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What Poker Players Should Know Before Investing in Cryptocurrencies

Odds are that you’ve heard many top poker players such as Doug Polk talk about cryptocurrencies. Some of you may even be thinking about moving some of your bankroll into crypto or simply investing part of your income as a way to diversify your investments.

Today we are going to take a quick look briefly at cryptocurrencies and discuss a few things to watch out for when getting started.

What Are Cryptocurrencies

When most people think cryptocurrencies, they think Bitcoin. Bitcoin is indeed the top dog in the crypto world, but it is not the only one. Cryptocurrency is simply digital money. It is a currency that is based on mathematical algorithms and exchanged over a technology known as blockchain.

There are over 1,000 different cryptocurrencies in the world. You’re probably reading this because you’ve heard about Bitcoin, which is the #1 cryptocurrency in the world. It has traded as high as 19,000 in the past and many believe it will go there yet again.

Then there are altcoins, or everything else not named Bitcoin. These “alternative coins” often are created as a way to solve a perceived problem in the cryptocurrency space or to provide some type of new technological breakthrough.

Popular altcoins include Litecoin, Etherium, Bitcoin Cash and Dogecoin. Altcoins can range wildly in price from sub-penny (Dogecoin) to over $1,000 each (Etherium).

Whether you’re investing in bitcoin exclusively or looking to diversify, there are a few things you need to keep in mind when looking to invest in this space.

Do Your Research

One of the worst things you can do with a cryptocurrency is getting into it without doing some type of research on the coin. What is the goal of the coin? What projects are they involved in? Who is on the development team?

Like you would with stocks, do your research on the company and see whether the coin is indeed viable or just another coin that is hoping to grab some money from people. Have a reason for buying the coin other than “it may go to the moon!”

Altcoins Are Usually Heavily Influenced by Bitcoin Pricing

One thing you will notice once you’ve entered the crypto world is that the prices of altcoins can be heavily influenced by the price of Bitcoin. During the recent Bitcoin “crash,” the prices of the majority of altcoins went through the floor.

Most coins that were at all-time highs had all of their gains wiped out and many were trading at levels not seen in a few months.

This is a pattern that you will see a lot in altcoins. When bitcoin is rising, alts will do the same. When bitcoin is tanking, the altcoin world tends to follow.

There are exceptions naturally. For those that do tank, a dip is a great time to enter into coins you believe will bring you long-term profits.

Cryptocurrencies are HIGHLY Volatile

As you may already know, all cryptocurrencies are highly volatile. This means that the price can go in any direction at the drop of a hat. Many times, it only takes some news about a currency to push it up or down.

Think about how stocks go up or down based on earnings or big news. Crypto is similar except for that the price can go up for seemingly no reason.

A couple months ago, Dogecoin went from .006 to nearly .02 over the course of a couple of days based solely on a couple of news stories that were trending on social media. The stories weren’t about any major developments in the coin but rather talking about how it was a joke coin that had a market cap at the time of $1 billion.

During the recent crash, the coin is trading under .005. It’s a prime example of how anything can, and often will, influence crypto prices.

Most Coins Are Not Easily Liquidated

Note that before you start trying to trade in crypto, you are going to have to jump through hoops to do most of your trading. This is especially true if you’re in the United States. For US crypto investors, you’re going to be limited to where you can buy coins with Fiat, or regular currency.

Coinbase is going to be your primary viable source for Bitcoin, Litecoin, Bitcoin Cash and Etherium. Often, you will need to buy one of these currencies and then send it to another exchange in order to buy the coins you want.

If you buy an altcoin other than the ones sold on Coinbase, your only way to profit from it when it goes up is to sell it for one of the Coinbase coins, send that coin back to Coinbase and then sell it on Coinbase for USD.

If you’re in other countries, you will have more options to buy and sell cryptos depending on your preferred exchange. Each exchange will tell you the ways you can buy cryptos using Fiat.

So be prepared to do an extra bit of legwork to buy and sell cryptocurrencies and don’t get frustrated with the process.

It is ALWAYS a Good Idea to Hold at Least Some Bitcoin

Some of you are reading this title and going “but Bitcoin is around $8,000. I can’t afford that.” Luckily, you can buy pieces of coins, meaning you can buy amounts as small as $20. When Bitcoin goes up, the value of your pieces goes up.

Bitcoin is going to always be the top dog in the crypto world and in some cases, it will be the only way you can trade certain altcoins. As such, it is always a good idea to have at least some Bitcoin.
Some will recommend having Bitcoin as your primary crypto in your portfolio, but we are not going to make those recommendations. Buy and hold what you feel is reasonable for you.

Cryptocurrencies Are Not Going Anywhere

When there are big crashes like the one that crypto is presently experiencing, there’s a lot of fear that the end is near for the space. However, there have been multiple big crashes in the past and the market always recovers.

That’s not to say that coins will not fail. They have and they will. However, the best coins will continue to gain in value over time, especially as blockchain technology continues to be adopted by business and individuals around the world.

Now it may be too late to get in and experience the insane gains that the original adopters of Bitcoin and cryptocurrency in general have enjoyed, but you can still use cryptocurrency as a way to diversify your portfolio.

Writer’s Note: I am not a financial advisor. I am a cryptocurrency investor and this post is intended as a knowledge exchange. Also, I am invested in Bitcoin, Litecoin, Dogecoin and other currencies not listed in this article. Investments have risk and there’s no guarantee you will make money investing in cryptocurrencies.

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