One of the things I find very interesting about cryptocurrency is that everyone is making money in different ways.
Some people are going long, some are going short. Some only buy Bitcoin or Ethereum, others are making their money by taking their chances with different coins (sometimes referred to as alt coins).
Not everyone has the stomach or desire to trade every day on an exchange such as Binance. Holding coins long term (HODL for life) is generally going to be the safest and most reliable way to make money from cryptocurrency, but I think the possible returns from taking chances on alt coins justifies the risks.
No one knows what coins will be a success over the next few years, but what we do know is that if you get in at the ground floor of a new coin, you can make a huge amount of money.
Moving forward, I am very keen on creating a diverse portfolio that includes many coins.
One way for me to do this is to use profits from mining to buy coins that are very cheap to buy (less than a few dollars). Another option is to mine coins that are not even on an exchange yet.
Coins that are valued at half a cent cannot be purchased. At that rate, they aren’t profitable, but if you can hold the coins and they later hit an exchange, even a very low price of $0.05 per coin gives you ten times your money back. If the coin shot up to be worth a dollar or more, you are looking at returns in the hundreds.
You obviously need to do your research and pick the right coins, however if you had lots of speculative coins in your portfolio, all you would need would be one or two to become popular to make it all worthwhile.
Embrace the Fork
As cryptocurrency matures, we are seeing new coins arrive that improve upon previous coins. Whether it be better privacy, faster transactions, or less fees, new coins often look like a more practical solution long term.
Rather than start from scratch, many coins are forking from existing coins.
This week we saw Litecoin Cash fork from Litecoin and in the first day its price shot up from around $ to around $9.
Anyone who had Litecoin beforehand would have made a lot of money from this fork as not only did the price of Litecoin shoot up before the fork, they were given 10 Litecoin Cash coins for each Litecoin coin they owned.
For the last two weeks I have been mining ZClassic and donating it to the developers of Bitcoin Private to support their development. I will be receiving Bitcoin Private coins in return.
This new coin will launch in a week as a fork of Bitcoin and ZClassic. As the name suggests, the coin is hoping its privacy features will attract many users (ZK Snarks is a privacy feature of ZClassic).
Without a doubt, the developers are capitalising upon the Bitcoin name. On the one hand, I think that the industry should probably avoid this habit of piggybacking off the success of other coins. On the other hand, as someone who has a stake in Bitcoin Private doing well, I hope the Bitcoin piggybacking works out.
I’ve paid close attention to a few forks now and one thing is clear; They all seem to make investors forward.
I am going to watch the news of cryptocurrency forks closely in the future and take some risks and invest in coins that are forking. It looks like a great way to make some money.
A Diversified Investment Strategy
I think a healthy crytocurrency portfolio accomodates safe bets such Bitcoin and Ethereum and incorporates new coins that have great potential. It should also take risks and invest in new coins that are forking.
I don’t want to risk everything on a new coin that is being forked or putting all my money to new coins, but it makes sense to take some risks or you will never make as much money from cryptocurrency as you should.
How you invest money in cryptocurrency will differ from me.
Everyone’s financial situation is different. Everyone has a different aversion to risk. Some will take chances. Others will not.
For the time being, my investment strategy has to be a little safer as I am looking to clear some of the debt from purchasing mining equipment. When some of that debt has been cleared, I will be less focused on making money in the short term and more focused on making money in the long term.
If I can select the right coins at the right price and HODL for years rather than weeks or months, I believe I can make a lot of money.
Would love to hear your thoughts on this topic.
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