Crypto as long term investment

What is long term investment?

In order to understand what a long term investment is, let’s break it into its parts as if it was a rocket ship we planned to take to the moon. No pun intended!

The word investment is connected with the word ‘invest’. To invest, means to put one’s money in an asset, in the hope that it will gain value in the long term. It can of course be a stock or a crypto, but it could be in a house, or in the education of your children. Long term implies that if you are to engage in such an investment, you don’t expect the returns to happen instantly, but rather it should take time. As Warren Buffet said, you can’t have 9 women get pregnant in the hope of the baby to be born in 1 month! Some things, need *time*.

Is crypto a good long term investment?

But, you aren’t on our blog to read parenting advice. No. You are here because you want to know if satoshis and cryptos can be a long term investment. The answer would greatly vary on your definition of long term. If you invest in a 401K at 20, you know you want to get that investment back when you are 60. You know that others have done this way before you were born.

With crypto, however, Bitcoin is this cute little internet thing that was born around the 2008 financial crisis. In 2021, BTC turned 13, and officially became a teenager! This means that, while crypto punks see it as a long term investment, they are essentially gambling that something that hasn’t been around for long, is here to stay for a long time. This isn’t right or wrong. It is up to you to decide whether a decade of data is enough for you to satisfy your risk appetite.

That being said, there are intrinsic elements in Bitcoin in particular, but also crypto in general, that make it quite attractive as a long term investment.

  1. Crypto came a long way. It used to be that the collapse of a single exchange, like MtGox, can cause all of the market to crash. Today, however, a China ban on crypto did not even cause price crashes or moon rallies among major coins.
  2. The CME, that is to say the traditional sophisticated investors, has had BITCOIN, and now ETHEREUM futures contracts. This means that these are here to stay. As a reminder, you can’t find lots of pairs on the CME other than mostly commodities, a few majors forex pairs, and the US indexes. No stocks, or ETF’s . In other words, you are in good company.

Benefits

A crypto asset has historically broken records in terms of ROI relative to any other asset. The volatility of crypto makes it such a fantastic and appealing long term investment vehicle. The fact that it is not tied to any government is also fascinating. It is not your crypto dollars that will be used to bail out the Wall Street bankers.

In general, crypto coins have a limited supply. Bitcoin, for example, is limited to 21Million coins that will ever be mined. This means that, whether you want it or not, there will always be a scarce supply, and by the time no more coins can be mined, the supply will no longer exist driving the price up. This is in stark contrast with how the federal reserve can print money without problem, essentially diluting your purchasing power and increasing inflation.

Risks

By far, your biggest risk when investing in crypto is related to how and where you store your crypto. 

  • If you decide to keep a harward wallet, and then you forget your wallet keys, well, you can say goodbye to your investment. 
  • If the exchange you stored your keys on happens to be hacked, then you also lose your money. 
  • Sometimes, the US federal government might decide to take over your exchange wallets like they did with btc-e. You then find yourself in a legal lawsuit with the US government. 

Automate crypto trading
Join Vestinda Private Beta


Get FREE access

Which crypto to invest in long term?

Choosing a crypto depends on your risk profile. Bitcoin, and Ethereum remain the top safest and most known coins out there. They have survived the test of time, and a massive part of the ecosystem depends on them, especially ETH.

  • You can visit CoinMarketCap to check out which crypto has the highest market cap at any point in time. 
  • Wallmine is a good place to do fundamental research on a coin to find the value of the coin.

Riskier investments can be made on DeFi itself. Be advised that this would require you to know what you are doing. But with every high risk, there’s always a high reward!

How to invest long term in crypto?

If you do not have experience trading, you can create a general basket of coins. Or, you can copy some of the best performing coins on Vestinda’s marketplace! The most important aspect of investing is learning to do nothing or almost nothing. And be consistent at doing just that. Remember, it is a long term investment. Not a scalp that you need to close after a few minutes of chart reading!

Make sure you understand the fundamentals of the coins you are interested to invest in. Research the team behind it, the GitHub page, code, white paper, social media etc. And try to make sure your investment is diversified across different sectors so as to avoid risk correlated losses.

How to choose the best platform for long term investing in crypto?

Once you decide on which coins you want to invest in, you will need to find a platform to purchase it from. Try to find a local exchange that is trusted, or use a regulated global exchange like Coinbase, Kraken or Bitstamp.

Crypto has intrinsic risk associated with it, so it’s best to avoid having risk related to the exchange. Once you have money in a crypto account, it’s time for you to purchase the coins you want based on your strategy. Or, again, you can use Vestinda to do that heavy lifting for you by using some of the best strategies curated on our marketplace.

How to store crypto safely?

There are a number of good software wallets out there that are pretty easy to set up. The safest way to store crypto though is in a hardware wallet. With both of the options, you own the keys, and no one but you has access to it. This approach does bear the risk of you losing access to your keys though.

If you do not want to take that risk, you can store it on a popular exchange. The custodian business has evolved a lot and most of the exchanges use advanced solutions from 3rd parties to store crypto in cold wallets.

But, at the end of the day, safety in storing crypto is just like having a safe password. If you don’t put in the effort, you expose yourself to the risk of losing your crypto, be it investment coins or trading coins.