Cryptocurrency Investing – Talking Everything Crypto

Cryptocurrency investing seems to be taking the world by storm. It appears to be moving from strength to strength and growing in popularity daily. However, for many, the realm of cryptocurrency is still unknown.

With crypto looming on the horizon as a developing currency, Monzi thinks it’s worth knowing what all the hype is about. Moreover, even if you think cryptocurrency investing might not be for you, it may still be wise to watch the industry. So, whilst we normally talk about cash loans and no credit check loans, today we will be discussing cryptocurrency investing.

Please note, specific ideas and products presented in this article may not be on offer by Monzi nor the lenders we work with. This article presents only general information. Consider seeking professional financial, taxation, legal or other advice to check how the information and ideas presented on this website relate to your unique circumstances.

What is cryptocurrency?

Like online cash purchases, cryptocurrency (or crypto) is a digital currency that you can use to obtain goods and services. Unlike traditional payment methods, however, crypto relies on cryptography and an online ledger to secure your transactions. Thereby making the golden rule of crypto – don’t forget your password.

It’s hard to picture this digital entity. One way you can learn visually is to think of cryptocurrency as arcade tokens. You can trade the tokens for goods and services. However, you first need to trade in real currency to grow your tokens value and quantity.

Currently, crypto is largely unregulated, providing opportunities for investors to play their cards and make significant returns. However, the performance of the various coins on the market can drop quickly and result in losses. For this reason, it is imperative to understand crypto before buying into the market.

How does cryptocurrency work?

If you are turning over the pros and cons of cryptocurrency and whether you should invest, you should first know how it works. Firstly, crypto cuts out the middleman. You don’t have to operate through a bank or an investment broker. You can trade your tokens directly to your peers. Secondly, transactions made with crypto are recorded on an encrypted public ledger. This ledger is called a ‘blockchain’. It is controlled by computer algorithms rather than government algorithms.

There are a plethora of cryptocurrencies in circulation. You can buy into a currency through online crypto exchanges, just like buying stock on stock exchanges. Bitcoin, Ethereum, Litecoin, and Dogecoin are currently some of the most popular currencies on the market. However, if you are well researched and believe you have found an up and coming coin that might do well, you can stray from the well-trodden path. It is worth noting that Bitcoin is the original coin, and other coins are known as altcoins.

The value of a coin correlates with community involvement. This doesn’t just mean that the coin is the most popular; it can also be due to scarcity, user demand, and utility. Crypto has received some criticism over the fact that it doesn’t have real value and is entirely a result of this community involvement. However, there are potential for gains when investing.

What is an investment?

An investment is anything you put your money into that has the potential to turn a profit. Several assets can be investments. For example, property, shares, stocks, gold, and now crypto.

It is quite common to take an investment loan to help purchase investments and hopefully turn over revenue. The goal of this is to produce a significant return in the long run. Which, you should note, is usually the goal for investments. They are assets designed to be kept for an extended period. However, crypto can rapidly increase in value and give the buyer a fast profit. However, this is not guaranteed and not difficult for an amateur investor. Your success depends on the dips and rises in the market.

What does it mean to invest in cryptocurrency?

Cryptocurrency investing can be akin to Russian roulette. As crypto is not technically a real investment, you need a buyer willing to pay more than you paid for you to do well with a crypto investment. This is an investment theory called ‘the greater fool’. Crypto is not like an investment property; property increases over time based on the market, location, and home features. Instead, crypto relies pretty heavily on community interaction.

For crypto to be a viable long-term investment, it would need to have stability. All currency, regardless of whether literal or figurative, needs stability to last. Given the current state of the crypto market, these currencies have been anything but stable. They have recorded extreme crashes and rises all within the period of two or three years, meaning if you plan to invest, you need to be serious about it. If you have no investing experience, perhaps start with another method of investing and then move into the world of crypto. Although, you shouldn’t let the potential of a loss scare you away.

Is cryptocurrency real money?

Cryptocurrency is not real money. It isn’t even an actual token. The conundrum of crypto is that you aren’t getting anything for your money, yet it still has value. Warren Buffet famously compared crypto to paper cheques, stating that crypto is an effective way to transmit money anonymously. However, paper cheques do the same thing, and the cheque itself is worthless.

Bitcoin presents a valid enigma. If the coins need stability to be a future currency yet have high price volatility, people are less likely to spend and circulate them. This makes them less viable in terms of establishing crypto as a proper currency. It also raises the question of why would anyone sell if they are only going to rise in value?

How to start investing in cryptocurrency?

If you’re looking to start cryptocurrency investing in Australia, you will first have to choose an online trading platform. You can do this by downloading a wallet app to store your currency. Subsequently, some of these platforms may allow you to create a wallet through them. There are several things to look for in a wallet, which you can read about next.

After choosing a wallet, you will need to create an account and link it to your bank account to make a deposit. Then you can begin trading and interacting with your chosen coin or coins. Before you finalise your purchase, confirm your details.

Finally, all you have to do is make sure you don’t forget your password.

How to choose a wallet and exchange?

There are many wallets and exchanges in circulation, which can make it hard to choose the right one for you. However, you should be looking out for four main features:

The authenticity and security of the platform

Company transparency couldn’t be more critical when it comes to investing and financial services. You may need to contact the exchange further into your crypto trading journey, so aim for customer support that is reliable and Australian-based. An excellent way to ensure the company isn’t a scam is to check whether they are open about their information. This information could include their location and owners. A transparent fee schedule is also a good way of determining the business isn’t a scam.

Available selection of coins

There are many coins currently available on the market, with more people developing new altcoins each day. Many of these coins are potential scams. However, there are also many genuine altcoins worth buying into. For this reason, you want to engage with an exchange that has multiple quality options. Unless you are only trading with Bitcoin and other prominent coins, most exchanges will offer these.

Usability

No one wants to engage with a layout that makes their life difficult. If you have found multiple exchange options, opt for the one that has a clean display. Moreover, you can find wallets with educational guides and a set-up designed to keep it simple. One other thing to look for is an exchange with a mobile app. Operating solely from a desktop can be limiting.

Fees

Finally, there are some fees and hidden charges to keep an eye out for. You may have to pay a fee for making a trade or for currency conversion. Try your best to trade with AUD only where possible, and be attentive to falsely advertised coin prices.

Investing in cryptocurrency for beginners

The basics of investing in crypto is a popular topic on the internet currently. Due to this, there are many resources available for you to learn from. Monzi recommends that you only use this article to begin your delve into cryptocurrency investing. However, one hot tip that we can give beginners is to contact the customer support of the exchange you are looking at. Doing this will allow you to speak to an informed staff member that can correctly answer your questions. It’s worth exploring your options before you settle on one exchange.

The same goes for Monzi’s services. Suppose you have a question about any personal loans. Whether car loans, a bond loan, or business loans Australia, our team may be able to help you out. Please note, however, that we are a lender-finder service, not lenders.

Is it still worth investing in cryptocurrency?

In 2021, crypto and cryptocurrency investing have mixed reviews and a volatile market. If you are looking to lower the risks, aim to buy with one of the established companies like Bitcoin.

Monzi can’t tell you whether or not crypto is a worthy investment. However, if you are looking for authoritative information on cryptocurrency investing, the Australian government has information available. Visit the MoneySmart cryptocurrencies and ICOs page for more details.

Cryptocurrency investing Australia: is it different to the rest of the world?

In Australia, crypto is legal and considered the buyer’s property. However, you must register your crypto exchange with the Australian Transaction Reports and Analysis Centre (AUSTRAC).

Aside from that, the currency and exchange operation is very similar to that of other countries. It may be wise to trade with AUD, however, to avoid conversion fees.

Cryptocurrency Investing: Monzi's guide

Reddit cryptocurrency investing

Recently there have been connections between social platform Reddit, the stock market, and crypto. If you are thinking about starting Cryptocurrency investing, Reddit may not be the best source of information.

This is not to say that all the information on Reddit about crypto is wrong. Specific Reddit communities have seen a lot of crypto success. However, there are many unresearched opinions on the platform that may lead you astray. Be careful which locations and institutions you take investing advice from. Government sites, banks, and exchange platforms are your best bet for finding helpful information. You could potentially use Reddit as a starting point. However, by no means should it be your only source of information.

Cryptocurrency investing books

One other source that could be useful are books on crypto. For example, ‘Cryptocurrency for Dummies’ and books published by well known financial figures and institutions.

Before purchasing a book on cryptocurrency investing, research the book’s author and ensure they have the qualifications to give financial advice. This is the underlying rule when learning about financial information. Confirm your source is qualified to advise.

Monzi does not make claims to have qualifications on this topic. We can, however, discuss the use of our lender-finder tool. If you have any questions about our service, contact our friendly team.

Which cryptocurrency is best to invest in?

Monzi can’t tell you which coin you should invest in. We aren’t financial advisors or crypto experts. We can, however, suggest some factors to consider when choosing a currency.

If you are a beginner, it may be worth opting for a reputable coin rather than an upcoming one. The major currencies in the industry are likely to be more reliable as an investment. Other ways to know whether a coin may be reliable is if major investors are investing in it or if the company’s owner is well known.

Beyond this, consider the price of a coin and whether it is in your budget. Crypto can stack up quickly in price, enter the exchange with a budget and stick to it. Consider your plans for the future and whether the coin you are interested in will align.

Can you lose money in cryptocurrency?

You can lose money in crypto. The following are several mistakes people make with crypto that can lead to a loss:

  1. Day trading. Day trading can work. Some people are very good at it. However, these people are also very serious and knowledgeable. If you don’t know, day trading uses short-term trading strategies to enter and exit the market within a day. For some people, day trading is a lifestyle.
  2. Believing crypto is a get rich quick scheme. It isn’t this simple. When people think they can make a lot of money fast and hundreds of people buy-in, the market will spike, and the bubble will burst. Don’t put in more than you can afford to lose, and plan to leave your investment alone for a while.
  3. Not prioritising security. Certain coins are currently precious, meaning hackers are constantly on the prowl. Ensure you choose a secure wallet for your coins, avoid spammy sites and don’t share your passwords.

Is it safe to invest in cryptocurrency?

Yes and no. If you do all the right things and are well-read on how the world of cryptocurrency investing works, it is unlikely you will experience any security breaches or scams.

As another golden rule, regardless of how well you are doing with your portfolio, avoid bragging. Don’t advertise success and keep your private key a secret. Whilst the technology itself is highly secure; it cannot keep out someone who knows your details.

Choose reliable exchanges and coins. If you need help working out whether an exchange or coin is trustworthy, look at the reviews and ask for opinions. This is imperative as you will have an investment and an attached bank account for depositing funds. Being sensible will keep you safe.

Is crypto a good investment?

Cryptocurrency investing can be an excellent route for you if you are smart about it. However, there are some instances where crypto may not be a good investment for you. These include:

You don’t understand it

The biggest mistake you can make with cryptocurrency investing is getting involved without being crystal clear on how it works. Not only is crypto confusing, but so are the accompanying tax regulations. The last thing you need is to lose money and be in trouble with the government.

You know you’re risk-averse

There’s no such thing as a risk-free investment. You have to accept a little risk if you want the reward. Therefore, if you like to play it safe, either in life or with your portfolio, crypto might not be the option for you.

You don’t have much of a portfolio

Diversification is always a good thing. Without diversifying your portfolio, you won’t have any protection from any losses you make or the ability to grow your current wealth. If you don’t have any stocks or property, it may be wise to start here before moving into cryptocurrency investing.

What else can you invest in?

There are many options available for investing that cater to multiple ages and experience levels. Monzi has ordered a few options available to you, varying in complexity, below:

  1. High-yield savings accounts. This one is a set and forget and involves shopping around for a savings account with high interest rates. An adult of any age can open one of these accounts; They are best for the money you will only access occasionally.
  2. Exchange-traded funds (ETFs). ETFs pool investor money into a collection of securities and give the buyer the ability to have a single diversified investment. Therefore, they are similar to index and mutual funds and are great if you intend to leave them alone for a long time.
  3. Real estate. If you don’t already have a property to your name in the current market, property investing can be difficult. However, it is an excellent way to create a form of fixed income. If you already have a healthy portfolio, property investing can be a perfect next step.
  4. Alternative investments. These can be anything from gold and silver to stamps and art. Please keep in mind that these investments, like crypto, are unregulated and can be volatile. Therefore, consider this move in depth before buying in.

Where can you buy and exchange crypto?

This depends on what your goals are. If you are only looking to buy Bitcoin, you may search for a Bitcoin-specific exchange. Here you can buy and sell your Bitcoin without being overwhelmed by other altcoin options. However, if you are interested in the possibilities altcoins could give you, several safe altcoin exchange options are available.

All you have to do is find the exchange you think will be best for you, create an account and add some money. From there, you’re free to buy and exchange as frequently as you like. However, it may be worth holding your coins for a reasonable amount of time if you are new to cryptocurrency investing.

What is cryptocurrency mining?

Cryptomining can be a slightly confusing topic if you are a beginner. Therefore, it may be worth visiting the Australian Cyber Security Centre’s (ACSC) page on cryptomining. However, crypto mining is essentially auditing cyber currency to ensure the coin is valid and useful.

This process uses some intense computer algorithms and complex mathematical problems to complete. However, the miners earn a small amount of crypto for their efforts to keep currency creators honest.

Cryptomining can become illegal, however. Malware is a tool to hack into accounts and utilise that computer’s processing power for their activities. You can protect your computer from this malware via specific computer security systems.

How long should you be looking to invest?

How long you invest is entirely up to your intentions and your skill levels. However, for a beginner, it is best to intend to hold onto your coins for multiple months. Within this time, you could see your coin prices rise and fall. However, keep in mind that just because it is falling doesn’t mean it won’t bounce back. Understanding the trends of Bitcoin and altcoins may help you decide when to hold and sell your investments.

Can you use a margin loan for cryptocurrency?

Yes, you can. A margin loan is a loan used strictly for investment purposes. Margin loans are also referred to as investment loans. This is as they allow you access to more significant amounts for a bigger investment. An investment loan can aid any form of investing, such as stocks and property. However, margin loans are typically for stocks, bonds, shares and crypto.

Generally, margin loans are pretty risky investments. This is due to the potential losses that you may make. If you are making a loss and receive a margin call, which is a call to add more funds, you will be exceptionally down on your luck. Therefore, making a loss and then having a loan to repay on top of this would be even worse. If you think you would like to expand the amount you invest, deeply consider the pros and cons. It may also be worth speaking with an investment broker for more help.

Personal loans for cryptocurrency investing

You don’t have to take an outright margin loan if you are looking to increase your investment. Taking personal loans is also a valid option. Monzi’s lenders may not need to know what you intend to use the money for. If they do ask, investing is a perfectly reasonable response in most cases.

For instance, you can be matched to a lender for a small $300 loan if you are looking to buy extra coins on the exchange. Again, however, beware of the risks associated with this. Don’t engage in such a loan for investment purposes if you aren’t completely clear on the rules and regulations involved.

How can Monzi help?

You can use your Monzi loan for whatever you want or need. If you decide you would like to use it to invest, power to you, however, ensure you understand the risks.

The application process is easy peasy. To clarify, all you have to do is click the ‘apply now’ button or scroll up to our slider. Enter the amount you want, provide us with a few details about yourself, and we’ll do the rest.

If you apply within business hours, we’ll do our best to find you a lender within 60 minutes. Providing we’re successful; your lender will be in contact with you to finish the process.

Want to stay in the loop?

If you would like to keep in touch, we’d love that. You can follow us on Facebook, Instagram, Twitter and Pinterest.

That way, we can update you and, if you have a great experience, you’ll remember we’re around to help you out in future.

Before you go, if you’re looking to learn more about investing, why not read our article on exchange traded funds? Or, you could check out our discussion of non fungible tokens.

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