Investing in bitcoin in 2018

If you followed my blog so far you probably saw that I did invest in the cryptocurrency for quite a long time and if you are familiar with my strategy, the time has come for me to raise my investments.

I’m not a financial planner, this is just an opinion on how investing in bitcoin can be really risky and that you could end up losing a lot of money.

Why lose money when you have the change to not do that?

Investing in Bitcoin in 2018

I think there 4 different approaches to investing in bitcoin:

  1. Buy bitcoin directly from an exchange
  2. Trade bitcoin futures on wall-street
  3. Buy special hardware to mine bitcoin
  4. Cloud mining
  5. Mine other cryptocurrency and convert them to bitcoin

Directly buying or trading bitcoin (1,2)

You could go to an online exchange or to a stock exchange website and either buy bitcoin or bitcoin futures, but I’ll advise you to not do that. Bitcoin simply can’t handle all the transactions that are taking place in its blockchain and that’s why the fees are bigger than ever and that’s why so many new forks of bitcoin appeared.

This actually means that bitcoin in its original form actually reached an upper limit where it can’t process more transactions per second. In a practical way, it can’t do more of what’s supposed to be doing.

Bitcoin has high volatility

In the first day of trading bitcoin, there have been 2 major drops in a matter of minutes and you can see that in this chart. Simply put, you can lose a big chunk of cash in a matter of minutes with bitcoin.

There was the possibility to make a lot of money as well but that’s usually what the daily traders are doing. Of course, I mean the ones with high experience that are better than the other 95%.

If you have no experience in this market what do you think that you’ll beat the odds?

Buy special hardware to mine bitcoin (3)

You can’t currently find a good price to mine bitcoin and to get an ROI in less than a year. The biggest company that is selling asics is bitmain and they are mostly out of stock. In the cryptocurrency, a year is a lot of time… my advice is to forget about this type of investment unless you can find really cheap asics.

Cloud mining (4)

It seems like a nice option with a good ROI, but what it isn’t clear to me is if they are actually mining it. There have been “cloud” companies and sites that mentioned to provide cloud services for bitcoin while all they did was a Ponzi scheme. There are still a few companies that pretend to offer cloud services right now with a good reputation, but in my eyes, I think they are just scamming because they can’t prove that they are actually mining it.

My way of seeing cloud mining

I consider this type of investment that is highly risky, you don’t know if they are really mining and you don’t own any hardware at all. If you decided to do this, don’t allocate too much of your net worth.

Mine other cryptocurrency and convert them to bitcoin (5)

This is what I have been doing for the past year and it’s a safer bet in terms of risk, you can have all the coins going to 0 dollars value while you will still have cash on hand. Owning video cards and computer parts are still going to hold value even with a 30% depreciation over the year.
This option requires some skills and it’s a complex process, but it’s not that hard once you figure how to do some basic computer stuff like installing a video card and installing an operating system.

Mining brings a lot of cash flow:

Mining other cryptocurrencies will provide you with a lot of cashflow and you could use it to expand the operation or to invest it in other areas. This is just optionality.

Conclusion about investing in bitcoin

Should you invest in bitcoin? My answer is that it depends on you and on how you plan to do invest in it. It’s a bull market and is stil going up. My advice is to be smart about how you do it and don’t expose yourself to too much risk without a good reward.
While holding bitcoin won’t provide you with anything, think about investing into some mining equipment and mine it on your own. Worst case, you end up with some hardware equipment which you can sell pretty easy.

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