Cryptocurrency: What is it? Explanation

The most important thing to get started: if you haven’t had any experience trading cryptocurrencies, such as Bitcoin, Litecoin, Ethereum and others, I highly recommend reading through this article: Cryptocurrency Explained.

You can’t compare cryptocurrency to stocks!

Today everyone wants a diamond ring: learning from history

You can’t compare cryptocurrency to stocks, rather to a commodity that people attribute a high value to. For example, diamonds. Actually, diamonds are “only” colorless stones. But ever since Tiffanys made the engagement ring the absolute standard in the 70s, everyone knows the “value” of diamonds.

It is similar with cryptocurrency, for example, there are only 21 million Bitcoins. In the meantime, a whole generation has grown up with digital currency, bitcoin has existed since 2009. More and more are investing in digital currency, even countries are thinking about their own digital currencies. The triumph of cryptocurrency! Also described here, in my article on the future of cryptocurrency.

Is it worth investing in cryptocurrency?

Imagine you bought $5,000 worth of Bitcoins exactly 4 years ago (price at $1,000). Today, the price is $53,000. If you sold it today, you’d have $265,000 in your pocket. That’s a whole $260,000 in profit! Even after deducting capital gains tax (profits from capital transactions must always be taxed in Germany) of 25%, you would still have a net profit of $165,000, even after taxation. In case you haven’t paid any capital gains tax yet, this only accrues with your annual financial statements, so not directly when you sell the cryptos.

Example calculation: 24 months Bitcoin – 1,000 % profit

Even 24 months ago, you would have made + 1,000%. Here, the price was exactly $5,000, which would have bought you 1 Bitcoin. Today, you would get $54,000 right away, + $49,000 profit.

Example calculation: 48 months Bitcoin – 5,300 % profit

If you had invested today, exactly 4 years ago, you would have made a profit of 5,300%.

Profit in a few years:

• Buy for $5,000 at $1,000/ 5 Bitcoins
• Current price $53,000 * 5 coins = $265,000 value
• Profit: $260,000
• Profit (after tax): $195,000

PS: As I write this article, the price has already risen above $54,000. Direct update:

Profit in a few years:

• Buy for $5,000 at $1,000/ 5 Bitcoins
• Current price $54,000 * 5 coins = $270,000 value
• Profit: $265,000
• Profit (after tax): $198,750

So during the article, my profit would have increased again by +$5,000.

Now every entrepreneur starts to calculate!

Target price $100,000 ? Bitcoin and alternatives

Now you can say, that will soon stop! And believe me, I hear that very often. However, I also heard that five years ago, three years ago, two years ago, last year. Yet bitcoin keeps going up. Currently, there is speculation on the $100,000 mark. Reason enough to think about investing profits not only in stocks, ETFs and other financial products, maybe cryptocurrency is something for your investment portfolio too!

All cryptocurrencies have advantages and disadvantages.

Trade individual coins (currencies)

If you look at the development of share prices, of the stock markets in general, over the last few decades, you will see that there are profits to be made in the long term, as described in detail above in the example calculation for 24 and 48 months.

Cryptocurrency has now been around since 2009, over a decade. Prices have steadily increased from a few cents to $1, $10, $100, a thousand and maybe soon it will be $100,000. Digital currency is the future. So why not invest some of your profits in cryptocurrency?

ETF Cryptocurrencies: Crypto Port Foil

So-called ETFs (Exchange Traded Funds) bundle several individual stocks into one financial product. Instead of 1 product with 100% risk, you have 1 product that contains many individual stocks that minimize the risk of your investment. Instead of “Tesla”, in the example of stock trading, you buy an ETF that deals with electric automobility and, for example, in addition to Tesla, also contains stocks such as Nio (electric cars from China) and Niu (scooters). The risk is distributed.

Advantage: You have to invest much less time

Especially as entrepreneurs and business owners, a core competence is most likely not the financial products, but in other areas. As an entrepreneur myself, I trade most mornings, nights or weekends – believe me, you don’t have the time for day trading! Between new business, employees, taxes, only invest the money you have left. But if you have profits to spare, crypto trading is an interesting option for your wealth building.

Read more about “Crypto ETFs” here:

• ETF Cryptocurrencies

Trading App: Buy, Hold and Sell Crypto ETFs

With what you can easily trade individual cryptocurrencies but also such “crypto portfolios”? Lots of questions of course: what app do you trade with, what do I recommend? So today I want to share my favorite trading app, with you, eToro. 29.88% asset growth in 12 months, with low risk through “Copy People” and “Copy Portfolios” or up to 127.35% through active trading and trading strategies. Learn here step by step about the app, fees and much more. Of course, with all the criteria of valuation, costs and all trading options, from stocks to ETF, index fund, currency, cryptocurrency and commodities. Plus the ultimate eToro advantage: you can copy successful traders! Keyword “Social Trading”. In the end, you’ll know the app inside out for your first trades.

Read more about my recommendation here:

• Trading App

New cryptocurrency with potential?

Which cryptocurrency is the best? The question is also asked so often that I have written a practical, simple overview of the world of cryptocurrencies for you here:

• Cryptocurrencies

Also interesting, what does the future hold? How have the prices of coins performed recently? Read the analysis here:

• Future cryptocurrency