Cryptocurrency Trading – Small Scale Stocks

There are many of us that watch the stocks of certain companies and think- “Wow, that doesn’t seem too hard.” Jokes aside, some of us are very talented in observing trends, current events, and the rise and fall of certain trading prices. The problem is that getting into stock trading is very difficult, and it requires a large sum of money to be worth the trouble.

One cannot simply buy stocks on their own, they must go through a broker, bank, or other means. Furthermore these organizations charge fees for everything. Ultimately an 8% return (pretty great, honestly) is diminished to less- 6%, 4%, or maybe even less depending on the associated charges. Moreover, trying to start with a small amount of stocks will yield no profit whatsoever. Trading heavily favors certain types of investors, and it is unfortunate that very bright minds are fire-walled from even beginning to invest because of the high entry barriers.

However, there is a “baby” stock market that has been emerging for years now. Following the success story of Bitcoin, other minor cryptocurrencies have arisen. And similar to stocks these cryptocurrencies are relatively predictable, rising and falling based on the same concept/rumor/news points that regular stocks do. But the main appeal to cryptocurrency trading is that the fees are minuscule, the returns are potentially huge, and anyone can do it individually with only a bank account.

Cryptocurrencies such as Bitcoin, Litecoin, Etherium, Dogecoin, Ripple, Monero, Dash, etc… are decentralized monetary systems not controlled by anybody in particular. They are virtual currency revolving around the idea of cryptography, and everybody using their machines to process information and anonymously mark entries into the “ledger” of the coin.

The value of these digital coins is determined by supply and demand. Essentially it arrives at its agreed upon price by what people are willing to pay for and sell them for. Coupled with the fact that there is a limited amount of each coin, the price can rise and fall similar to real currency. And similarly, the currency retains all attributes of real money (except for physicality, but honestly bank accounts are mostly digital now too). Coins can be created predictably through mining, but that is a difficult process that is not recommended for an individual. Overall, digital cryptocurrencies are an interesting concept that currently seems like a viable way for people to securely pay digitally without the interference of governments or corporations. Whether they will still exist further into the future is a tough call, but for the time they are still new, exciting, and gaining value as the market settles and becomes less volatile.

Bitcoin was the first cryptocurrency, and I do not recommend trading bitcoins. The market is slower now, and it more closely resembles actual stocks. Rather, this article is going to talk about the lesser cryptocurrencies and why they are a great starting investment for anybody with a little money to spare.

The smaller cryptocurrencies are much more volatile. These coins are lesser known, lesser used, more reactive to price changes, and they offer a better chance for smart investors to make money.

For example, observe this graph (https://coinmarketcap.com/currencies/ethereum/) above. In the span of a few months, the price of Etherium rose from 7 dollars to 50 dollars. One privy to the market, or somebody that saw the upward trend and bought at 10 dollars per coin could have quintupled their money, essentially turning 100 dollars into 500 or 1000 into 5000. Below is another example.

Litecoin, often talked about as the Silver Bitcoin, jumped from 2 dollars to 12, a 600% rise. The interesting point to make about this jump is that it was entirely predictable. Rumors of Segwit (a helping technology for the blockchain ledger) adoption allowed the price to rise, and anybody watching the news could have predicted it.

Indeed the currencies have the potential to lose money just the same as it give money. Referring again to the Litecoin chart above, there is a dip past the highest peak, and where the graph goes now is up to what the consensus is about the Segwit technology. Some may liken this to gambling, but the predictability at which it will rise is enough that any intelligent person could invest and cash out at key moments to triple or quadruple their stake in a month or so.

So how does one begin to trade in these emerging currencies? There are various methods, but I recommend the easiest and less risky method. Coinbase (https://www.coinbase.com/) is a popular and active online digital “wallet” for various cryptocurrencies. Creating an account there and buying Etherium or Bitcoin is exceptionally easy, and it requires no starting funds. All you need to do is verify your identity via documents and link a bank account. After transferring any amount of money into your account, you can trade it for Bitcoin or Etherium effortlessly. For another popular coin, Litecoin, you can create a GDAX (https://www.gdax.com/) account off of your Coinbase account and use the same bank account to buy other currencies. There are tiny fees attached to these services, so be aware of them as you fund your account. After buying coins and gaining value, you can sell them through these exchanges as well and transfer the money back to your bank.

Other cryptocurrencies can be traded from other online exchanges such as EXMO, BTC-E, Kraken, etc… I am not familiar with all of them, so I can not weigh in on the best for lesser known coins. But mostly I recommend sticking to 3 or 4 currencies and monitoring the news and charts. Specifically Litecoin and Etherium are interesting markets that should be watched right now. Overall, cryptocurrency trading is a great way to give a monetary opportunity to anybody with money to spare. It has little entry barriers compared to stocks, and the payouts are much higher and more predictable as well. Intelligent investors can quickly make huge profits, but non-dedicated people can lose money as well by not watching the market. This technology could only exist in our current era, so take advantage of it while cryptocurrency while they are still gaining value.

TL;DR – Minor cryptocurrencies make smart people money, and not trying the market is stupid

Leave a Comment

Your email address will not be published. Required fields are marked *