If you haven’t heard of Bitcoin (BTC) by now, you’re one of the rare few. In 2017, its rise in value from just under $1,000 to over $11,000 so far has everybody talking about it. It also has a lot of people asking me questions about how to invest and where, so here’s what I’m doing with Bitcoin and cryptocurrency investing in general. Before I get started, though, this post isn’t about what Bitcoin is, its history, what it means to mine a cryptocurrency, or any of the technical details. This is more for people who see the investment potential and want to dive in.
My Rules For Investing
The first thing I tell people who ask me about buying Bitcoin is that it’s an extremely volatile, high risk/high reward gamble. In fact, the level of volatility is what makes it so enticing and exciting to me, but it’s also what limits how much I’ve invested so far. Do not put anything in that you can’t afford to lose. This is my number one rule for crypto, Reg A funding, and anything else with this level of risk.
Next, keep emotions in check. Many people I know, myself included, feel a lot of regret about ignoring Bitcoin or spending all our coins when they were $1 each. Leave the past in the past and look forward. It’s also too easy to see people currently making money hand over fist and feel the need to throw your 401k at this shiny new thing with the hopes of retiring as a millionaire in a few years. The fact is that you can get incredible returns, but nothing is a guarantee. Be thoughtful in your choices and know and respect the risks.
How To Buy Bitcoin and Other Cryptocurrencies
One of the most frequent questions I’m asked when I talk about Bitcoin is how to buy it. My exchange of choice so far is Coinbase because it’s stable, sticks to the basics, and has a good grip on security. (Disclaimer: My link to Coinbase earns us both $10 if you sign up and buy $100 or more). Many other popular exchanges are listed here. Not every exchange will have every coin listed. For this reason, I have assets in several exchanges. If you plan to diversify into several alt-coins as well as your Bitcoin, you’ll want to buy Bitcoin and then send some of it from your main exchange wallet to an alternate exchange where you can trade it for the alt-coin of your choosing.
I’m no expert, but I have a loose strategy for my buying. I’m holding Bitcoin, Etherium, and about 15 different alt-coins. I won’t go into how much I have invested, but for the alt-coins, I try to buy 100 or more of each. Some I have 100 of that cost me around $100 and it goes all the way up to one I have 1,000,000 of. Most of them will price out of my radar, turning $100 into just pennies or will vanish entirely. Others have already returned 200% to 500%. I plan to hold most of what I buy for years. Whatever you buy, CoinMarketCap is a great place to get a glimpse of just about every coin and do a little research.
How To Mine Bitcoin
When Bitcoin was the only kid on the block several years ago, you could download a program known as a miner and put it to work, earning several hundred Bitcoin a day. These days, the mining complexity for Bitcoin makes mining on a home computer a fruitless effort, but there are still many ways to mine for digital gold.
The easiest (and cheapest) way to get your feet wet with mining is by mining on your existing computer. While you can’t (effectively) mine Bitcoin directly with your home machine, you can mine one of the many alt-coins or just grab the NiceHash Miner. Nice hash will mine something else (like Monero) and convert the mined asset to BTC for you. I run it on my home desktop and it trickles in tiny fractions of BTC daily. It can be hard to watch it earn so slowly, but if you leave your computer on like I do, you might as well let it work for you. If you want to mine an alt-coin directly, that will require a little work and is more involved than I’m prepared to go into in this post.
With some capital investment, you could opt for your own mining rig. Depending on how fast you want to mine, you can spend as little as a couple hundred dollars or upwards of thousands. The more you spend, the faster you can mine. As an example, you could spend around $3,500 on an AntMiner S9 which gives you about 14TH/s (TeraHash per second) and at today’s calculations you should be able to mine around 0.00261 BTC ($27.08 USD) per day. Of course, mining at home consumes electricity that you’ll need to factor in and if you want to maximize your profits, you’ll need to be aware of all the settings and tweak them as you go. Eventually, too, the hardware may be outweighed by the growing mining difficulty and become obsolete. It still can be quite profitable and is generally passive income as a little machine just makes money for you all day.
Although I trickle-mine on my home PC and I like the idea of having an AntMiner humming away in my basement, I recently started cloud mining with HashFlare at 2.5TH/s. This way, I can still get the benefits of computing power that is designed for mining Bitcoin while starting out a little slower. I’ve seen a lot of people earning this way, so I suspect I’ll end up re-investing until I’m bringing in a lot of profit from this one source. If I end up not liking my results, I just won’t buy more hashing power. In short, you pay a set amount of BTC once for a pre-defined amount of hashing power for a 1 year contract. Throughout the contract, you get paid back whatever was mined which you can then reinvest or cash out if you’d like. Another well-established cloud mining site is Genesis (get 3% bonus hash power if us use my code: MTQemq).
No More Waiting
No matter which of the options above seems to make the most sense, stop waiting around to get into cryptocurrencies. I believe Bitcoin has another 1,000% plus yet to climb and it’s bringing a lot of alt-coins up with it. Many of us look back today at 2010 and wish we’d paid more attention. I won’t be looking back at 2018 the same way and neither should you.
That legal disclaimer thing
I’m not an accountant, financial advisor, crypto expert, finance guru, or college graduate. The stuff I talk about above is from my own limited experience and research. You’re urged to always do your research and educate yourself.