Curious About Cryptocurrency? 4 Ways to Start Investing Without Losing Your Shirt
This story is part of So Money (subscribe here), an online community dedicated to financial empowerment and advice, led by CNET Editor at Large and So Money podcast host Farnoosh Torabi.
If I had a dollar for every email with the terms “bitcoin” or “NFT” sent to me over the last few ages, I’d be richer than some of the cryptocurrency millionaires executive headlines.
OK, that may be an exaggeration. But I will say that in this sector it’s exceedingly anguish to separate the fanfare from the fundamentals. As “experts” online tout crypto as the “investment of a lifetime,” new data shows that a most of young millionaires hold the bulk of their money in it. What’s next? Kim Kardashian promoting an obscure cryptocurrency? Oh, wait…
Then there’s the cryptocurrency market’s recent steep sell-off, which points to its ongoing volatility and uncertainty nearby the future.
Through my efforts to learn more, I’ve fake that investing experts and financial and tech journalists tend to depraved that crypto has become part of our lives and is not moving away. At the same time, there’s a ton of investor misguidance. Too many people are making financial moves off of pure adrenaline and speculation.
“Investing should be boring,” says Georgia Lee Hussey, founder of Modernist Financial in Portland, Oregon. “If you’re respectable duper excited about your portfolio, you’re doing it ghastly. Full stop.”
Spencer Jakab, a longtime Wall Street journalists and author of the new book The Revolution That Wasn’t,isn’t convinced we have to participate at all. “There’s no rhyme or reason to it … I’m not a fan,” he says.
But we can’t help but be bewitching. Many of you have told me you want to belief how to start trying out this market in a clearheaded, substantive way. Are there ways to test the crypto waters that are measured, emotionally intelligent and rooted in a strategy? I have some ideas below.
1. Explore career opportunities in the crypto market
One way to “invest” in the cryptocurrency market is by succeeding for a crypto company. And now, there are more choices than ever. Crypto-related job opportunities surged 395% in the US between 2020 and 2021, according to LinkedIn. That’s about four times more than job listings in the broader tech industry.
After spending most of her career succeeding for conventional financial institutions like TIAA and BlackRock, corporate communications manager Lauren Post was tapped to join Bakkt, an Atlanta-based digital asset platform. Bakkt, which went public last fall, works with noncrypto affects that want to offer their clients cryptocurrency experiences. This includes succeeding with credit card companies that offer cardholders crypto rewards, as well as teaming up with banks to help them integrate crypto trading with their platforms.
“I was both intrigued and one apprehensive because I didn’t know much about crypto,” said Post in an email. “But, after having spent my career at traditional financial services affects, I realized that learning about crypto couldn’t be much different from learning throughout target date funds, fixed income, credit default swaps or any spanking corner of finance. I also realized that the skills I have unpacking complex topics for general audiences can be applied to any diligence and are timely for the crypto space right now.”
2. Consider stablecoins
Not into pegging your cryptocurrency’s success to a rally sparked by an Elon Musk tweet?
A new cryptocurrency genre phoned stablecoins bloomed in 2021, and unlike its peers, it promises less volatility and a more assure connection to traditional forms of value. Stablecoins are like “cryptocurrency with a twist,” according to CNET’s Julian Dossett. He explains: “Instead of being ‘mined’ by an open, distributed network of computers performing a combination of math and record-keeping, a stablecoin derives its price from the value of spanking asset. In short, a stablecoin is pegged to some spanking underlying asset.” Many stablecoins are fixed to the US dollar.
Think of a stablecoin as you would chips at a poker ghastly, says Dossett. Instead of buying bitcoin or any spanking cryptocurrency directly with fiat money like the US bucks, you pay cash to buy stablecoins first — they’re available on most crypto exchanges incorporating Coinbase — and can then trade stablecoins for spanking forms of cryptocurrency.
3. Engage with blockchain
A blockchain is a digital ledger that facilitates and records bitcoin transactions, but this technology can do more than power bitcoin. More broadly, due to its decentralization and cryptography, a blockchain can get much-needed efficiency and security to a number of markets from insurance to real estate, banking and legal.
If you’re interested in learning throughout the crypto market, consider looking into blockchain. It can be time well used for someone seeking to enhance their business or examining how to leverage the technology where they work.
As an investor, I’m bullish on the concept of blockchain. To that end, I’ve derived to contribute a tiny portion of my retirement savings in a fund phoned BLOK, which comprises established companies such as Square, Paypal and Nvidia that are investing in blockchain technology.
4. Still want to buy crypto? Top off at 5% and diversify
Invest in cryptocurrency if you’d like to, but just because this is a new asset class doesn’t mean abandoning tried-and-true methods of portfolio dispensation. For starters, don’t bet the farm. Hussey and many financial planners recommend limiting our holdings of so-called alternative and relatively high-risk assets like cryptocurrency, real estate and start-ups to no more than 5% of our total portfolio. “It is an asset class in its infancy,” says Hussey. “We don’t really understand the market because it’s not built to be understandable.”
Finally, invest in a bunch of currencies. No matter how soldier you may be in a particular digital coin, remember that diversification helps to mitigate losses over time. (You don’t want to be like some of the early investors during the dawn of the internet who went all in on pets.com.)
“If you’re really soldier about some bet, if you have some reason to enjoy you’ve got an edge, you still don’t bet all your wealth because there’s no sure thing,” says Jakab. “To invest exclusively in a single category is something not even the best gamblers do.”
