How much do I need to start a cryptocurrency investment
Why should I invest in cryptocurrency?
Sherlock Holmes said: “When you have eliminated all which is impossible, then whatever remains, however improbable, must be the truth.”
And the truth is: it’s impossible to make a respectable return on traditional savings accounts right now. It can also be difficult right now to make a respectable return on some of the traditional finance industry investment vehicles.
When consumer-facing investment platforms are “suggesting” (not promising!) everything from negative yields to 13.4% over 10 years, that’s a terrible performance, with the only guaranteed winner being the platform itself.
Cryptocurrency is a new asset class: it’s virtual assets. That might seem weird: how can something that’s just a number on a database be worth something? Or be traded? Well, the traditional finance market has absolutely no problem with the concept: most of the money in the world is wrapped up in promises, and fiat money like USD or GBP comes into existence at the stroke of a keypress.
However, the key technology behind cryptocurrency (“blockchain”) is revolutionary and useful. The top cryptocurrencies have proven their worth time and time again: for instance, Ethereum’s smarter blockchain is the world computer behind millions of automated transactions a day, all transparent.
But why invest in it? Well, it’s probably the future of finance (a gradual merger with the traditional finance sector so everyone uses blockchain is a reasonable long-term prediction). Crypto can also give you returns that don’t have their juice sapped from them at source by over-entitled financial middlemen.
5 steps for investing in cryptocurrency
1. Understand what you’re investing in
It’s actually quite difficult to find good reporting about cryptocurrency in the wider world thanks to the hysteria of most media outlets about it, and it is even more difficult to find useful summaries about particular coins.
One of the best sources of information is Coindesk, which has reports and summaries by experts.
If you read those reports, that would make you better informed than 99% of the world’s population about Bitcoin. Though the downside is you may find yourself being asked about it at parties!
2. Look to the future
Cryptocurrency as an asset class is only 12 years old, and Ethereum is only 8. They’ve made massive strides in that time, facing down regulators, crashes, hacks and more – and are still standing. It’s acknowledged that blockchain is a valuable technology that would revolutionise the way economies work. There’s a long future ahead for traditional finance itself merging with the crypto ecosystem. That, combined with the fact that some coins have a hard cap on the number that can ever exist, means that things are likely to trend upwards over time.
3. Be aware of the volatility
But that upward trend is medium-to-long term. The problem with a new asset class is that there’s a lot less money in it than in established ones. There’s still a large amount of money in the crypto sphere, but that’s dwarfed by the trillions in traditional finance. Any billionaire, for instance, can have an outsize effect on the crypto market (Elon Musk, for example). As the sector gets larger, that ability will fade, but for the moment trading crypto day-to-day is a nerve-jangling exercise, and best avoided by the uninitiated (no matter how tempting).
4. Manage your risk
Some crypto is safer than others. Knowing the risk profile of coins and having an idea of how to spread your investment is the key to this. Bitcoin and Ethereum are volatile but proven.
Sometimes risk can come from unexpected places. “Stablecoins” are supposed to be pegged to a real-world asset for stability, like the US dollar.
But the design of the stablecoin and whether it’s got anything to back it up is an all-important consideration. A stablecoin like Circle’s USDC (backed by proven assets) was always going to be more stable than a coin using clever mathematical tricks, such as UST and its sister coin “LUNA”, which collapsed when its weaknesses were intentionally exploited, leaving a lot of unhappy investors in its wake.
Also, always beware of the current hot trends: the more excitable people are getting, the more cautious you should be! NFTs, for example, are an example of a useful technology being used for inappropriate financial purposes and marketed to people with wild promises of future gains. FOMO (“fear of missing out”) has never been so dangerous.
5. Don’t invest more than you can afford to lose
This is basic advice for any situation where your capital is at risk. Traditional finance and cryptocurrency are both perfectly capable of wiping out your money if you choose the wrong risk profile.
How can I invest in crypto – AQRU!
One of the simplest ways to dip your toe into the crypto waters is to use a platform like AQRU. It combines the simplicity of a yield-bearing account with the returns of crypto.
Although the dollar value of Bitcoin and Ethereum can change, the amount of it you own won’t go down: it will go up, thanks to interest.
The service we offer at AQRU means that your investment into crypto can be cautious and at your own pace, rather than all-in and risky (although there is always risk attached!), and it only deals with the most stable and safe assets. That might not be as exciting as being able to choose from a whole page of excitingly named virtual coins, but it’s a lot safer, especially when your coins are being protected by bank-grade security.
How much do I need to invest?
The nature of investments is that “the more the better”: the more capital you have, the more interest you get. But who in this life routinely has large lump sums? For most people, it’s something you have to build to.
One of the ways investment experts advise investing is with small, regular amounts. Aside from being more affordable, this means that you are helping to deal with changes in the value of an asset by spreading out the buying. Of course, the amount can’t be too small since even in crypto it’s unlikely to accomplish much. You can get funds into AQRU as easily as by pressing a button in your online banking.
AQRU’s small minimum investment of the equivalent of 100 euro and fee-free deposit means that even “small” amounts are put to good use immediately. Any amount can also be withdrawn in fiat currency fee-free to your bank account if you happen to need it (though, if you take our advice, you shouldn’t!).
The main options in AQRU also don’t lock your assets up, though lock-in periods may apply to some of the investment accounts.
Whether your risk profile is happier with USD-linked assets and interest, or whether you want to invest in coins with exciting long-term prospects such as Bitcoin or Ethereum, AQRU is a pretty good way to start.
You can onboard for free on our website or download our app from the App Store or Google Play. Once you have been verified (photo ID, proof of address, selfie) and have set up additional security on your account, you can deposit funds. Then, put them into your chosen investment account, and watch them start earning!
We have produced a small illustrated guide to onboarding with AQRU in our Help Centre, which might be helpful.