How Much Money Do You Need to Invest in Crypto? - Deepstash
How Much Money Do You Need to Invest in Crypto?

How Much Money Do You Need to Invest in Crypto?

Curated from: entrepreneur.com

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Building a Crypto Mining Rig

Building a Crypto Mining Rig

Getting involved in crypto mining means you’ll be able to generate coins on your own with no need to purchase them from someone else. You’re going to need a powerful rig, and even then, there’s no guarantee to make money from this endeavor.

Most cryptocurrency mining computers rely on very powerful GPUs, costing hundreds to thousands of dollars.

You’ll need to spend money on the electricity that powers your computer. Depending on which coin you want to buy and the competition you have  ( + other variables), you could end up spending more money to operate your rig than you make with the mining.

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Purchasing Currency

Most people buy and sell coins through a marketplace. With the right market, you’ll have even hundreds of cryptocurrencies to choose from, and you can buy in tiny increments, sometimes securing a transaction for less than $100.

Most cryptocurrency brokers charge money for this service, so you’ll pay a bit more than the total purchase price of your transaction (it's a negligible cost).

If you’re interested in trading coins frequently and taking advantage of the small spikes and valleys that occur throughout the day, you’ll need a significant amount of capital, and you’ll need to be prepared to make substantial transactions.

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The Rig Problem

The Rig Problem

If you have a powerful computer, you can set up a rig to mine cryptocurrency on your behalf, to generate the resources yourself. There are just a few problems with this idea.

  • GPUs and other necessary computer components tend to be very expensive for starters, compromising your potential profitability.
  • Crypto mining is also highly competitive and energy-intensive. This means you may end up spending more on electricity than you make generating cryptocurrency.
  • Unless you know what you’re doing, you’re probably better off buying and selling crypto on the market.

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The Free Capital Problem

You can purchase $20 of Bitcoin right now, but if you don’t have $20 to spare, that’s not going to do you much good.

Small scale transactions like the one above shouldn’t be a problem for anybody. But, if you’re living paycheck to paycheck or if money is inordinately tight, you might struggle to save up enough to build momentum.

There are several ways to handle this. For example, you could pick up a second job or a side gig to make some extra money. You could move to a cheaper location or cut expenses that are no longer relevant to you.

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The Portfolio Balance Problem

Just because you can invest in cryptocurrency doesn’t necessarily mean you should. Cryptocurrency is an uncertain investment wrought with volatility and regulatory complications.

There’s never a guarantee that any cryptocurrency will increase in value or even hold its value. And, many new cryptocurrencies entering the scene end up being flagged as scams.

If you’re interested in protecting your investment and maximizing your long-term gains, you shouldn’t invest all your money in cryptocurrency, especially if you don’t have much money to spare.

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The Time Problem

The Time Problem

Many people who delve into cryptocurrency are excited about the notion of turning a $1,000 investment into millions of dollars in wealth.

While this is possible, it’s unlikely, and to the extent possible, it will take a long time to unfold. For example, even if you saw an average return of 10% per year, it would take 73 years to turn $1,000 into $1,000,000.

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The Learning Curve

The Learning Curve

Even if you spend months reading about cryptocurrency, studying historical trends, and doing your due diligence for each of several different currencies currently being traded and speculated on, you still might make some bad decisions.

You could end up losing your initial investment, plummeting the principal back to zero. Or, you could make a handful of bad trades that completely negate whatever gains you made from your first trades. You could even end up holding onto a cryptocurrency with no realistic future. Even with a lot of money, becoming a competent cryptocurrency investor takes time.

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