Cryptocurrency: Should You Invest or Speculate?

Cryptocurrency: Should You Invest or Speculate?

Every first-time investor looking to profit from trading does not consider cryptocurrency alternatives, focusing on two main ways: trading and mining.

The main cryptocurrencies are Bitcoin and Ethereum. The dreams of those who come to the world of cryptocurrency mining are shattered by the "powerful hammers" of mining pools, which have become not just difficult, but almost impossible to compete with.

Of course, you can try to join one of them. However, joining the pools focused on mining the favorites of the cryptocurrency market today is quite a costly operation, requiring the purchase of the most powerful equipment, the payback of which turns out to be questionable.

That is why, if your goal on the exchange is to profit from operations with Bitcoin or Ethereum, it makes more sense to prefer trading rather than mining.

Trader or Investor

Once you have decided that you will go the way of trading, earning on the fluctuations of cryptocurrencies, you should choose the direction and speed of movement.

And in this matter, understanding whether you are a trader or an investor will be the determining factor.

For you to be able to make a decision, you should understand the fundamental difference between these two concepts.

An investor is a person who seeks to profit from effectively investing his capital in financial assets.

As a rule, investors are those people who make a single, but voluminous transaction, buying an asset in the hope of its growth in the long term, taking responsibility in advance for the possible consequences of this operation.

An investor always takes all possible risks on himself, not expecting a quick return on the transaction, but usually getting a very substantial benefit in the end.

The trader is a professional possessing special knowledge and skills for effective management of both own and investment capital.

As a rule, traders strive for short-term profit on sharp price fluctuations.

Typically, traders' positions last from a few minutes during periods of high volatility, to a few days when the price shows signs of strong growth followed by profit-taking and the opening of trade in the opposite direction.

Both participants in the cryptocurrency market have the same goal - profit, but the methods of achieving it are different, although they are somewhat similar to each other.

After all, an investor does not need as deep a knowledge of technical analysis as a trader to find short-term trading opportunities.

However, understanding when momentum is forming in the market, what the market trend is, and where the main support and resistance levels are, is necessary for both of them to make trading and investing profitable and safe for the capital.

Trading is a Profession

It should be understood that when choosing the path of a trader, you must devote quite a bit of time to education and developing your strategy as well as your trading style.

We won't dwell on the styles in this article, but we can suggest you read our other articles in the "Blog" section, where you can study in detail all aspects and techniques of modern crypto-trading.

And, in addition to the fact that trading requires deep knowledge of the material, it also implies quite an active presence of the trader at the monitor and constant control of the market, which takes quite a lot of time, unlike investing.

Investing - for Those Who Want Additional Income

In fact, unlike trading, even though you will need to take a course on technical analysis, which is perfectly suited to Bitcoin and Ethereum charts, the process itself takes minimal time, allowing you to live your life quietly and engage in your main activity.

To understand the possibilities of investing, you just need to look at the Ethereum chart, from which you can see that if you had bought this cryptocurrency just a year ago, spending $100 when its price was $10 per coin, now your profit would be $4500, in just a year, risking only a hundred dollars.

When choosing how to make a profit, it should be understood that an investor takes advantage of a profitable moment, while a trader knows how to take advantage of even the smallest price changes in the market.

But concerning cryptocurrency, one thing is certain - it is the perfect tool for both the one and the other method of making a profit.