Did you know you don’t need to buy a ‘whole’ Bitcoin-like one pictured above?
Note to our readers: as Star Wars fans and with the 9th installment of the franchise due to release as at the time of writing, we feel that it is obligatory to list them out in terms of Light vs Dark Side.
Becoming a Bitcoin millionaire – The Light Side
№5 EARLY ADOPTERS
We do not need to say much here. Early adopters are those who are fortunate or savvy enough to recognise Bitcoin’s potential in the very early days. There are a number of these people who are now bitcoin millionaires and even billionaires. An example is the Chinese Bitcoin tycoon and serial investor Li Xiaolai, who reportedly holds more than 100,000 Bitcoins to his name (as at the time of writing, the price of Bitcoin is USD$7,202 per coin). You do the maths.
№4 STARTING A BITCOIN BUSINESS
A number of entrepreneurs have made millions from Bitcoin-related businesses. These include Bitcoin exchanges, mining pools and payment processors. Some even run more interesting business models such as the sale of cryptocurrency pets/collectibles.
Going down this path requires a lot of determination, skill and a bit of luck. A lot of the markets are getting saturated with Bitcoin-related start-ups. The wannabe entrepreneur must ensure there is a genuine market for the product/service they are offering.
Notable Bitcoin businesses include Binance.com, which only started in 2017 and turned into the largest exchange by volume in a matter of months. The founder of Binance has been officially on the billionaire list since 2018.
The beauty of starting a Bitcoin business is it doesn’t need to be substantial in the beginning. In fact, the Coinstash team only started as a hobby while one of the founders also worked full-time. It now has a full-blown trading platform and has plans to expand into Singapore!
№3 ARBITRAGE OPPORTUNITIES
Unlike the stock market, because Bitcoin is still relatively new, the financial market around cryptocurrency is still in its adolescence. This presents arbitrage opportunities for resourceful traders. In 2017, many traders were able to use the significant price differences across exchanges and also across currencies to their advantage. Certain traders were able to make in the excess of $100,000 per day by employing this technique.
The limitations around arbitrage trading are that it is typically capital-intensive, and the person will need to be quite financially savvy. Mistakes can be very costly in this space. In fact, many traders were already millionaires but they just added the Bitcoin millionaire title to their trophy cabinet!
№2 BECOMING A CRYPTO INFLUENCER
It is often underrated how profitable a crypto influencer, media company or community manager can be. It is not unheard of that successful influencers charge four to five figures per hour for their time or endorsement. Given restrictions around cryptocurrency in terms of social media advertising, these channels to reach the target audience have become increasingly popular. Bitcoin businesses and other participants in the cryptocurrency ecosystem pay a lot of money to get their messages across.
№1 INVESTING WITH DISCIPLINE
Our top pick for the average person is simply investing. We believe that for the average person, nothing beats investing with discipline. If you have invested $50 per week religiously over the past 5 years, you should be sitting on a nice six-figure saving by now. This is by far the safest and most practical path to become a Bitcoin millionaire.
Becoming a Bitcoin millionaire – The Dark Side
We need to preface this by saying that we are strongly against any of these methods of accumulating personal wealth. In fact, the reason for us listing them below is to warn the public of potentially falling into these traps.
№5 BITCOIN TUMBLERS
These are money launderers but for Bitcoin. They employ certain techniques to ‘mix’ the good coins with the coins obtained via illicit means, therefore hiding the origins of the illicit coins.
The irony is that some tumblers aren’t even real. We have heard stories where people have run away with other people’s dirty coins, instead of providing the service. A case of scammers getting scammed.
№4 PYRAMID SCHEMES
Do you ever get emails saying investing in Bitcoin and get 1,000% returns in a few months? There are a lot of pyramid schemes around cryptocurrency in general. They will try to attract new money to pay out returns for the perpetrators and previous investors, until the system cannot support it anymore.
One of the biggest schemes to date is Bitconnect, whose price plummeted to below $1 from a previous high of nearly $500. It took billions of dollars from investors.
№3 HACKING OF EXCHANGES
Bitcoin exchanges are easy targets for hackers and other bad actors. This is due to the relative anonymity around Bitcoin, the ease of transfer and the large balance of funds that exchanges typically keep on behalf of their customers. These factors make them easy targets.
Recently, an major exchange based in New Zealand went to liquidation due to losses associated with hacking.
№2 MARKET MANIPULATION
This problem is very prevalent in cryptocurrency markets and it does not get the attention it deserves. The typical ‘pump and dump’ schemes have been outlawed in the traditional financial markets for decades, but similar techniques somehow appear to be under-prosecuted in the cryptocurrency space.
An example is someone who can spread false news about the prospect of a particular coin, with the aim to ‘pump’ up the price. When others trade based on the false news, they then ‘dump’ their holdings, thereby generating a profit based on the increased price.
№1 EXAGGERATED OR NON-EXISTENT PROJECTS
Ever wondered why Initial Coin Offerings and cloud mining projects carry such a bad name? It is because there are too many bad actors who promise the world, only to deploy the investors’ money to their own benefit. In the case of cloud mining, the so-called ‘mining site’ may not even exist. This is an under-regulated space and the stakeholders spread over multiple jurisdictions. The outcome? Unsuspecting investors have very little prospect of getting their money back.
Want to become a Bitcoin millionaire and wondering where to begin?
It really depends on where you are located. However, we list a few below:
Binance.com is the largest cryptocurrency exchange by trading volume.
Kraken.com is known for their powerful trading engine and customer-friendly interface.
Liquid.com is suited for advanced traders, given the breadth of functionalities, it has, including margin trading and lending abilities.
Coinstash is the newest platform in Australia to buy and sell Bitcoin, Ethereum and Ripple. It is more suited to new traders due to simplicity and its amazing customer support!
Coinstash is a registered digital currency exchange based in Australia. Our customers praise Coinstash as one of the most user-friendly, educational and supportive platforms. Through its live support 7 days a week, Coinstash has accumulated numerous positive reviews from its customers. Coinstash is also one of the only digital currency trading platforms that has participated in Australian government Austrade’s landing pad program.
Note nothing in this article should constitute general or specific financial advice. Coinstash does not take into account your circumstances when publishing articles. Any content on Coinstash.com.au or related domains are informational only.
Source: Ting Wang, Coinstash