Disclaimer: this is no financial advice and no encouragement to invest in crypto, please do your own research and only spend what you can afford to loose
A very, very short introduction
Bitcoin, Ethereum, Tether, Cardano, Dogecoin… CRYPTOCURRENCY.
In short, cryptocurrency is a new digital way of payment. It is a digital currency, which only exist electronically and there are many sorts of coins that you can trade with. It is a medium of exchange and is governed by everyone. This means there is no central authority that regulates cryptocurrency, but instead it is decentralized. Decentralized here means there is no central bank in which the money gets stored or transferred to, so the money is controlled by the people themselves. These cryptocurrencies can be traded on various trading websites like Bitvavo, Binance, Coinbase, Kraken and many more.
One thing to keep in mind is that cryptocurrencies can be very volatile. This means that their market price is everchanging, depending on how many people invest in the coin and how much they invest or sell again.
However, not all crypto is alike.
By that I mean that the different coins actually do something besides being a medium of exchange. Let’s take Ethereum for example. Ethereum is a decentralized computing platform which uses blockchain technology. This platform supports not only cryptocurrencies but also other kinds of decentralized applications, which allows people to have more control over their content and data. Ether (ETH) is the corresponding cryptocurrency of Ethereum and the second largest cryptocurrency after Bitcoin. With ETH you can trade on the trading platforms, and Ethereum is the blockchain technology behind it.
This goes for almost all of the other cryptocurrencies as well. But then again there is always an exception. In this case it is Dogecoin, a memecoin.
Memecoins are a type of cryptocurrency without any use for the real world. Dogecoin was a meme, a coin inspired by jokes which raises awareness for cryptocurrency.
How to make money online (fast)
When investing and trading with cryptocurrency, you have two possible ways to go: long-term trading or short-term trading. Here, I explain one form of short-term trading also known as flipping.
When you are flipping, you buy a coin at a low of the market price. When the price then rises a bit, you sell the amount of coins you bought again. Each time you do that, you will have a little bit of profit and like this you can make money over a short period of time. The profit you’ll get depends of course on the amount of money you buy the coins for.
This sounds all very theoretical, so let me explain it with an example:
- Let’s say you invest 10€ in Bitcoin for the market price of 49496€ per Bitcoin (market price on the 11.10.21 at 22:26h)
- For 10€, you’d get 0,00020144 BTC
- Since the market price of BTC is constantly changing, your 0,00020144 BTC might be worth a little bit more or less after some time. When the market price rises, you sell your BTC again for a higher price
- Now your 0,00020144 BTC might be worth 13€ instead of 10€
- (Theoretically the market price went up by 30% , which is however unlikely for Bitcoin because Bitcoin is not as volatile as other coins; usually the rise and decrease of the price is very, very little)
- Congratulations, you made 3€ with flipping!
Logically, if you invest more money, your chances of more profit are higher as well. But the chances of the market price decreasing are always just as high. And sometimes it might look like the price won’t go up again. Then you panic and sell lower than you originally bought in, because you want to avoid losing more money. Don’t do that 🙂 That’s how you lose your money instead of making money.
What I would do (and already did)
With all this being said, don’t fomo in and buy in on a high market price. Instead, buy in low and sell high, that’s how you get the cash. Most people think you should buy in when the price is high because then the coin is worth more but you should do the opposite: buy in when the price is low, so you can buy more coins for less money. And my advice: don’t trade with emotions. I always get too scared when investing and stare at the screen every two minutes, which is absolutely useless. You can invest some money and maybe look at it again in a few years, who knows maybe you doubled your money or you’ve become rich.
Finally, please enjoy this video I found on YouTube. It was my inspiration for this post:
Sources and additional information
Article: Milutinovic, Monia. “Cryptocurrency,” in Ekonomika, Journal for Economic Theory and Practice and Social Issues, vol.64, 2018.