The Crypto Craze - What You Should Know About The Crypto Hype
Cryptocurrency can be a complex topic for many. However, one doesn’t really need to have a high IQ to understand that those in the field can make a lot of money. This started what Glen Goodman termed the “Cryptomania” or simply, “The Crypto Craze”.
Although it’s a fairly good thing that many people want to get into cryptocurrency, this is also where a lot of cons arise. Since some, most even, start investing in crypto without acquainting themselves with the basic details, it just results in loss and an overall negative reflection for those in the field.
To avoid these cons from the crypto craze back in 2014, we have prepared some of the most essential things that you need to know in the following sections. These will help you execute cryptomania more effectively and successfully in the 21st century.
What Is Cryptocurrency?
A cryptocurrency is a digital money that can only be used online. There are no actual notes or coins in it. It's typically only possible to get it or spend it online, which requires moving funds from one account to another. There are nearly a thousand distinct cryptocurrencies, each with a different value per coin.
COPYRIGHT_WI: Published on https://washingtonindependent.com/the-crypto-craze/ by Stefano Mclaughlin on 2023-01-09T06:18:30.351Z
Way back 2014, the three most popular cryptocurrencies were Bitcoin, Ethereum, and LiteCoin.
Bitcoin, most especially, got all the buzz for being perceived as the future most significant world currency, possibly even replacing the dollar as the world's reserve currency in the future.
How Did Crypto Start?
Crypto has long been around in the community, but the main playing factor in its popularity is Bitcoin.
When the world's largest Bitcoin exchange, Mt. Gox, was hacked in 2013 and 850,000 Bitcoins were stolen, the euphoria about this new funny money swiftly turned negatively. Bitcoin's price plummeted from a peak of almost $1,200 per coin to a low of $160, a drop of more than 85%.
Putting more than a modest portion of your portfolio into Bitcoin in the aftermath of the Mt. Gox theft was similar to giving up your life savings in exchange for a mouthful of magic beans.
Even so, Financial Times didn’t let the opportunity pass up to announce that they will have to get themselves out of the whole Bitcoin situation and placed a bet that it was the end of both the currency and crypto altogether.
They were wrong, though. Soon enough, several other cryptocurrencies, more improved and advanced, rose up the ranks. Some of which are Ethereum and LiteCoin, the previously said currency types.
Why You Shouldn’t Get Into Crypto Because Of FOMO
FOMO is an acronym that has spawned a slew of memes. It stands for Fear Of Missing Out, as you may well know.
People knew that purchasing at the pinnacle of a craze wasn't the best idea, but the dread of being the only one who didn't make it wealthy was too much to bear. Even those who had previously been burnt appeared willing to try again.
Because of FOMO, people evidently invested in cryptocurrency even if they’re not fully ready. This is one of the biggest mistakes that one can make since there’s no guarantee or insurance that the money you invested in buying coins will go back with the same value, much less, return.
The Risks That Come With Crypto
Here are some risks that you need to know before getting into crypto:
Fraudulent Scams
If cryptocurrencies provided ideal ground for opportunists, it also provided excellent ground for well-organized Ponzi schemes.
These are usually based on enticing others to invest money in a scheme with the promise of excessively large profits and are named after the notorious swindler Charles Ponzi.
The goal is generally to make the founders wealthy while leaving the final (and largest) set of investors with nothing. OneCoin is a reported Ponzi scam with a modern crypto twist in that it masquerades as a legitimate cryptocurrency.
Instability
The crypto market is an unstable and unpredictable market. Although you’ll see a lot of price predictions from experts, you can never be truly sure that a currency will peak or dip since it will depend on a lot of factors.
The 'Bitcoin Roller Coaster' meme became synonymous with the emotional roller coaster that Bitcoin traders were experiencing. You'd see that meme all over social media whenever the price rose a little. It was actually contagious, propagated by thrill-seekers, and infectious to anybody who fantasized about limitless wealth.
Non-Guaranteed Investments
Once you invest in cryptocurrency, there is zero guarantees that you will get your money back. No matter how small or big it is, if the currency goes through a severe crash like what happened to Bitcoin, know that it may take longer for you to recover.
What To Know Before Investing In Cryptocurrencies
Even if you can afford to lose all of your money, it's critical to safeguard yourself emotionally as well as financially. It's disheartening to lose the majority of an investment, and it's a common occurrence that turns keen traders off for good.
It’s also important to note that you should never expect that things will go according to your plan. You should have backups, backup backups, and anything that may help you bring back the same amount of money if ever things go haywire.
Summary
These lessons will help you avoid beginner mistakes and wasted money in the long run. Even if making mistakes is the stepping stone to learning something, this is something that you definitely don’t want to happen in cryptocurrency. It’s important that you have a plan for what you do with your money and never splurge on something using finances that are meant for something else.
About The Authors
Stefano Mclaughlin - For the first five years of his career, Stefano worked as a financial advisor on state and local tax matters, developing internal marketing technology for his multinational tax business. With over 12 years of experience designing high-performance web applications and interactive interactions, Stefano is now a marketing technology specialist and founder.