Some of the striking questions on cryptocurrency are if it’s capable of making someone retire rich, become a millionaire, or be financially free? It’s a tough question to answer because you could either lose or gain.
Cryptocurrencies such as Bitcoin, and Ethereum are digital currencies that can be used to buy and sell goods and services online. Just like you have physical cash, you can also have cash stored in a digital wallet. For any cryptocurrency, you cannot hold it because it’s virtual. However, you can make it physical by converting it to cash.
Virtual currencies are not regulated by any bank or government. In Nigeria, transactions on cryptocurrencies are restricted. However, the government is working towards developing a document that will provide regulations.
Before having a cryptocurrency in your digital wallet (They are stored in a digital wallet), you will buy it with traditional money like Naira, Dollar, or Pound. There is also another way of acquiring crypto assets. It is called mining.
Mining is a process where computers solve complex math problems to generate new units of cryptocurrency.
Anyone who has intentions of buying any cryptocurrency would have to buy through debit or credit cards from popular trading platforms like Binance, Coinbase, Luna, OKX, etc.
Experts’ Views on Retiring Rich
Making money from cryptocurrencies and possibly retiring rich will depend on how much work and money you are putting into your investments.
If you’re starting with $5,000, for example, it is doable, but you will be taking big risks to make that kind of return in a short timeline. If you are willing to put in $500 over time, it could happen in 20 years.
It all depends on your discipline and understanding of market dynamics. You can have good and bad times and also understand the possible scams in the space. What is trending today, may phase out tomorrow.
Danetha Doe, an Economist, and Personal Finance Expert, said “investing in crypto can be a small part of your retirement planning. Crypto is a volatile market and therefore should not be a huge part of your financial strategy, but it can be a way to diversify your holdings.
In a note obtained by TechEconomy, Charlotte Freda, Crypto Expert does not agree that cryptocurrency is too volatile as has been claimed over the years.
She said cryptocurrencies such as Bitcoin, Ethereum, and Shiba Inu – Shiba Inu, one of the cryptocurrencies called the meme coin due to its origin; have outperformed stocks and real estate over the past decade.
“If you risk your whole portfolio on a single crypto, your risk increases exponentially.”
According to Charlotte, diversifying investments in cryptocurrencies is imperative, just as it’s the same with investing in the stock market.
“Just as you should with a stock portfolio, diversify your crypto holdings; this would help your portfolio grow exponentially, especially if it’s managed by an expert who knows how to.”
She noted, “you’re looking to “earn” your way to riches in the crypto space, rather than speculating directly in the market, one option is to become a miner.”
“Crypto miners are rewarded with coins by validating transactions on the blockchain. To do so, they must solve extremely complicated equations, which requires extensive computing power.”
To be sure, investing in cryptocurrencies should be second to having a solid financial plan that includes emergency savings and solid retirement planning, according to Tyrone Ross, CEO, Onramp Invest, a provider of “crypto asset” management technology for financial advisors.
“It does have a place, especially for those that are younger, and to be sure, investing in cryptocurrencies should be second to having a solid financial plan that includes emergency savings and solid retirement planning.”
“Have a financial plan first and figure out where crypto fits into that,” said Ross. “If you don’t have a plan, what are you doing?”
What Determines Value of Cryptocurrency?
Market sentiment and consumer confidence are usually the drivers of any crypto asset.
Benjamin Tucker, Crypto Investor, said when a bull run happens, consumers continue to invest in the asset as the price climbs. It becomes very cyclical.
“The same is true when crypto moves opposite. When crypto markets fall, consumers dell their assets. Consumer confidence works against you when the market crashes.”