Bitcoin was launched in 2009 as the world’s first cryptocurrency. Today, there are over 2,000 unique cryptocurrencies, as identified and tracked by the experts at Investing.com; and that number is up from 1,658 that the company identified as recently as this past spring.
Of course, such incredible growth is ripe for scams, and only time will tell if all of these “currencies” are legitimate. Yet their explosion has still resulted in four specific opportunities for entrepreneurs who want to ride the cryptocurrency wave to success.
Investing in cryptocurrencies is like holding a share in a new business that can either make you wealthy beyond your wildest dreams or leave you with nothing but a piece of paper. Unlike what happens when you purchase a share of a company, however, by owning a cryptocurrency, you are in effect buying into the belief that it will become a world currency potentially able to replace the euro or dollar, or other traditional monetary unit.
This is a big concept to buy into; but for many, the potential rewards are worth the risks.
For example, had you purchased one Bitcoin in 2011 for $100 and kept it through its subsequent highs and value drops, its current value would be $6,166, according to the experts at Investopedia. Since Bitcoin prices are higher now, and you would be purchasing following its initial huge growth spurt, you might still see a great return on investment, but probably one not as dramatic as in years past.
Still, there are thousands of newer cryptocurrencies that are poised to make the same leaps in value; it’s just important to do your homework to avoid scams and worthless currencies.
Dip investment in cryptocurrency follows the arbitrage principle, which says to buy low and sell high. Unlike traditional investing, with a dip investment strategy, you are purchasing a currency only to sell it when the price hits what you believe to be its peak.
With this process, you track a specific currency and note its average price. You then purchase the currency when the price drops (or dips) below the average and sell it when its value recovers. Depending on your risk comfort, you can buy at a big or small dip and sell when the price recovers.
The experts at CryptoCurrency Facts recommend a conservative strategy of waiting to purchase the currency until the price starts to rise after a dip and then again waiting to sell until its value begins to go back down. The worst-case scenario is if you guess the market incorrectly and get out with only some minor gains rather than waiting for the currency to bottom out. A little profit is better than none at all, and there is no guarantee that the value will recover.
Leveraging the arbitrage principle across trading platforms
Cryptocurrencies are sold on many different trading platforms, and often prices among them vary slightly, allowing you to buy low on site A and sell it for a profit on site B, often in a matter of minutes, if not seconds. This process can be highly successful and relatively risk free but is also challenging. You must be able to track a specific currency across several buying platforms and execute the purchase and sale before market conditions change. Profits from this strategy can be high, but you need to have the right tools or support to achieve real benefits.
Companies such as Profitcoins and hedge funds like Virgil Capital use sophisticated algorithms to track currencies across multiple sales platforms and complete transactions in a matter of seconds. This timing allows investors to take advantage of pricing differences before most traders are even aware of the discrepancy. While the method is often touted as a way to obtain secure profits, it's just like any investment: There are risks, and there are fees.
Perhaps the lowest-risk way to invest in cryptocurrency is to work in the industry itself. From investment companies to startups, the industry literally has thousands of job openings in the United States alone, according to the IBC group, which is currently seeking to fill several cryptocurrency positions.
CoinList, separately, created a widely shared infographic that details the various types of cryptocurrency jobs employers are seeking to fill. They include:
- Blockchain engineer/developer
- Full stack developer
- Community manager
- Tech writers
- Content marketers
- Business developers
- Meme specialist
Job listings can be found on traditional sites such as Glassdoor or Indeed, and each currently has more than 700 active listings for cryptocurrency and blockchain positions. Another great site is Crypto Jobs List, which has blockchain and cryptocurrency postings from top companies that run the gambit from analyst to sales. This growing field holds many employment and entrepreneurial opportunities for those willing to live on the cutting edge of monetary development.
Cryptocurrencies offer many opportunities to build wealth, including traditional investment, dip investment, arbitrage and employment. The path you choose will depend on your risk-aversion levels and career goals, but investment in cryptocurrencies is a smart choice -- assuming you do your homework first.
Had you bought a single Bitcoin in 2011 for $100, it would be worth $6,166 today. Sorry you didn't jump in?