Can you become rich with cryptocurrency?
It's been the big question ever since Bitcoin created multiple millionaires in 2017 when the price hit almost $20k. Suddenly, people across the globe started taking an interest in investing in cryptos or trading with cryptos.
A decade ago, a small investment of $1,000 of Bitcoin returned around $15 million in 2017. So, we all want to know how to make money with cryptocurrency in 2021. But, where do you start?
How do you know which crypto will make you rich in 2021?
There are over 10,000 listed cryptocurrencies, with Bitcoin still sitting at the top. You can check cryptocurrency prices at Coin Market Cap.
For the average person, buying Bitcoin isn't a possibility. Today's price of $33,377 (July 2021) isn't exactly a bargain-basement price.
Can Bitcoin make you a millionaire? It's unlikely unless you are an investor with unlimited funds. Some crypto experts suggest that the price of Bitcoin will rise to $500k at some future point.
But you don't need to buy Bitcoin to become a millionaire. With 10,000 cryptos to choose from, there are opportunities to make money from cryptocurrencies that won't break the bank.
We know it is possible to become a millionaire with crypto. But, sadly, not all investors will be that lucky. So how likely is it to get rich with cryptocurrencies?
In this article, we discuss the risks and potential rewards of investing in cryptocurrencies. We will also highlight four cryptocurrencies that we believe have the potential for significant growth.
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- The Risks Versus Rewards of Cryptos
- Should You Invest in Cryptocurrency?
- Should You Invest in Several Cryptocurrencies?
- What Are the Best Cryptos for Investing in 2021?
- Four Cryptos with Potential for Investment
- How to Know the Best Cryptos to Buy
- Timing is Everything
- Technical Analysis for Cryptos
- Recap of Can Cryptocurrencies Make me Rich?
The Risks Versus Rewards of Cryptos
Over the last year, Ethereum made 1,500% gains. Bitcoin gained around 400%. Dogecoin, a cryptocurrency that began as an internet joke, achieved over 15,000% gains. Yes, we'll talk about Dogecoin later.
A year ago, the price of Ethereum was $85. In May 2021, the price was $4,300, and today is over $2,000. Many other cryptocurrencies made significant gains also. So it's not unimaginable to become a millionaire from cryptocurrencies.
But rewind to the prices again, and let's look at the hard facts.
Ethereum was $4,300, and now it's $2000. What would have happened if you had purchased Ethereum at $4,000? You'd be looking at a loss right now.
Dogecoin hit $0.64, and today the price is $0.20.
Ah, so you can lose money investing in cryptos? Yes, investing in cryptocurrency is high risk. But the overriding factor for making money from cryptos is to buy at the right price.
How do you know the right price to buy cryptocurrency?
More on that later.
Cryptocurrencies are volatile. Nobody truly knows the future of cryptocurrencies, although there's significant speculation from crypto experts.
Should You Invest in Cryptocurrency?
Many investors believe in the future of cryptocurrencies. As society evolves, fiat currencies are becoming less attractive. There are limited gains from traditional saving accounts, and the emerging technology of cryptos is incredible.
Currently, digital currencies' transaction speeds and costs do not compare with Visa, the payment giant. But it's only a matter of time and, when that day comes, fiat currencies may have done their day.
Investing in cryptocurrencies is risky. You could make a lot of money or lose a lot of money. If you want to invest in cryptos, you must assess your risk tolerance. Also, you could be holding your cryptos for an extended period, years maybe. If you have spare money you can afford to lose and have the patience, investing in cryptocurrency can be lucrative.
Cryptos are sensitive to media coverage. Following a tweet from Elon Musk on Twitter, the price of Bitcoin dropped 10% overnight. In less than two months, most crypto prices fell 50%.
Ask yourself the following questions:
- Can I afford to put money into cryptocurrencies?
- Am I patient enough to hold my cryptos for years?
- Can I remain calm when the prices of my crypto investments plummet?
- Am I prepared to research cryptos for investment?
Should You Invest in Several Cryptocurrencies?
All investment experts suggest diversifying financial portfolios, and cryptocurrencies are no exception.
Not all cryptocurrencies survive.
In 2017, Amir Bruno Elmaani launched an ICO for Oyster Pearl. The ICO was well received and had many investors. But, in December 2020, the IRS charged Elmaani with tax avoidance. Supposedly, he bought several yachts and homes and hid the money away.
Investing in a Crypto ICO is a significant risk. When creating your portfolio, it is less risky to invest in cryptos with history and those listed with the highest market capitalisation.
Diversify in cryptocurrencies with different utilities and spend time researching cryptocurrencies. You can find details on Coin Market Cap and follow the links to the crypto websites to assess growth potential and innovation
What Are the Best Cryptos for Investing in 2021?
What crypto will make you rich?
The truth is nobody can answer that question, not even crypto industry experts.
Whatever cryptos you choose for investing, accept that you may have to hold on to your crypto for an extended period before making the profits of your dreams.
Any single crypto could turn out to be the next Bitcoin. Realistically, the decisions you make for investing in cryptocurrencies can only ever be speculative.
But, we can take a look at a few cryptos with investment potential.
Four Cryptos with Potential for Investment
1. Ethereum (ETH)
Ethereum is the #2 listed, second-generation cryptocurrency with a market cap of $243,868,551,704. Over the last year, Ethereum gained 1,500% before falling back 50%.
Ethereum is in the middle of an upgrade, which has created a few limitations from some investment areas. The Ethereum 2.0 upgrade enabled Ethereum followers to stake Ethereum and earn ETH token rewards. Sounds great, but until the ETH2 upgrade completes, those who have staked Ethereum cannot access their ETH or ETH rewards.
You can read more about staking Ethereum in our article on how to stake Ethereum.
If you plan to invest in Ethereum, the above restrictions don't apply.
Crypto industry experts predict the price of Ethereum may reach $20,000 by 2025. So, at today's price, investing in Ethereum could be an option if you have significant investment funds.
2. Dogecoin (DOGE)
Dogecoin began in 2013 as an internet meme with the logo of a Japanese dog (a Shibu Inu).
Dogecoin made gains of over 15,000% over the last twelve months. (Source: CoinDesk Data).
Recent price gains for DOGE may have coincided with Elon Musk expressing support for Dogecoin, which stimulated a 40% increase. Musk said, "Working with Doge devs to improve system transaction efficiency. Potentially promising."
The price of DOGE rose to $0.64 in May 2021, but today it is $0.20. in 2017, the price was $0.007, so Dogecoin has made significant headway, even given the recent price drop.
Dogecoin is an open-source cryptocurrency and the #7 coin listed on Coin Base Market, with a market cap of $27,253,874,016. Dogecoin allows peer-to-peer transactions and rewards content creators for sharing their content. Dogecoin holders can join a community and receive Dogecoin rewards
Crypto industry experts predict that the price of DOGE could rise to $1 by 2025. As DOGE wasn't far off a dollar in May 2021, could DOGE reach $1 before 2025?
Currently, Dogecoin uses proof of work (PoW) mining protocols. But, they are contemplating switching to proof of stake (PoS) protocol within the next few years.
Alex Mashinsky, Co-founder, Chairman and CEO of the Celsius Network, recently speculated about a potential transition to proof-of-stake (PoS) for Dogecoin. He said, "I'm going to make a prediction," declared Mashinsky, "in the next two years, Dogecoin is going to migrate from proof of work to proof of stake."
The change in protocol would allow Dogecoin fans to stake DOGE, which would probably increase the number of investors. Naturally, a price hike would follow with more investment in DOGE.
At $0.20 per Dogecoin, you won't have to break the bank to invest in DOGE. Established for eight years and in the top 10 listed cryptocurrencies, it could be a low-risk investment.
For instance, 500 DOGE would cost you $100. If Dogecoin transitions to proof of stake (PoS), the potential for a price hike would increase. But these things don't happen overnight. It's a complicated rollout process. So if you buy Dogecoin now, anticipate holding for several years.
You can, however, receive DOGE rewards by participating in a Dogecoin community.
3. Cardano (ADA)
Cardano is third-generation crypto with a growth of over 2,000% in the last year. Cardano is the first proof of stake (PoS) platform. It is listed #5 crypto with a market cap of $41,428,235,198.
Bitcoin is first generation crypto, as is Litecoin (LTC) and Dogecoin (DOGE). Mining using proof of work (PoW) protocol is energy-intensive and expensive. The technology is lagging.
Third-generation crypto, such as Cardano, use proof of stake (PoS) protocol, which means faster, more effective transactions with lower costs. Cardano led the way and is a cryptocurrency to add to your portfolio. Not least of all that the current price of Cardano is around $1.30.
Cardano aims to become the best platform for smart contract technology (Ethereum have the same goal). Think of how Amazon Web Services dominated the scene and how Amazon still have centre stage.
Both Cardano and Ethereum want to be the crypto equivalent to Amazon Web Services, suitable for other technologies to springboard off. This technology is called Decentralised Autonomous Organisation (DAO)
Charles Hoskins, the founder of Cardano, was a co-founder of Ethereum. So it's no surprise that the two crypto companies are competing for the top position.
As mentioned, Ethereum is upgrading, but they have a way to go. Currently, transaction fees (called gas fees) are prohibitively expensive. To be taken seriously, transaction fees must be reasonable, fast and appropriate.
Imagine if you were paying for your shopping at the store. You swipe your card, and the transaction is almost instant. But if you paid by Bitcoin, you'd have a ten-minute wait and a hefty fee. Ethereum is still too slow and won't speed up until the final upgrade.
But Cardano, with established proof of stake (PoS), is already leading the way.
Some crypto industry experts suggest that Cardano could overtake Ethereum in the future.
We'd love to tell you more about Cardano, but you can read our article, How to stake Cardano if you'd like more of a deep dive.
4. Polkadot (DOT)
Polkadot is an open-source sharding multichain protocol founded by the Web3 Foundation. Polkadot can facilitate cross-chain transfers of an asset or data type, not only crypto tokens. This technology enables blockchains to interlink operations with each other.
The technology is unique to Polkadot. The DOT token provides network governance and operations. It creates parallel chains from bonding.
Polkadot technology connects:
- Public & private chains
- Permissionless networks
- Oracles & future technologies
Polkadot has four core components:
- Relay Chain – This chain creates consensus, inter-operability and shared security across the network of multiple chains
- Parachains – these are independent chains enabling multiple transactions on several chains, which means improved scalability
- Parathread – these are similar to parachains. But connectivity is flexible using a pay-as-you-go, economical working model
- Bridges - the bridges connect parachains and parathreads to enable communication with external blockchains, such as Ethereum.
Well, this all sounds very interesting, if you enjoy technical stuff, that is. There's a good reason for the technical explanation of what makes Polkadot unique, which we will explain in the next section about what to look for when investing in cryptocurrencies.
How to Know the Best Cryptocurrencies to Buy
When choosing the best cryptocurrencies for investment, there are essential components for assessing investment potential.
- Scalability – if a cryptocurrency is first-generation, it comes with baggage. Proof of work (PoW) is labour-intensive, energy-intensive, slow and ponderous and not environmentally friendly.
- Does the crypto have a strong community? – if a cryptocurrency has a strong following, it means there is a belief in the crypto. For instance, all four of the above-listed cryptocurrencies have strong communities. Whilst it's essential not to make decisions based on the opinions of others, it pays to be in a crypto community so you can observe buying trends
- Fundamental Analysis – who is behind the cryptocurrency? What are the company mission statements? Who is the founder, and are they transparent with their processes and thinking? Is there an experienced team? What has the track record been so far? Have they messed up, upset investors or are they showing innovation and growth-minded thinking?
For example, we mentioned the founder of Cardano was a co-founder of Ethereum. Undoubtedly, Charles Hoskins utilised the lessons from developing Ethereum to its current status and is now developing Cardano with his knowledge and experience.
Novice crypto investors think that buying the lowest-priced crypto is a good way to invest. But that's not necessarily the best advice. Checking the fundamentals of a crypto company helps you to become a better crypto investor
- Technology and function – what purpose does the crypto serve, and does it provide value? Is the crypto technology practical, and can it be adapted for other blockchains? Are the company offering disruptive technology?
Does the technology enable smart contracts, such as Ethereum?
Third-generation cryptos with unique, innovative and scalable technology offer the most significant growth potential, which means the crypto price will likely increase.
- What is the vision for the future? – as cryptos have developed, first-generation cryptos are lagging. They failed to consider scalability. They may not have seen the bigger picture for cryptos and considered a long-term future projection for crypto development.
The top listed cryptocurrencies have earned their position. Bitcoin perhaps got carried along by the public FOMO because today, the Bitcoin functionality is costly and dinosaur-like, and coin distribution is limited to 21 million.
There is no potential for growth with the 10-minute transaction speeds of Bitcoin mining. Who is going to wait ten minutes for their cappuccino? - and then pay $20 transaction fees for a $5 drink.
You might not mind waiting if you are handing over your Bitcoin to purchase a Tesla vehicle. But, hold on, Elon Musk has banned the use of Bitcoin payments whilst Bitcoin continues to eat up the earth's resources.
Until Bitcoin eliminates proof of work (PoW) mining, many other more innovative cryptos offer the potential for investing. And many, you can buy for less than a cup of coffee.
Crypto companies must be thinking ten years ahead as the world and technology are moving so fast. Fourth-generation cryptos will challenge first and second-generation cryptos and leave them standing.
Timing is Everything
The worst thing you can do as a crypto investor is buy a cryptocurrency when the price is surging, but this is the behaviour of most uneducated crypto investors.
Avoid online forums with financially inexperienced crypto followers telling you what coins to buy and when. FOMO (fear of missing out) is a big issue for crypto newbies. It's easy to get swept along by the emotions of others, but hold fast, and you won't regret it.
When people buy crypto, the price rises, then people see the price rising and jump into the market. The prices continue to increase until it's too rich for the average novice crypto investor. Then the price starts to fall. Novice investors panic sell. Oh, look, the price dropped some more.
It's not rocket science. It's market sentiment, and that is what drives the price of cryptocurrencies.
It's the very reason that Bitcoin prices went wild in 2017. FOMO dragged people into buying Bitcoin at crazy prices.
The secret to building a successful portfolio of cryptocurrencies is to wait.
Don't do what the mass market does.
With cryptocurrencies, you are investing in intangible assets, so you're homework is essential. There must be some solidity behind a crypto's worth.
Yes, you could argue that Dogecoin started as an Internet joke. So how has it built credibility? Over the eight years since conception, Dogecoin realised they were onto something potentially valuable for the blockchain and started taking the coin (a little) more seriously. Now, Dogecoin has a scalable function.
The price of cryptocurrencies goes up and down. If you want to buy cryptos, wait for the lows. Earlier, we suggested checking fundamental analysis before buying cryptos. Another factor that can help is to learn technical analysis for cryptos.
Currently, most cryptos are consolidating after a price drop. Successful investment in cryptos depends on confirmation signals. So it's essential to align the components for buying cryptos for investment.
Technical Analysis for Cryptos
How does technical analysis help get the timing right for buying cryptos?
The above image is the daily chart for ADA/USD.
The chart represents a similar pattern for many cryptos.
Starting from the bottom left, the price of Cardano (ADA) began rising at $0.08. at the top of the chart, the price is $2.45. Since then, the market has drifted uncertainly, hovering at around $1.30 today.
So is today the best time to buy ADA?
Buying crypto in an uncertain market is a gamble, pure speculation.
For the above chart, it is better to wait until something happens.
Possible scenarios for ADA/USD are:
- The price breaks above the descending channel and pulls back for a retest before moving higher
- The price comes back to the centre (dashed) line and bounces back to the top of the channel – where it will break through or bounce back down again
- The price breaks the centre line and touches the bottom of the channel. Here it might bounce back up
- The price breaks through the bottom of the channel, then it pulls back for a retest and carries on down
With four potential scenarios, which one indicates a good time to buy cryptos?
Realistically #1 and #4 are the options for the highest probability for a buy or a sell.
It may seem tempting to buy ADA/USD when it hits the bottom of the channel, but such a purchase is still speculative.
However, if you plan to hold ADA/USD for the long-term, it is less risky priced below a dollar than buying high-priced crypto like Ethereum and then watching the price plummet.
Technical analysis isn't 100% because nothing is guaranteed. The trick is to aim for high-probability investments for cryptocurrencies.
Recap of Can Cryptocurrencies Make me Rich?
Undoubtedly, investment in cryptos could make you rich, but it could take some time. Cryptos are volatile and often spend long periods in consolidation.
Choose cryptos with scalability and innovative technology and, ideally, listed in the top twenty by market cap.
Cryptos with proof of stake (PoS) consensus offers more potential for speedy transactions and low fees, which equates to usability. When a cryptocurrency provides a necessary utility, it increases growth potential.
Timing is everything. Learn fundamental analysis for buying cryptos and technical analysis for finding the best price to buy cryptos.
We discussed four potential cryptos that could make you rich in the future:
- Ethereum (ETH)
- Dogecoin (DOGE)
- Cardano (ADA)
- Polkadot (DOT)
There are no guarantees, but these four cryptos have shown innovation. They have a strong community and scalability.
Dogecoin is proof of work (PoW) consensus but, you can earn DOGE rewards, and proof of stake (PoS) will likely happen in the next few years.
Diversify your crypto portfolio to minimise risk, and buy cryptos with different functions. Diversification helps to spread the risks of an investment in cryptos.
The emerging technology from some cryptos will challenge centralised currencies. As we move deeper into the digital age, crypto investing may become the preferred option for investors. At the least, cryptos will make up a healthy portion of an investors portfolio.
Please note that the above information is not providing advice on tax, investment, or financial services. We provide the above information without consideration for risk tolerance and a specific investor's financial circumstances.
Trading or investing in cryptocurrencies may not be suitable for all investors. It does involve risk and the possibility of a loss of capital.
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eToro have proven themselves trustworthy within the Crypto industry over many years – we recommend you try them out.
Virtual currencies are highly volatile. Your capital is at risk.
Is it better to invest in stocks or cryptos?
It's a personal choice to invest in stocks or cryptos, but cryptocurrencies offer great potential for a minimum outlay. There are some restrictions with buying stocks as it is best to buy 100 stocks at a time, which can be an expensive way to invest.
Today, if you purchased 100 DOGE, it would cost $20, and 100 Cardano would cost around $130.
On balance, and depending on your needs and requirements, buying cryptos could make you rich with less risk.
Can you become rich with cryptocurrency?
Many Bitcoin millionaires would say yes; cryptos can make you rich. But there is no guarantee as an investment in cryptocurrencies is speculative.
What crypto can make me rich?
Nobody can answer this question, not even crypto industry experts.
Weigh up the pros and cons of investing in cryptocurrency and work out your risk tolerance. The details in the article can help you to make an informed decision about buying cryptocurrency.
Can Bitcoin make you a millionaire?
Though you can never say never, Bitcoin is lagging as the first-generation crypto.
Other coins are developing superior technology with infinite scalability. However, considering that market sentiment drives the price of cryptocurrencies, Bitcoin could still see further gains. Today's price is over $30k, so Bitcoin is high-ticket crypto.
How can I make $100 a day with cryptocurrency?
It's not possible to guarantee $100 a day with cryptocurrency from investing in altcoins.
If you want to make $100 a day with cryptos, learn how to day trade cryptos. If you become a successful cryptocurrency day trader, it is more than possible to earn $100 or more a day, depending on the size of your trading capital.
Which cryptocurrency will make me a millionaire?
Nobody ever anticipated that Bitcoin would create multiple millionaires and billionaires.
Considering that Dogecoin and Cardano prices are currently as low as when Bitcoin got going, could ADA make you a millionaire? Or can DOGE make you a millionaire?
How about Polkadot and Ethereum? Could Ethereum make you rich? Well, Bitcoin top price was $64k. Today ETH is just over $2k. Anything is possible.
Polkadot has incredible technology and is still under $15, so the scope is there for price increases.
The one certainty is that none of the cryptos will make you a millionaire overnight. If you were investing in stocks, you would expect to hold for five to ten years. Realistically, the same values apply to investing in crypto.
Crypto that may make you rich in 2021could be any of the top listed cryptos or even emerging fourth-generation cryptos.
What happens if I become a crypto millionaire?
It's worth mentioning that, in the early days of crypto, converting cryptocurrencies to fiat currency was challenging and, if available, was expensive. Today, some of the crypto exchanges still do not have the functionality to withdraw your cryptocurrencies in fiat currency.
Imagine you have a $1 million crypto portfolio in one of those exchanges, and you cannot get it out. You might be able to transfer it to another exchange with fiat currency options, but the charges could wipe away some of your $1 million.
Think ahead. Choose a crypto platform with full functionality, low fees and a secure wallet.
Today, you don't have to select a crypto-specific platform for investing in cryptocurrencies. Many established platforms offer multiple cryptos with secure wallets, such as eToro, the leading social trading platform.