Is it worth investing in bitcoins and how to invest in cryptocurrency correctly? Find out which projects you should choose to invest money in them at interest.

They write about Bitcoin on the Internet, talk on national television, and argue in supermarkets and on public transport. Some want to buy cryptocurrency and make money on the rise in exchange rate, others predict an early collapse of the bitcoin market, since the latter are not supported by anything and represent an “artificially inflated soap bubble.”

Let's not enter into polemics, but try to calmly understand what is happening. Denis Kuderin is with you, an expert of HeatherBober magazine on financial literacy.

I'll tell you if they're profitable investment in bitcoin, why this currency stubbornly continues to rise in price, despite pessimistic forecasts, and what types of investments in BTC are the most popular. You will also find out what kind of profits trading on the cryptocurrency exchange can bring, and why knowledgeable people do not recommend keeping all your savings in “cue coins”.

1. Is there a future for investing in cryptocurrency?

According to the most progressive financial experts, the blockchain technology on which bitcoins are created is the very future that science fiction and futurists have written so much about.

The digital currency Bitcoin, the first among cryptocurrencies, has long become a full-fledged means of payment. Moreover, this is no longer just a convenient way to pay on the Internet, but a tool for enrichment.

Perhaps the current status of BTC is not exactly what the creators of the cryptographic code expected, but reality has made its own adjustments. “Bitki” became a means of accumulating and multiplying capital. Honest entrepreneurs, large corporations, housewives and freelancers invest in this currency.

Many of those who invested a large amount of money in cryptocurrencies several years or even months ago received considerable profits when the currency was exchanged back at an increased rate. There are also those who regularly makes money on the difference in quotes.

Let us list the main characteristics of Bitcoin in terms of investment attractiveness:

• high volatility– in 2017, the cost of BTK increased almost 20 times;
• widespread demand– the currency is recognized by all segments of the population;
• ever-increasing complexity of computing new blocks– the more computational costs, the higher the cost;
• independence from the global economy– since the currency is not tied to any country, investors do not need to be afraid of revolutions, crises and sanctions;
• no one controls the cryptocurrency account except you– third parties or organizations cannot freeze money or limit the transaction amount;
• limited number of coins– the reserves of bitcoins on earth are limited, it will not be possible to “print” a million or two more bitcoins.

We'll look at these and other benefits of Bitcoin in more detail in later sections, but first, it's enough to understand that valuebitcoin– a fait accompli. Investments in this currency definitely have and will have value in the near future, but you should not immediately convert all your existing savings into “digital”.

In the near future, investing in Bitcoin will have a beneficial effect on your wallet

Even the most profitable financial instrument requires a balanced and reasonable approach. Bitcoins also have disadvantages. Cryptocurrency is not recognized by the Russian government as a full-fledged means of payment. At any moment, cue balls can be banned in the Russian Federation, as they did, for example, in Iceland.

Besides, this currency is really not backed by anything other than consumer demand. It becomes more expensive for the same reason that everything else becomes more expensive - there are people who want to buy it.

But this value is artificial. It is not the same as, say, oil. Oil is a real fuel. And bitcoins are just a chain of cryptographic code in a computer.

However, all these circumstances do not prevent thousands of people from making money on BTC right now. What to choose – caution or risky but promising manipulations – is up to you to decide.

2. What are the benefits of Bitcoin investments?

Let's take a closer look at the benefits of investing in Bitcoin.

In fact, there are more advantages; only the main ones are presented here.

1) Complete anonymity

All that can be found out about a transaction when it is carried out is the wallet number. Moreover, all transactions are open for viewing on the blockchain. How much money was spent and when - this information is publicly available. But from whom and to whom, only two participants in the procedure know.

I note that this plus is relative. On the one hand, anonymity is great: no one pokes their nose into your financial affairs. On the other hand, this is the reason for increased attention to cryptocurrency transactions from the state.

If one day governments decide that digital currency undermines state security (for example, it stimulates the trade in weapons and illegal substances), anonymity will become a powerful argument against bitcoins.

2) No connection to a specific bank

Bitcoins are not controlled by any financial institution. Banks have nothing to do with this currency at all. And therefore, there is no need for intermediaries when carrying out operations, and there is no one to pay the commission.

No one will be able to limit the transfer amount or freeze your account. The only danger is losing the key to your Bitcoin wallet. This is a really serious risk, since it is impossible to restore access to the wallet. Lost keys are lost forever.

3) The number of bitcoins is limited

The maximum number of bitcoins that will ever be mined is known: 21 million. This number is predetermined at the program code level and cannot be increased.

At the same time, the process of cryptographic calculations of each new block is constantly becoming more complicated, and the reward for it is falling. This inevitably increases the value of new BTC, although objectively the difficulty of mining is of concern only to miners.

3. How to invest money in bitcoins - popular investment methods

So, you are determined to invest in Bitcoin.

First, you need to choose an investment method. Not all options are equally profitable, and some are riskier than others.

Method 1. Investing in cryptocurrency at interest

A strategy for the lazy, or maybe, on the contrary, for the wisest. The simplest option and quite possibly the most profitable way of investing that anyone can handle.

What it takes: Buy BTC at the lowest price you find and wait for the value to rise. Many did this in 2017 and were not disappointed.

An acquaintance of mine named Andrey bought a certain amount of cryptos, hoping for a long-term investment. He had 250 thousand rubles who needed a safe investment. There was enough money for exactly 1 BTK.

When he discovered that the exchange rate had first doubled and then tripled, his intentions changed. He no longer wanted to store, he wanted to make a profit right now. And he successfully did this, multiplying his initial investment several times.

Perhaps he was even in a hurry - the rate soon rose by several more points. And yet the operation was more than successful and, most importantly, did not require any intellectual, much less physical effort from my friend.

Method 2. Trading on the stock exchange

Cryptocurrency exchanges have become no less popular than stock exchanges or the Forex market. Due to the high volatility of crypto money, operations here are characterized by increased risk and the same profitability.

Sometimes during the day the rate increases not by tenths, but several times. A person who is familiar with the basic principles of trading has every chance of making a fortune. True, this will require a lot of time and effort. Stock trading is not a game, but daily work.

Advice: choose a reliable exchange with an impeccable reputation - the market is full of fraudulent sites that simply will not allow you to withdraw your earned money. Or you will lose profits on extortionate commissions and exchange transactions.

Method 3. Funds (investment projects)

Investment funds and projects are essentially reminiscent of ordinary banks, only they work not with fiat currency, but with cryptocoins. As a rule, these are English-language sites, so to understand the rules for placing a Bitcoin deposit, it is advisable to speak this language.

If you have already given your money to mutual funds and received profits from such operations, then the principle of working with Bitcoin funds will be generally clear to you.

The general meaning is as follows: professional investors manipulate your money to make a profit and take a certain percentage for themselves. It would seem that everything is orderly, noble and transparent, but in reality there are also scammers in this environment who are not averse to profiting from your savings.

Method 4. Purchasing mining equipment

Expensive, but reliable. At least in the current period of time. We are talking about the latest equipment - special ASIC processors created exclusively for Bitcoin mining. This is exactly the equipment installed on industrial farms for the extraction of cryptocurrency.

The disadvantages of this method are incredible electricity bills, the increasing complexity of calculations every year, and a decrease in the cost of remuneration. Experts say that such a farm will pay off only in a year and a half.

More information on this issue is in the article “”

Method 5. Participation in pools

This is a simpler, but less reliable method of mining.

Today almost no one mines cue balls alone: miners unite in pools - special communities. Pools have different levels of profitability and popularity, but they have the same goal - an even distribution of profits between miners.

Another mining option - cloud mining. In this case, you do not spend money on purchasing equipment at all, but rather rent it from an industrial farm. In this area, there is also a high risk of fraud - there are only a few honest cloud mining sites that are directly related to cryptocurrency mining.

Comparison table of investment methods:

4. Main risks

I outlined the main risk above - the value of bitcoins is not supported by anything other than demand for them.

Yes, this is a convenient, uncontrolled, high-speed and secure means of payment, the currency of the future. But for now, its real value is the result of speculative processes and mass “craze” on blockchains and cryptocurrency.

Here is a very likely scenario for the exchange rate to fall:

At some point, several large investors decide for some reason to “go to the cash” and sell cryptocurrencies. The price drops a little. Smaller players are starting to get nervous and are also selling bitcoins.

Then they write about it in the media, on websites, and on TV. Panic ensues and everyone begins to hastily get rid of BTK. The price drops sharply. A collapse occurs.

Another danger - possible ban at the state level. Banks and governments do not need alternative currencies. If government officials decide that cryptocurrency is undermining the country’s economy, using bitcoins will become problematic.

Still, investing in Bitcoin is risky.

Bitcoin experts point to another possible risk: the means of mining this cryptocurrency will gradually concentrated in the hands of a narrow circle of people– in particular, several Chinese mining farms. Hence the trend towards centralization of BTC, which was originally conceived as the most independent and decentralized means of payment.

5. Rules for investing in cryptocurrency

A few simple but important rules for investing in digital money.

Remember and put into practice.

Rule 1: Don't convert currencies too often

The more exchange transactions you carry out, the greater the losses. For each transaction, exchange offices charge a commission, sometimes a considerable one. However, it is not always possible to change currency at a favorable rate.

There is a good service for tracking the best quotes at the moment -. I personally always use it when I need to exchange electronic money for rubles or vice versa. The site not only gives the best rate in real time, but also publishes other important information - currency reserves, reliability ratings of exchangers, user reviews.

Rule 2. Choose projects that pay profits in bitcoins

If you participate in cryptocurrency projects or investment funds, choose this option to receive rewards in bitcoins, and not in rubles or dollars. This is more profitable from the point of view of long-term investments.

Rule 3: Think carefully about trading ideas

An obvious, but no less important rule.

The network is full of scammers playing on the relevance of Bitcoin. Numerous faucets, ICOs (or rather, counterfeits of them), cloud mining sites (in fact, pyramids). You need to be able to calculate such sites, otherwise you will not see any earnings or your own funds.

6. Is it worth investing in bitcoins – real investor reviews

Earnings on bitcoins are not limited by anything. Except perhaps the final amount of this currency. There are people who have already become millionaires, having bought a hundred or two BTK on occasion several years ago.

Today, not only cryptocoins themselves are sold on the market, but also securities based on them. The name of these bond analogues is Bitcoin Tracker One. They are sold on regular exchanges. There are already several types of Bitcoin bonds.

It is quite difficult to estimate the income of Bitcoin investors - there are too many tools and nuances in this area.

The network is full of messages from those who got rich in a couple of months on the stock exchange or cloud mining, but there are also a lot of negative reviews from deceived investors. Of course, you shouldn’t believe everyone, but it’s definitely worth studying each of the investment areas in detail.

Watch a short video on the topic of Bitcoin investments:

7. Conclusion

Investments in Bitcoin are moderately promising, moderately dangerous and little predictable. If you have free money that you don’t mind losing in the event of force majeure, take a risk - cryptocurrency is freely sold and bought on exchanges, forums and exchange offices.

Question for readers

Your opinion: what types of cryptocurrencies are the most promising for investment?

Good luck with your investment projects! Comments and feedback on the article are welcome. See you again!

Hello, in this article we will talk about the virtual currency - Bitcoin.

Today you will learn:

1. How to earn bitcoins with and without investments.
2. What to do with bitcoins.
3. How much do they earn?

Working ways to earn bitcoins

First, watch a 3-minute video that literally tells you about the Bitcoin cryptocurrency:

Earning bitcoins using a computer is becoming more difficult. Just a few years ago, when Bitcoin was just beginning its “promotion,” it was possible for anyone to earn the average salary of an office worker. Now, with the advent of the big coin, we have to come up with new ways to actually earn coins.

Mining

Mining is the extraction of currency using a video card, one of the first ways to earn cryptocurrency. It has its drawbacks, although it is considered the most reliable and profitable.

About two years ago, you could earn money thanks to a video card, which did not require any expenses. The whole point was that the currency “hunter” built gold mines in a game form, extracted gold and exchanged it for real money.

Now, in order to earn money, you need to create or buy a special computer configuration with an expensive video card. Not only will the configuration cost a lot of money, but you will also have to pay twice as much for electricity. That is why mining, as an unprofitable method, goes down a step from the top every month.

Advantages of mining on your own computer	Disadvantages of mining on your own computer
1. It is possible to sell equipment at a discount at any time. 2. Complete minimization of speculation. 3. You choose which currency to “hunt” for. 4. Automatic earnings of bitcoins.	1. Equipment handled in this manner has a high risk of breakdown. Added to all this is the low likelihood of warranty service. 2. Noise and double the electricity use. 3. It is not possible to create large farms in your own apartment. 4. Due to Internet outages, work is completely interrupted (even if it has lasted for several days), and the farm has to be started again.

The offer of mining among “hunters” is considered only if it is possible to pay half the cost of electricity or not pay for it at all.

Cloud mining

The essence of cloud mining is that you don’t have to spend money on a computer, video card, and so on. You are offered to rent computing power on remote servers. However, cloud mining has been almost completely “attacked” by scammers who successfully hide after receiving the rental payment. So be careful with this.

The purchase of capacity occurs in hashes. The computer unit increment system is identical to bytes. It is advisable to purchase Giga or Terahashi. This is a more reliable option.

The average cost of one Gigahash depends on the exchange rate. For example, in 2016, 1 bitcoin cost about $650. 1 Gigahash cost 0.0006 bitcoins ($0.47). This will be enough for a stable income of 1 bitcoin per week.

Investments

Bitcoin appeared in 2008 and its cost was negligible. In 2017, the cost increased a million times. An investment carries some risk. With a long-term investment in cryptocurrency, it is possible for the price to rise, stop, or fall.

After several years, many people regret that they did not contribute, for example, in 2013. It was at the end of this year that the price began to rise, which later rose “to the skies.”

Bitcoin farm

Mining farm – a chain of computers that perform calculations around the clock, 365 days a year. The way a farm works is that you provide a specific program with the processing power of your computer. The video cards built into the farm operate at the limit of their capabilities.

Farms occupy a pyramid position. They are beneficial only to those who started doing this at the time of the birth and “promotion” of cryptocurrency. Many people, having learned that a mining farm brings in $1,000 a month, spend fortunes on it, but what happens then?

Perhaps in the first month the farm will give you the desired money. But the fact is that over time, the computing power requested by the program and servers increases. And the power of your farm remains the same as in the first month. As a result, earnings will decrease.

In the best case, the owner of such a device begins to try to fix something, but nothing works, and therefore he has to sell the farm.

Next, the second pitfall: your farm worked hard, for example, for about six months or a year. You bought it for 100,000 - 150,000 thousand rubles, and in a year its cost due to constant work will be about 60,000 thousand rubles.

But does anyone make money on these farms? Yes, on the computing power of those who buy up hangars and completely fill them with farms. They invest several million and buy about hundreds of thousands of video cards. This brings income, but newcomers who have stepped on the second pitfall make money only by selling these same mining farms.

To avoid getting hooked by those who sell farms, ask yourself: why is he selling it if it generates income? True miners who know all the intricacies and nuances of making money will not dare to decide to sell what generates income.

How the farm works and what you get paid for

Bitcoin is a decentralized unit. It does not have a single server or developer who would do this. That is why when you download special mining software, you turn your computer into a particle of the server. And there are quite a lot of people like you. If you put all these particles together, you get a powerful server.

To give people an incentive to stay part of the server, the system pays rewards in the form of virtual currency. That is, miners receive money for donating the power of their computer to the system.

Remember that it is impossible to quickly earn bitcoins, and it is also impossible to earn them simply by placing a farm on the windowsill and minding your own business. This is a kind of investment in which you need to wait for payback, you need to constantly work on it, delve into new subtleties and monitor the exchange rate of virtual currency daily.

Earning bitcoins without investment

It is quite possible to make money on Bitcoins from scratch, but it will take a lot of time. At the moment, there are a huge number of servers that offer free currency, more precisely, Satoshi (one hundred millionth of a Bitcoin). All you have to do is enter captchas, go to websites or watch videos. In general, a full-fledged job.

Where to earn bitcoins

Free Bitcoin servers are called Bitcoin faucets. The amount of earnings is low, but you also do not perform complex tasks. Initially, faucets were created to “promote” currency, but now they are the easiest and most popular way to make money. Plus, there is a referral program on all servers. By attracting partners, you receive additional income.

Several ways to earn currency without investment:

1. Bitcoin collection.

The easiest way to get bitcoins. The registered user is asked to either enter a captcha or view an advertisement, and after the action is completed, they are paid from 50 to 200 satoshi.

Typically, such faucets have a timer for entering a captcha or viewing an advertisement. On some sites, the entry can be repeated every five minutes, while on others it can be repeated every hour. Experienced “hunters” suggest setting up 10 – 20 servers for coin mining, because it is very difficult to get even an average income from one such faucet.

If you have or a well-promoted social network, then this method is just for you. You can leave affiliate links to Bitcoin faucets where a certain number of people will see them. Thus, we are back to the referral system again. For referrals, that is, partners, the service determines your percentage.

1. Automatic earnings on faucets.

Making money on a machine is the best option for finding virtual currency. This is a fairly simple method that is suitable for those who want to make a profit without any action at all. In order to earn money, you just need to install the special STARTAVTOBET application on your computer, and it will bring you money automatically.

What to do with earned bitcoins

If you have earned your first bitcoin, then the question arises: what to do with it? Before you start working, any server you want to register on will offer to open a wallet with which it cooperates.

This is exactly the same system as, for example, if you paid your child’s tuition through a university partner bank: minimal commission or no commission at all, and the money will be received one hundred percent. Many Bitcoin faucets withdraw earnings automatically if you enter your wallet number.

After the first cryptocurrency has been successfully earned, it must be withdrawn. Many advanced “workers” advise not to wait for the rate to double or increase, but to withdraw the amounts immediately, because there is a huge risk of “burning out”.

Bitcoin withdrawal

It is legal to withdraw bitcoins to an electronic account. Unfortunately, this currency cannot be cashed out, but there have been cases when it was used to pay in online stores.

The following ways to receive cryptocurrency are available:

1. You can withdraw through exchanges.

Exchange systems have flooded the Internet. They allow users to engage in a system of purchases and sales, as well as cryptocurrency conversion (conversion is the ability of currencies to exchange among themselves). The commission on exchanges is minimal, but you need to wait until there is a buyer for your product.

A popular exchange is a great chance to quickly exchange a coin. The most reliable exchanges are those that, after registration, ask you to make a deposit and undergo verification, and only after that they provide a full list of transactions.

1. Exchangers.

The most reliable and proven method by many people. Almost instant payments to your desired wallets. But of course, the exchanger requires a fee for its operations.

1. Forums.

This is perhaps the most unsafe method of exchanging currency. It is built through a forum on the complete trust of strangers in each other. And here the chance of becoming a participant in a dishonest deal increases.

On specialized forums it is possible to find a specific person with whom you will make a transaction, but this will take some time. The advantages of this option are zero commission and instant exchange.

How much do you earn on bitcoins?

The more people mine or register for Bitcoin faucets, the less you will earn. Imagine a circle that is divided into ten equal parts. A circle is information that you need to process, and for this processed circle you pay 20 bitcoins.

There are ten people like you, and when you process this circle, one tenth of all the money will end up in your wallet. Now imagine that a thousand more people find out about this circle, which means that now the reward will be a thousand times less.

The Bitcoin exchange rate is not backed by anything and is extremely unstable. It changes almost every hour. This happens because its fall and rise depend only on two factors: buying and selling.

Example. If one person decides to sell ten bitcoins, the rate will fall quite low, and if he decides to buy them, the rate will increase. It also depends directly on the news. If a well-known news newspaper writes that they want to block the cryptocurrency, then the rate will be almost equal to the minimum.

When considering mining as an option for making money on cryptocurrency, the daily income will be about 600 rubles per day. And this is with the most powerful gaming computer. If you take a computer of average power, then the maximum income will be 50-60 rubles.

Alternative ways to make money on Bitcoins

People don’t really want to wait for their cloud mining to take off or for a certain amount of Satoshi to be collected on a Bitcoin faucet.

In order to earn 1 bitcoin per week, you can use the following methods:

1. Take advantage of cryptocurrency doublers.

Doublers operate on the “invest - get twice as much” system. In this case, you need to be careful and not jump into the pool headlong. Beginners who invest large sums to receive what they think is the same cryptocurrency are left with nothing.

In case of “victory” over the doubler, it is recommended to use only those servers that offer small percentages (2-3% per day). There is no need to “scroll” the money several times either. It’s better to do it once, withdraw and invest further amounts. This will be more reliable, and you definitely won’t get burned out.

The operating principle of doublers is based on the arrival of newcomers to the system who invest money. In this case, payments to existing participants continue. But such servers later turn into scams and are forgotten.

Earning money from honest services is not built on the principle of a pyramid, like future scams, but on the principle of deposits in official financial institutions, where they pay a small percentage on the account balance. In order to earn 1 bitcoin per week, you need to invest 15.

1. Casino.

There are small lotteries or casinos on Bitcoin faucets. With an accumulated amount of several hundred Satoshi, you have the opportunity to win at the casino and earn currency for free.

1. Exchange.

Traders no longer want to earn one bitcoin a week. They want the same results in a few days or even hours. Trading takes place according to the standard market system: we buy cheaper and sell more expensive.

The exchange rate does not depend on any influences. The main task of a trader is not to panic when the rate begins to decline rapidly. Just wait until the price rises again and sell. For your patience you will receive very decent money.

What is happening in the world of cryptocurrencies clearly claims to be a mini-revolution, the potential of which is not fully understood today even by the most active players in this market. Its capitalization today is $80 billion, and the daily trading volume is 4-5 billion. Where did cryptocurrencies come from, how to get them and what to do with them next, says Zhanna Kulakova, a financial consultant at TeleTrade (TeletradeBel LLC).

— Initially, the creation of cryptocurrencies had a powerful ideological background, and the creators of Bitcoin focused on its anonymity.

Zhanna Kulakova
Financial consultant TeleTrade

“What can characterize a person more accurately than his financial transactions?”

The “father” of Bitcoin, little known to the general public Satoshi Nakamoto did not promote his brainchild alone: ​​other people also took an active part in this, such as, for example, Hal Finney, a convinced cypherpunk (a representative of a community of people interested in maintaining anonymity). The cypherpunks saw money as one of the main threats to privacy, since few things can characterize a person more accurately than their financial transactions. That is why the idea of ​​​​creating an anonymous payment system seemed so attractive to them.

Finn actively promoted cryptocurrency on the Internet Marty Malmi. “The widespread adoption of such a system could undermine the state’s ability to exploit citizens (...) I cannot help but be encouraged by practical projects that can bring us closer to true freedom.”, he wrote. By the way, Finney, Malmi, and other Bitcoin “activists” did not set themselves the task of evading taxes. It was primarily about the desire to hide information about oneself from the all-seeing eye of the state.

Marty Malmi. Photo from talouselama.fi

The first relatively large online store to accept Bitcoin was an anonymous platform selling illegal goods - Silk Road. Over the 2.5 years of the platform’s existence, the volume of transactions amounted to 9.5 million bitcoins. Its owner, William Ross Ulbricht, by the way, was also an active critic of government economic regulations. He is now serving a life prison sentence. The history of these people and their motivation is described in detail in Nathaniel Popper’s book “Digital Gold”.

However, today it is not the anonymity of cryptocurrencies that comes to the fore, but the investment attractiveness for individuals and the ability to attract financing for companies.

Long-term investments: what is the risk?

It is interesting to consider cryptocurrencies as an investment instrument, and the simplest and most profitable strategy can be “buy & hold” - buy and hold. We are talking about long-term investments here.

The rise in prices will be facilitated not only by the widespread legalization of cryptocurrencies and the growing interest in them in society, but also by the fact that the emission of many cryptocurrencies is algorithmically limited. The system was initially designed in such a way that it is impossible to issue more than a predetermined number of tokens (electronic tokens, each of which is a unit of virtual currency). For example, for Bitcoin the “ceiling” is 21 million coins, for Litecoin – 84 million.

And in the short term, the cryptocurrency market may be subject to strong fluctuations.

For example, during the period from 2009 to the end of 2013, Bitcoin rose in price from zero to $1,200, after which by January 2015 it collapsed to $160, two years later, by January 5, 2017, it again rose in price to almost $1,200, and by January 11 it had fallen to 765 dollars. Ether this year initially pleased investors with an increase from $8 to $400; a week later it collapsed to $13, but soon again exceeded the $300 mark.

Literally a few large transactions can provoke significant fluctuations in the prices of cryptocurrencies, and these fluctuations will not necessarily be in the direction of growth. In 2011, one seller, having placed only one large order for the sale of Bitcoin on the MtGox exchange, collapsed its price from $17.5 to $0.01 in a matter of minutes. It is still unknown exactly who it was: someone who deliberately wanted to collapse the market, or just a scammer who wanted to quickly get rid of the stolen bitcoins. But the fact remains that the price of this cryptocurrency instantly collapsed 1,700 times. Now the market capitalization is much larger, and it will be much more difficult to collapse it, but the repetition of such situations is not excluded, especially if we are not talking about Bitcoin, but about a “young” cryptocurrency with a small capitalization.

In addition, a sudden drop in confidence in cryptocurrencies can cause periods of falling prices lasting several months or even years. For example, in the summer of 2016, the Bitcoin rate collapsed by 20% after a large-scale hacker attack on one of the largest Bitcoin exchanges in Hong Kong. And during the period from December 2013 to January 2015 (that is, in just over a year), Bitcoin, against the backdrop of hacker attacks and massive profit-taking, collapsed by more than 7.5 times from $1,200 to $160.

Photo from the archive, ferra.ru

However, those who choose cryptocurrencies as an object for long-term investment also take risks. An increase in the value of virtual currencies in the future looks very likely, but it is not guaranteed. If, for example, we assume that some critical vulnerability is discovered in the system of a particular cryptocurrency, or states begin en masse to introduce a total ban on the use of this currency, its value may even fall to zero.

How to invest money in cryptocurrency

There are several ways to get cryptocurrency.

• Mining— independent mining using a computer that has to solve a complex cryptographic problem. This method requires certain material costs from a person for equipment and electricity, as well as some skills, so it is not suitable for everyone.
• Just buy cryptocurrency, using one of the many online services for exchanging virtual currencies or even a special cryptocurrency ATM (these already exist in Russia and Ukraine). Here it is important to pay attention to the commissions that are often charged during the operation and choose the most profitable option.
• Buy cryptocurrency as part of an ICO— an initial public offering of cryptocurrencies, which is used by companies to attract investment. This process has much in common with an IPO (public offering of shares), only in this case the investor invests money not in securities, but in so-called tokens - units of a new virtual currency.

After an ICO, cryptocurrencies usually begin to be traded on an exchange and their price fluctuates depending on how successful the project is. Both an increase of tens of times and a significant fall are possible. Here it is important for the investor to correctly assess the prospects of the project for which financing was raised. In essence, everything happens like in the stock market.

Photo from the world's largest mining farm in China. From cryptonavigator.com

Is the game worth the candle?

This year alone, startups have already raised more than $1 billion through ICOs. That's ten times more than in all of 2016, according to research firm Smith & Crown.

According to some reports, 10 million people invested their money in the ICO. Interestingly, the creators of Ether, one of the most popular cryptocurrencies today, raised funds for the development of the system through an ICO, selling the first 60 million tokens for 31.6 thousand bitcoins. At that time, the price of one ether was $0.3. As of July 13, 2017, it reached $200.

Today there are several thousand cryptocurrencies in the world and new ones are constantly appearing. Among them are about a hundred well-known ones. According to Coinmarketcap estimates, the top 10 cryptocurrencies by capitalization at the beginning of July 2017 included Bitcoin, Ethereum, Ripple, Litecoin, Ethereum Classic, Dash, NEM, IOTA, Monero and BitConnect.

Many say that it is too late to buy Bitcoin: it is too expensive and you need to choose from young and promising people.

However, over the past three months, Bitcoin has doubled in price and, according to Goldman Sachs forecasts, will reach $4,000 by the end of this year.

Standpoint Research predicts its growth to 50 thousand dollars in 10 years, and Saxo Bank - to 100 thousand. Some experts talk about a million dollars per token. Bitcoin has clearly not reached its ceiling yet.

In my opinion, the best chances for growth have cryptocurrencies placed as part of the ICO of truly successful projects, as well as “oldies” that have long been known to everyone and are holding up well - Bitcoin, Ethereum, Litecoin.

What is the law?

Prices for cryptocurrencies are formed in the same way as for any other asset: under the influence of supply and demand. The demand in this market is of an investment nature, and its additional driver is the legalization of cryptocurrencies in many countries.

Approaches to regulation differ: some states treat cryptocurrencies as a commodity and tax them, others as currency or as private money.

A complete ban on cryptocurrencies exists in Thailand, Vietnam, Bolivia, and Bangladesh.

But most developed countries - the USA, Canada, Singapore, EU countries, Japan, Australia - have taken the path of legalization.

The caution of states in this matter is not difficult to understand. Cryptocurrencies do not have a regulator above them and depend little on the monetary measures of central banks and big politics, since they can be issued by any participant in the system, and transactions do not require the presence of any intermediaries.

There is still no legal crypto-foundation in the world: no direct prohibitions, no permissions. And Belarus seems to be taking the first step in this direction. A special interdepartmental working group with the participation of the Administration of the High Technology Park is preparing a draft regulatory legal act on the digital transformation of the Belarusian economy. They plan to use the blockchain network to maintain registers of bank guarantees and in the securities market.

Another way to increase your asset in cryptocurrency is to make a deposit at interest. Yes, such a possibility exists. And if you have a couple of Bitcoin coins (or any other token) lying idle in your wallet, this is a great opportunity to extract additional income from your investments.

Features, advantages and disadvantages of this method of earning money, as well as: links to sites and practical instructions for beginners - we will talk about all this in the current article.

The essence of making money

The method of earning money on digital currency that we propose is not much different from the usual and familiar to all of us bank deposits: the investor is invited to make a deposit for a certain period (or unlimited) at a percentage of the investment amount.

On the Internet you can find dozens of websites of companies and services offering to invest Bitcoin or altcoins at interest (a considerable proportion of which, by the way, may turn out to be outright fraudulent resources). We will only talk about those sites with which we dealt in practice (reviews of which were posted on the pages of our site). These are cryptocurrency exchanges, which, in addition to their main tool - trading, offer their users to invest free funds at interest, and automatic trading services on crypto exchanges.

Peculiarities

pros

• Additional income
  (or other cryptocurrency) generate income due to the growth of the coin rate. Profit is formed due to the difference between the purchase and sale prices. Investing cryptocurrency at interest until it is sold is an excellent opportunity to earn extra money.
• Passive income
  Requires virtually no time or attention. The level of income directly depends on the amount of the deposit. Depending on the investor’s goals, profits can be withdrawn/cashed out and used at your own discretion, or reinvested, increasing the deposit amount.
• Favorable percentage
  Deposits in cryptocurrency will provide a much more favorable interest rate on the deposit than the traditional bank deposits already mentioned above. Starting from “moderate” profit (36-48% per annum), ending with a profitability of 10% per day (or more).

Flaws

• Perhaps the only, but quite significant, disadvantage of investing cryptocurrency at interest is non-trading risks, such as, for example, the option of closing the exchange, resulting in the loss of all invested funds. However, this equally applies to any crypto trader trading on the site. Often, non-trading risks are simply ignored by most who trade as unlikely. And banks in the vastness of our country are not particularly reliable.

Links to sites and exchanges

Lending Bitcoin at Poloniex

On the Lending page of the Poloniex exchange, you can issue a loan (that is, lend your own funds) to traders trading on the site.

• The crypto exchange acts as a guarantor of the return of funds.
• The only currency available for lending is Bitcoin.
• The user chooses the interest rate, as well as the term of the “deposit” (from 2 days), at his own discretion.

Screenshot of a Bitcoin deposit at interest on the Poloniex exchange

You can learn more about investing Bitcoin at interest. There are also detailed instructions on how to register and work on the Polonics exchange for beginners.

InvestBox on Yobit

Users of the Yobit crypto exchange have the InvestBox tool at their disposal. It makes it possible to make a deposit in several dozen altcoins.

• The loan is not issued to traders, but to the exchange itself.
• The altcoins available for investment are constantly changing.
• The percentage on deposits in some tokens can reach 10%, 50% and even 200% per day.

Cryptocurrency invested at interest on Yobit

For more information about investing cryptocurrency at interest on the Yobit exchange, read here, where you will find a comprehensive guide to working with the Yobit exchange.

On the night of September 2, 2017, the Bitcoin cryptocurrency rate exceeded $5,000 per unit for the first time. Bitcoin crossed the price of $4,000 on August 13, and $3,000 a week earlier. The purchase and use of bitcoins are not described in the current legislative framework, but the State Duma has already begun work on a law on cryptocurrencies, and more and more people are thinking about the possibility of making money on them.

And if mining - the provision of their computing power for a cryptocurrency system for a fee or commission for operations - is already occupied by large communities of miners, then a significant increase in the rate attracts general attention.

What is the view of this from a professional participant in the investment market, for whom searching for the best options for investing their money and the money of their clients is their daily job?

Alexey Astapov, director of capital raising and deputy chairman of the board of the Arsagera management company, a man with 22 years of experience in the investment field, shared his opinion on the topic of bitcoin and cryptocurrencies.

Why is the price of Bitcoin rising?

Because the demand for it is growing, and it is being drawn into circulation. Simply put, the pace of Bitcoin generation lags behind the growth rate of settlement volumes in it. If the rate of generation of this electronic money were equal to the rate of increase in settlements in it, then the cost of Bitcoin would remain at the same level. In addition, as a result of this “scarcity”, additional demand arose from those wishing to play on the growth of the exchange rate - as a result, a reflexive process was launched: they buy because it is growing, it grows because they buy.

Most likely, it was the second function of money (the first is making payments, and the second is saving) that became the main reason for the sharp rise in the exchange rate. Since exchange rate growth is not needed for calculations, this accumulation function is speculative. That is, people buy bitcoins simply for the purpose of reselling them to someone else at a higher price.

Who will buy more?

The one who will think that it will cost even more. On the one hand, if you evaluate the volume of the same bitcoins and compare it with the volume of daily settlements in classical money, then it is clear that this is a drop in the ocean and it can grow for a very long time. But on the other hand, why will Bitcoin become the new global settlement currency? We are talking about converting computing power. In fact, popular competitors like Etherium are already appearing. And given that computing power can be converted into any cryptocurrency, it is not a fact that Bitcoin will eventually take any place in the sun.

So, this is not the end of the development of cryptocurrencies?

It is quite possible that some more reliable and convenient algorithm will appear that will replace Bitcoin. Therefore, on the one hand, it makes no sense to ignore the emergence of a new type of money in the world, with the help of which settlements take place; on the other hand, the value of this money is currently determined by its value in classical money, which in itself is already strange.

Many people unequivocally say “this is money!”, but they have value due to their valuation in US dollars. It turns out that some additional money supply is being generated in the world, while the desire to carry out calculations in it and the demand for it are difficult to predict. Therefore, the situation is more reminiscent of a huge casino with permanent participants, where people play with each other, and those who support this game - miners - receive their bonuses for the opportunity to place a bet.

Some even consider cryptocurrencies to be a pyramid like MMM

Calling this in its pure form MMM is not entirely correct. In the case of Bitcoin, there is a useful function: by presenting a demand for this money not for the purpose of speculation, but for the purpose of making calculations in it, you receive a service for making these calculations.

Bitcoin farm in China

For example, those who create cryptocurrency generation farms are reminiscent of a migrant worker who comes to some territory and says - I have computing power, I’m ready to work to carry out operations. That is, we cannot say that this is a pyramid in its pure form - the investment of a certain utility is still present. But where is the true demand associated with carrying out convenient calculations, and where is the reflexive process in the hope of reselling at a higher price to someone who believes that it will be even more expensive, it is extremely difficult to determine, as well as to assume the size of these components in the future.

How might the situation develop for those investing in Bitcoin or other existing cryptocurrencies?

If Bitcoin takes the place of the main means of payment, then the speculative component will gradually decrease, and over time it will be at an acceptable level, as happens in the stock market when stock prices are determined. A share is a share in the business and property of a certain company, but even here there are situations when the value of the share in its price is separated from the fundamental value. But initially there is a rational grain in the nature of the action, compared to the same MMM tickets. Therefore, either Bitcoin will eventually occupy the niche of a means of payment or, most likely, this pyramid will collapse.

What should those who are thinking about buying bitcoins pay attention to?

Now it is difficult to determine what is more in the value of Bitcoin - the demand for calculations or the reflection of speculative growth.

One thing is clear: the value of Bitcoin cannot grow much on its own. Because the production of Bitcoin has a certain cost, and this is purely a matter of production. As in the case of the issue of paper money, the transition from coins made of precious metals, which in themselves were a value as such, to payments in the form of paper money once became a new qualitative leap in the life of mankind.

The cost of paper money was not nearly equal to the cost of gold. The production of paper money has a low cost, and any denomination can be assigned. Imagine that there is a sharp demand for such money, and at the same time someone is simply printing this money. Let us assume that the demand, due to the convenience of payments in them, is so high that people exchange gold money for paper money at an ever-increasing rate. We are seeing something similar now in a number of cryptocurrencies.

But still there is no general transition from ordinary money to technological cryptocurrencies

It must be borne in mind that the cost of producing paper money is low, and people now manage to earn money on the same farms, but saturation will gradually lead to the fact that increasing computing power will be unprofitable, and the amount of this electronic money will reach the required amount, satisfying the demand for them.

And if some kind of cryptocurrency from central banks appears, and we can carry out the same operations in them as with bitcoins, then there will be no point in overpaying users. The same central banks will bring to the market a means of payment that will provide exactly the same advantages as Bitcoin, while it will not have a markup in the form of a speculative component. And why then would you need Bitcoin if you can pay in the “official” cryptocurrency?

What will happen to Bitcoin then?

It will begin to rapidly deflate in value. Competition in the generation of cryptocurrencies will lead to the fact that their cost will have a small markup associated with their production. And if we hope to support the exchange rate with demand, then governments and central banks should get involved. Because: what is the underlying value of a currency within a country? What essentially makes a currency national?

What?

Taxes. The main reason why a person considers the national currency is that all taxes are accepted only in the national currency. And this is a key point for the national currency of a country. And Bitcoin is just an add-on. The fact that people agreed to exchange them is great, but without a government base that gives value to this monetary unit, ultimately its relevance and value risks being reduced to zero.

To summarize, what is your view of the future?

Bitcoin has a certain useful function, but sooner or later the state must intervene in this method of calculation, which, for example, will legalize the payment of taxes in this form. This will be the key point. What currency will it be? It is very doubtful that it will be Bitcoin. When national banks come up with an equally technologically advanced replacement and endow it with the appropriate capabilities, you will tell the next generations about the miracles of the rise and fall of the Bitcoin rate, which few will remember.

If you want to know the company’s point of view on other investment topics, we suggest you read the articles of interest on the website of the Arsagera management company.
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