Debt is certainly no less than quicksand. People reach the age of 40s and are still in debt of the college fees and education loans. There are senior citizens living in old age homes but are technically under debt due to expenses of moving in to support homes and ending the last of their days with dignity.
These we sympathise with. These we can relate to.
But, the minute a person who has a family to support and already is in debt decides to invest in cryptocurrency, we declare him to be the biggest idiot on the planet.
Do not get us wrong. Investing in cryptocurrency is not a Ponzi scheme. Blind investment without an exit plan is utter waste of investment. That’s why before any and every such transaction, it is advised that few matters are kept in mind.
Understand what you are investing in:
Cryptocurrencies work on the Blockchain technology. Before investing in any particular crypto, read and study its Blockchain application. Does it cater to something that has a future growth? Are there any means of expansion of the company? What platform is the technology working on? Is it traditional Satoshi or the new age Ethereum? Are there any forks in its near future? Who are the developers? Is their vision big enough to reach the moon? Study! Study! Study! Study thoroughly the white paper that is posted on every site of the crypto in question. Only then, once you know everything about the token, think about investing.
Know your investment amount limit:
Now that you know who all about the technical and logistical aspect of the currency, focus your attention towards yourself. Divide the assets and the debts that you have. They are to be divided into expendable and nonexpendable. You home and its mortgage is a non expendable debt. But, the boat docked in the pier. which is a symbol of your masculine independence is an expendable asset.
Know which materialistic thing you can live without. Once sorted, look into your fiat currency in your savings account. Is it enough to sustain yourself and those dependent on you for 6 months in case of a market crash? If it is not, then deduct from the investment amount and place it in this back up fund. ( trust us, you won’t regret it. ) Once your Plan B is safe and secure, zero down on an amount that you want to trade. Again, be alert that you do not invest the whole amount in one shot. Invest small amount first and slowly raise the bar. This helps as you find your feet in this new world of cryptocurrency.
Study the market and then quit when ahead:
So you invested. You already have 6 months of sustenance money set aside as Plan B and your investment has managed to defy odds and give your a nice profit. What now? Do you hang on and let it grow more or do you fold up and cash in your profit? Well, in case of a profit, we again suggest that you go to the drawing boards. Study the market trend. For example, back in December when Bitcoin was king and everyone was blindly jumping on to the bandwagon just to get a piece of the pie. There were few who held on hoping for a bigger piece, a bigger profit. They were the ones who lost a golden opportunity to sell and lost a tidy sum. When we say, this sector is inconsistent in its pattern, we mean that there is no knowing what is going to happen next. Quitting while ahead is something one needs to know and actually follow through. We understand the temptation is too great. That one extra day hoping for the profits to increase a little bit more. One extra transaction wishing it to be the one that shoots your investment to the moon. Quit when ahead. Trust us. Tomorrow is always going to be a day away!
Invest profit earned in traditional means for future rainy days:
So you quit. You make a neat sum in profit. Now, be sensible and pay off your debts. Better yet. Pay the IRS the taxes that are due. Once that is done, pay off your past debts. Still have an amount remaining in hand? Remove a sum for future crypto trading and store the maximum amount in a traditional, centralized manner. Don’t be so shocked. We aren’t declaring a war against cryptocurrency. This practise of continuing to store fiat currency in traditional options such as banks, stock markets or as a gold bar makes sense. The cryptocurrency market is fluctuating and hyper-volatile. There is no algorithm that can predict its future gains or drops.
Vitalik Buterin, the co creator of Ethereum is one of the biggest supporters of traditional assets and considers them to the “safest bet”.
He tweeted: “Reminder: Cryptocurrencies are still a new and hyper-volatile asset class, and could drop to near-zero at any time. Don’t put in more money than you can afford to lose. If you’re trying to figure out where to store your life savings, traditional assets are still your safest bet.”
Hypothetically speaking, we all know that traditional and centralized banking, stock markets, Diamond Mining amongst other sectors shall all convert into a decentralized Blockchain Platform. Invented in 2009, a mere 9 years back. That is too soon in the life of a currency to make its value hold out. But, till it happens, traditional assets are the best answers for the likes of us. Don’t live a life in debt just for the rush of earning a profit.