The two best ways to invest in cryptocurrency are: 1.) Use the tokens for your purposes or 2.) Hold onto them as long as you can, since, in time, your tokens will be invaluable.
Most people, intrigued by the blockchain and caught up in the frenzy to get some of the coins, rush to buy for low and sell for fiat (money) when its value climbs. This is no different than the “pump and dump” scams illegalized in the 1980s, that only harm its investors and others. Not only are people who trade bitcoin for fiat gaining very little in return, but they're also losing their chance for profiting from the cryptocurrencies. Here’s why:
Your money is valueless
Regular money was backed first by gold, then silver, until 1971, when President Nixon removed its value and called it legal tender.
According to the U.S. Department of the Treasury: “Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything… The notes have no value for themselves, but for what they will buy.”
Bitcoin, in contrast, is backed by mining that comes from humongous amounts of electricity.
According to VICE Motherboard, one Bitcoin transaction requires the same amount of electricity as powering 1,018,762 American homes for one day, where each home is 2700 square feet. And this estimation was done in 2015, where Bitcoin only processed seven transactions a second! Cryptocurrency is, also, scarce. Paper money can be printed ad infinitum. The Fed simply rolls more off its printing press whenever it wants to. Mining blocks, on the other hand, get less sustainable as their electric sources diminish. The number of bitcoins created in each Bitcoin update are halved every 4 years. By 2140, when mining stops, this number will round down to zero. All you have is the 21 million bitcoins in circulation. The scarceness of this resource give your digital coin even more value.
Given inflation, political uncertainties like Brexit, the current administration, and economic crises such as India’s 2016 demonetization, crypto-enthusiasts are convinced that Bitcoin (or cryptocurrency, in general) is the future of the monetary system. It shields your earnings from inflation, from political and economic turmoil, and from government instability. Since the Blockchain was started to get you away from fiat, why would someone trade it for fiat? There is a time - and crypto-enthusiasts are convinced of that - when the monetary system will implode and Bitcoin is the way of the future. Since Bitcoin is scarce, each and every bitcoin you have is going to be trillions, if not megan-zillions, more than what it is at the moment.
Five things to look for when for reviewing a company
Do you know enough about the cryptocurrency to invest in it? If not, spend time familiarizing yourself with the start-up, before dipping a toe in the water and, then, tread very carefully. Check out the company yourself: Its whitepaper, roadmap, marketing team, social media, website, Github, Twitter. And most important: Hold onto your cryptocurrency. Never sell for fiat (unless you're really, really strapped for money).