the Appeal is That It’s Trendy
Celebrities ranging the gamut from Paris Hilton to Floyd Mayweather have extolled the virtues of Bitcoin. Kanye West even briefly launched his own crypto coin, Coinye. There are also countless TikTok and Twitter influencers promoting various coins. Celebrities have followers who follow their lead. Celebrities are trendsetters who dictate what is popular.
Also, cryptocurrencies have been, up until now, an underground culture. Once seen as a way for drug dealers to launder money, Bitcoin maintains a certain outlaw mystique despite going mainstream. When you buy crypto, you are buying into an underground scene.
In short, for some people, the cryptocurrency culture forms a part of their identity. It has a language all its own, and the volatility is certainly a thrill.
Bitcoin Provides Hope to the Hopeless
When people read the headlines about “instant Bitcoin millionaires”, they sometimes react in the same way as if cryptocurrency was the lottery. While it’s certainly true that many early investors in Bitcoin are now extremely wealthy, that’s not as likely to happen now. For example, in 2010, a Silicon Valley engineer decided to invest $3,000 in Bitcoin when it went for a mere $0.15. That gave him around 20,000 Bitcoin. By 2013, the price of a single coin had jumped to $350, and our anonymous tech engineer began to sell. The price quickly jumped to $800, and our tech engineer had made his first $2.3 million. He quickly quit his job and has been living high off his Bitcoin investments ever since.
Stories like these drive the fantasies of a few people looking for a way out of their financial difficulties.
But today, with a single coin valued at between $30,000 and $40,000, that sort of story isn’t really possible. Today, our anonymous tech engineer’s $3,000 investment might only buy 1/10 of a coin, not 20,000. However, that doesn’t stop some people from dreaming of becoming an overnight millionaire.
New Cryptocurrencies are Minted All of the Time
While it might be too late to become an instant Bitcoin millionaire, getting in early on a new coin could be the ticket. However, investing in new cryptocurrencies can be extremely risky. That said, there is no profit without the risk.
Bitcoin is not the only player, there are thousands of cryptocurrencies circulating at any one time. While many will go the way of Kanye West’s ill-fated Coinye, others will rise to the top. The trick is, figuring out which coin is the best bet right now.
For example, you probably have heard of Polkadot, but it now has a market cap of more than $28 billion. Polkadot only launched in September 2020 and by the end of September 2021, its price went from $2.93 to $25.61. That’s an increase of 872%. If you had invested just $100 at the launch of Polkadot, you could have turned it into $87,200 in just one year.
An even better example is Dogecoin; in 2017, the price was a pathetic $0.0002. Four years later, in 2021, its price was $0.20. While that’s nothing compared to the price of Bitcoin, that’s a 101,800% increase. So, if you had invested $100 in Dogecoin, four years later you would have $10,180. While that’s not a life-changing amount, it is a pretty good return.
If you want to become a crypto-millionaire, studying the potential for new cryptocurrencies might be the way to go.
Celebrities and “Hope-ium” Aside, Bitcoin is a Good Investment
With the US dollar devalued and the economy crashing, Bitcoin can be a good way to safeguard your cash. Stored in a wallet outside of a bank, cryptocurrencies cannot be devalued. Moreover, Bitcoin breaks through international borders and is impervious to seizure. Whether you are in the United States or somewhere else in the world, Bitcoin can be converted to fiat currency and used as cash.
This makes cryptocurrency very attractive to anyone worried about hyperinflation, bank failures, or other man-made disasters. However, keep in mind, in a prolonged grid or internet failure, you won’t be able to get to your crypto wallet. If they ever do flip the “internet kill switch”, you could be out of luck and on the street.
With that said, many traditional investors think that crypto is a solid investment. Just as the stock market has the power to make winners and losers, so does the crypto market. However, before you begin trading, review this cryptocurrency strategy guide on www.covemarkets.com.