We’ve talked to people who havetaken out a mortgageorcashed out their entire 401 earlyto invest in cryptocurrency—heck no! Don’t put it all on the line and risk your financial future, your retirement dreams and your family’s well-being. If you can’t afford to lose the money, don’t invest it in something as unstable as crypto. Diversify your portfolio with at least ten cryptocurrencies from different categories to manage your risk. Expand your horizons by investing in stocks with exposure to blockchain technology and the cryptocurrency market. Dogecoin(pronounced “dohj-coin”) started as a joke back in 2013 and is now the hottest thing to invest in.

Consider using some of the value of your crypto holdings to create more conventional stability. By doing that, you allow the rest of your crypto holdings to become less of a gamble and more of a specific investing strategy. You’ll still have the theoretical upside of crypto, but you’ll also have a more reliable base to your financial planning strategy. The cryptocurrency market is extremely volatile.

You do realize “let it ride” is a gambling term, right? While you might think I’ve unfairly targeted one throwaway phrase in your email, it’s the blurred line between gambling and investing which makes cryptocurrency so confounding. To be sure, there are individuals and exchanges trying to drag this world into the sunlight. Always read about the background of a cryptocurrency, its underlying technology, its management, and its community before investing. Ask yourself what problem a cryptocurrency is trying to solve and why that solution matters. The road to building wealth is slow and steady, and there are stillway too many unknowns when it comes to cryptocurrency.

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She delivers workshops and seminars to corporations, universities, and investment groups, and has been featured in Forbes and on CNN. She was named the 2018 Personal Investment Expert of the Year by Wealth & Finance International. Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Yeah, it’s the household name that most people think of when you talk about cryptocurrency.

• The SEC alleged that the ICO an “outright scam,” alleging that AriseBank falsely advertised that it would offer FDIC-insured bank accounts through nonexistent banks.
• You’ve probably heard of people making (or losing!) hundreds of thousands of dollars by investing in cryptocurrency.
• It’s the strategy and planning behind the asset which decide whether or not you’re gambling.
• While Bitcoin was created to become an alternative option to traditional currencies like the dollar, Ethereum has evolved into a network that can be used to do old things in new ways.
• Always read about the background of a cryptocurrency, its underlying technology, its management, and its community before investing.
• Investing, when done well, is really boring.

Additionally, investors generally have specific goals for specific accounts whether the money is meant for retirement, college, or some other time-determined event. Gamblers primary goals revolve around winning the bet, without any additional structural elements or constraint. Plain and simple—investing in cryptocurrency is not a good way to build wealth for your future. Now, we’re not saying that cryptocurrency is going to go away.

For instance, a healthy emergency fund, a properly funded retirement strategy, and the absence of consumer debt make investing excess funds in speculative vehicles much more tolerable. It’s tough to accomplish this level of stability when your entire net worth is tied-up in something as volatile as crypto. Don’t give in to a craze just because there’s a lot of hype.

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So, you’ve heard about Bitcoin and other cryptocurrencies, and you’re ready to add these new kids on the block to your investment portfolio — that’s great! You’re now officially a part of the future economy. To make the best decisions for your portfolio, educate yourself on the basics of cryptocurrencies and what you need to get started. Also, be sure to do your homework on a crypto’s fundamentals before adding any new assets to your portfolio.

The bad information circulating about buying and trading cryptocurrencies is even worse. All across social media platforms you will find pump and dump cons, pyramid and Ponzi schemes and scams where a coin doesn’t even exist. The Securities and Exchange Commission in January shut down an allegedly fraudulent initial coin offering from a company called AriseBank.

Trading in cryptocurrency is kind of like gambling. Because it’s exchanged person-to-person withoutanyrealregulations, there’s no pattern to the rise and fall of its value. You can’t figure out the changes or calculate returns like you can with growth stock mutual funds. There just isn’t enough data, or enough credibility, to create a long-term investing plan based in cryptocurrency. Don’t play poker with your financial future here. I’ve always believed a person can earn the right to take additional investing risks by creating underlying financial stability in their life.

The SEC alleged that the ICO an “outright scam,” alleging that AriseBank falsely advertised that it would offer FDIC-insured bank accounts through nonexistent banks. The SEC also accused AriseBank of failing to disclose to investors that many of its founders and executives have criminal backgrounds. Kiana Danial is the CEO of Invest Diva as well as an internationally recognized personal investing and wealth management expert.

Cryptocurrencies are digital assets people use as investments and for online purchases. You exchange real currency, like dollars, to buy “coins” or “tokens” of a certain kind of cryptocurrency. You need to come to terms with the FOMO which inevitably comes with switching from a speculative investing strategy to a more prudent investing strategy. You can’t forever measure your decision to diversify with an open-ended timeline that would otherwise allow your previous speculative investments to swing wildly, if not higher. If you were to diversify and then your previous investments shot up like a rocket, you’ll feel like you failed. That’s FOMO, and it’s as old as investing itself.

Bitcoin

There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data. It’s true—crypto is about as hot-tempered as a 2-year-old. Its value swings way up only to come plunging back down, and you never really know what you’re going to get each day.

Too many people believe investing is gambling. Well, that depends on your investing strategy. Tim Chen is CEO and co-founder of NerdWallet. Chen also sits on the Consumer Advisory Board of the CFPB . Prior to founding NerdWallet, Chen was a hedge fund analyst at Perry Capital investing in payment processing firms, credit card networks, and technology companies.

Could crypto become a more legit way to invest later on down the road? Listen, you can try your hand at cryptocurrency if you want to. If you have some money you’re willing to lose, money that you might have thrown away on a roulette wheel in Vegas instead, knock yourself out. But we want you guys to win with money and secure your retirement future—and there is just no evidence that cryptocurrency is going to do that for you. At this point, most people still see cryptocurrencies as an investment.

Is Cryptocurrency A Good Investment? Only If You Like Gambling With Your Savings

He also worked as an equity analyst at Credit Suisse First Boston. Tim has a bachelor’s degree in economics from Stanford University. Prior to founding NerdWallet, Chen was a hedge fund analyst at Perry Capital investing in payment processing firms, credit card networks and technology companies.

Just when you thought investing couldn’t get weirder, an internet dog meme became the hottest new cryptocurrency. You could also buy thoseNFTswe were just talking about with cryptocurrency, if owning the world’s first digital perfume or digital toilet paper with flowers is your thing. Yes, those are “real”—but that’s a story for another day.

If you chase crypto based on what’s hot that day, you’ll probably wind up sick too . That’s what it’s like to exchange cryptocurrencies. They’redecentralized—which means no government or bank controls how they’re made, what their value is, or how they’re exchanged. Because How to Send and Receive Crypto ofthat, cryptocurrencies are worth whatever people are willing to pay or exchange for them. You’ve probably heard of people making (or losing!) hundreds of thousands of dollars by investing in cryptocurrency. It feels like a modern-day gold rush all of a sudden.

Is Buying Cryptocurrency Investing Or Gambling? Here’s How To Tell The Difference

Make sure you’re investing money you can afford to lose. You’re not buying a currency; you’re buying the idea behind the coin, which is supported by an underlying blockchain technology. Blockchain technology is a distributed ledger that records a growing list of data. For example, NFTssparked a cryptocurrency digital art craze where you buy digital art with digital money—NFT stands for non-fungible token . NFTs are supported by Ethereum’s blockchain technology, creating a brand-new way for folks to get into fine art collecting. Investors have very specific goals around rate of return, time horizon, and risk tolerance itself.

The primary difference between gambling and investing is an investor will use tools of diversification to mitigate risks and decrease the chance for loss. A gambler is typically all-in with a singular lever dictating whether they win or lose. And even if you hold different types of cryptocurrency, the use of a single asset class means you aren’t mitigating risk through asset allocation and diversification.

Most Americans would not walk into an underground casino and gamble with their life savings. Yet, this is what consumers may be doing when they speculate on cryptocurrencies today. As a result, some have seen their investments wiped out by unscrupulous characters, fraudulent coin offerings and scams.

How Does Cryptocurrency Work?

With all the fraud and uncertainty surrounding cryptocurrencies, investors are flying practically blind. If regulators step in and begin to exact more accountability from the players in cryptocurrency and blockchain markets, it may allow legitimate players in this space to flourish. But for now and the for foreseeable future, cryptocurrency is a bad bet for American consumers.

Investing in cryptocurrency is risky, to say the least. The fundamental question of who regulates this volatile world — and to what extent — needs to be sorted out now before more consumers get hurt. Dummies has always stood for taking on complex concepts and making them easy to understand. Dummies helps everyone be more knowledgeable and confident in applying what they know.

And the lead agency needs to have the budget necessary to launch investigations and bring cases against bad actors. All it takes is five minutes on the internet to know not everyone has your best interests at heart. Scammers will stop https://xcritical.com/ at nothing to get access to your personal information and passwords—even your bank account. The value of cryptocurrencies goes through extreme ups and downs. There’s no denying that some are really hot right now—but for how long?

Checking Cryptocurrency Fundamentals Before Adding To Your Portfolio

It’s the hot buzzword of the investing world these days. Ever heard of Bitcoin, Dogecoin, Litecoin, XRP or Ethereum? Nope—they aren’t embarrassing rock band names from the ’90s. They’re actually types of cryptocurrencies .