How to Invest In Cryptocurrencies for Everyday Investors

It has been nearly ten years since Bitcoin and distributed blockchain technology was introduced to the market. Unknown to the mysterious Satoshi founder, this would become the impetus for the crypto craze we see today. Many people have speculated that Bitcoin is the largest bubble of all time, while others state that cryptocurrencies are a disruptive technology that is here to stay for the long-run.

Proponents of Bitcoin and its related currencies state that any process that eliminates the need for regulation, banks, and expensive middlemen can only be good for society. From its initial goal of decentralizing payments, Bitcoin has branched out into many other possibilities, and is one of the most spectacular investments we have witnessed to date.

It’s hard to know how much of the buzz around Bitcoin is sensationalized hype or truth. Looking at the huge, volatile swings of the currency, one could be left wondering if it’s merely speculation that’s fueling the currency’s surge, or if it represents a new era of payments thanks to blockchain technology.

How to Speculate on Cryptocurrencies

There are a few ways that investors can transform their fiat dollars into virtual tokens. You can opt to buy from the major leaders: Bitcoin, Ethereum, Litecoin, Dash, or others. It’s important to note that Bitcoin skyrocketed from $1,000 at the start of 2017 to over $20,000. While Ethereum went from $10 to more than $700. So if you like the idea of buying an ‘index’ of different funds, this investment portfolio would have certainly paid some serious returns last year.

The other thing to consider is that as much as you are buying tokens, coins, or other virtual monies, you are also betting on the performance of the blockchain itself.

Unlike other currencies which are backed by gold or a national economy, crypto coins have no intrinsic value. The only thing that these backers are counting on is that the blockchain will continue to be worked on and developed for real-world applications. Because right now, some believe that these tokens are nothing more than speculative instruments, surging in price via the effect of FOMO (fear of missing out) and media scandal.

The other way you can break into the crypto market is by investing in companies that leverage blockchain technology. These companies run what are called ICOs (Initial Coin Offerings). Some of these firms have delivered enormous profits to their investors, while others vanished with their backer’s money as part of a well-designed scam.

For this reason, investors should tread with caution, especially if the brand’s proof of concept, whitepaper, or roadmap is sketchy or seems unrealistic.

Due to the attention that these coins have received in the past, a number of established, real-world businesses began to announce blockchain projects. Some have even changed their name to attract potential investors, using terms such as “cryptocurrency,” and “blockchain,” and reaped massive returns.

On the surface, putting your money into a company leveraging the blockchain could be a safer option that buying coins – but investors still need to do their due diligence and buy stocks in the right company.

There are serious doubts about the blockchain’s actual ability to alter the way that we store, use, and transfer money. It has been nearly a decade since Bitcoin’s inception to the market, and it has not yet changed the status quo. A lot of investors could end up losing everything they own due to being too optimistic about this technology’s adoption in the real world.

One potentially safer option for everyday investors is to put their money into a corporation, such as IBM. IBM has launched numerous blockchain initiatives, as well as branching out into the fields of cloud computing and artificial intelligence. If one of these options fails for IBM, investors will not be left completely out of pocket, as the firm will still be able to deliver enormous profits.

To put it simply, investing with a company like IBM could work to reduce the amount of downside (risk) of an investment, instead of speculating on the tumultuous rise and fall of the crypto market.

Is IBM the Leading Blockchain Company?

According to IBM, they state that they have worked for with more than 400 of their customers to design and implement blockchain systems. Some examples of IBM’s initiatives include an agreement with several European banks to design a platform for trade finance. Maersk, which is one of the largest shipping companies, was also included as part of IBM’s leadership in blockchain tech.

Due the fact that many of these initiatives are still in their beginning stages, its unlikely that they are profitable – at least for now. Although there could be some indirect benefits as well, such as attracting new business when IBM’s customers signs a blockchain contract.

IBM has 98% of the world’s largest financial institutions as their core customers, as well as 80% of the world’s communication providers, and 80% of the key retailers. This massive customer portfolio thus gives IBM some options in the market thanks to their trusted relationships with these clients.

The good news is that IBM could be the most cost-effective blockchain stock money can buy. IBM posted that they expect a 3.9% dividend yield, combined with a $13.80 profit per share. These stats are taken from IBM’s 22 month long history of delivering profit to their shareholders.

How to Invest In Cryptocurrencies for Everyday Investors Summary

Jumping on board media trends is not a smart way to your invest your money, especially in the case of cryptocurrencies. These tokens are so volatile that one’s entire portfolio could be wiped out within hours.

For everyday investors and those who are new to cryptocurrencies, investing with a company such as IBM could be a viable way to expand one’s portfolio and ride on the coattails of the brand’s success.

It could be argued that the company will still remain profitable, even if their blockchain ventures fail, thus making for an interesting experiment as opposed to the whole firm going bankrupt and losing their investor’s money.