So, you are a cryptocurrency investor and you are going all out to acquire the coins that you want. Bitcoin mining has been around for a long time now (considering the time frame in the digital platform). The pitfalls of mining for your own coins can be solved through Cloud Mining.
Understanding Cloud Mining
In simple terms, cloud mining is mining cryptocurrencies. However, conventional methods require you to have your own hardware and machines. Cloud mining on the other hand and as the name implies, uses the cloud’s service. Basically, you get to share the processing power of remote data centers to accomplish this. Features of cloud mining include:
- Hardware-free – You no longer need to manage your own hardware to mine for bitcoins or other types of cryptocurrencies.
- Mining companies will host the mining rigs.
- You only need to buy shares or enter into a contract with the mining company.
Going virtual with cloud mining
With cloud mining, you will buy hashing power from the mining company. In most cases, they will be operating one or more mining farms that can be rented out.
Pros and Cons of Cloud Mining
Generally, cloud mining was developed to overcome the limitations of bitcoin mining locally. Among the advantages of cloud mining are:
- Ideal for newbies – Cloud mining will be perfect if you are starting out in investing in this money market. As a beginner, you will enjoy this service which is simple to start. In fact, you do not need to have any technical knowledge in mining for cryptocurrency with cloud mining because it is all taken care of. It is like buying gold without needing to store the physical goal.
- Account setup – All you need is to create your account and make any charges applicable. This is usually related to the hashrate that you want to buy. The higher the hashrate, the more your potential returns will be.
- Hardware-free – You no longer need to be concerned with the hardware to mine for bitcoins. Gone are the days when you have to find out which graphics card or ASIC to use
- Low-cost – Without the hardware, your cost decreases incredibly. Now, you no longer need to worry about the noise and heat which means you do not have to invest into cooling or soundproofing equipment. In the long run, you save on overheads like electricity bills as well. Furthermore, you need to have more than 1 machine to mine for bitcoins on your own.
Meanwhile, there are downsides to cloud mining too which include:
- Lower income – The equation is simple and very straightforward. Because you are not mining your own bitcoins, you will not enjoy the full returns. The difference you make has to be used by the service provider to cover their overheads.
- Slower returns – Cloud mining might not be your first choice if you are looking for fast profits. It depends largely on the hashrate you are putting into and then you just have to wait because a lot of the control is not in your hands.
- Scams – This is not anything new as it has been prevalent with bitcoin since it started. Quite obviously, when it concerns money, scammers will be on the loose.
- Limited blockchains – At the moment, cloud mining can only be done for popular names like Bitcoin and Ethereum. Conventional mining allows you to dig for other lesser-known ones.
Future of Cloud Mining
Market analysts have been very positive about the future for cryptocurrencies mainly because of the potential to grow. This prompted the throngs of bitcoin miners who spent millions in machines and rigs. Suffice to say, bitcoin mining has become less profitable each day and this cannot be justified with the cost of operations and hardware.
Cloud mining offers a whole new dimension for investors mainly because they are more cost-effective. The ROI is better too although it might take longer but that would be normal for investments into any money markets anyway.
Ways of investing in Cryptocurrencies
With all the new technologies and developments in the finance and money markets, there has not been a better time to invest in cryptocurrencies than the current time. While it looks almost the same as investing in any other form of financial products, you must know what it is and how it works before you start.
There are in general, 2 ways to invest in cryptocurrencies namely directly or indirectly. The former refers to a situation where you buy (and sell) cryptocurrencies in your own way and decide what your next step will be. This is a great way to invest in cryptocurrencies if you:
- are looking to have full control over what you buy and when you buy (and sell of course)
- are looking to maximize your profit without having to pay any form of charges to anyone
- are a seasoned investment person who has tried-and-tested strategies
- are looking to invest an amount of your choice (usually small)
Meanwhile, indirect investment is where you put your money in products that are related to cryptocurrencies like stocks and such. If you are looking to invest a large amount of money, this method might work for you and its also a god method for those who are not very certain about the volatility of cryptocurrencies.
What are you looking for?
Investing in cryptocurrencies is very much the same as investing in any other form of financial products. You must know what your goals are. Other factors that need careful consideration include:
- The amount you can put into your investment
- How long would you be willing to wait for the returns
- What is your risk factor?
Start your Cryptocurrency Investment
For the most part, using direct investing in cryptocurrency will be the best way to go as you get full control of what you want to invest in and where. You can do so by:
- First, pick the currency that you want to invest in
- The, you need to select a suitable digital wallet
- Then, pick an exchange
Which Cryptocurrency should you choose?
Don’t make the mistake of choosing just Bitcoin or Ethereum just because they are the most popular (and probably earliest). There are now more than 1,500 cryptocurrencies in the world that you can pick to your heart’s content. It could be a few cents or a couple of thousands of dollars. What you can actually do is to make smaller purchasers from the cryptocurrencies that are large in value. Certain types of cryptocurrencies are meant to be used for a certain purpose. For instance, the music industry uses a cryptocurrency called Tron. Meanwhile, those of you who are inclined to use traditional ways of buying might use the Dash cryptocurrency.
Like it or not, there are certain ‘big players’ in every financial market. In Cryptocurrencies, the following ones might resonate with you (probably because they are the pioneers and most popular globally).
- Bitcoin: This is the one with the largest community of investors in the world. It is the first one to be created and is still going strong. Among all the other cryptocurrencies, Bitcoin has the largest market capitalization which is slightly more than 50% of the entire market. Its value, however, is among the most volatile (some call it wild)
- Ethereum: Using their own ‘smart contract’, it is one of the most popular cryptocurrencies (some say it is more popular than Bitcoin) among companies. In fact, it can be traded in many exchanges without contracts and is commonly used to pay for a certain job or task by companies.
- LiteCoin: This cryptocurrency is known for its speed needed for transactions which is a lot faster than the traditional Bitcoin. Used as an alternative to Bitcoin, LiteCoin, however, is not used in as many exchanges as compared to the Bitcoin and Ethereum
- Ripple: This is one of the cryptocurrencies known for being cheap. It has a market capitalization of more than USD13 billion and is known for being stable and secure. Many major international companies have since come out to support this cryptocurrency and the target is to go global in facilitating payments
As mentioned, there are many more cryptocurrencies that you can choose from and you will in most cases, need a digital wallet to directly purchase them. Another option to get your hands on cryptocurrencies would be to mine them yourself.
What about Digital Wallets?
Like a physical wallet, the digital wallet is the place to store the cryptocurrency that you have purchased. However, they do more than that because the digital wallet is actually the platform that you use to trade the currencies. Digital wallets are online services offered by many parties where you will need to pay a fee (for its features). Take note that not all wallets allow you to access many cryptocurrencies as some are only used for a certain type. There are in general, 4 types of digital wallets which are:
- Hardware: which looks like USB drives where you need to physically plug them in to use your cryptocurrencies. This is quite a safe type which you can access your coins offline
- Software: the most popular type which is basically apps or programs that can be downloaded and accessed. You can usually access multiple cryptocurrencies with this
- Online: Normally used through an internet browser which means you need internet access to manage your cryptocurrency. All you need is a browser and you are good to go.
- Kiosks: A new type of digital wallet sometimes called the Crypto ATM (Automated Teller Machine). You are limited by the location but is a very secure digital wallet
And the Exchange
When you invest in cryptocurrency, you need to do so through an exchange. This is very much like a bourse or stock market exchange which is like a marketplace for selling and buying of cryptocurrencies. Some exchange charge you fees and you need to know the size and which cryptocurrency can be traded in the specific exchange. Popular ones include:
Trading Cryptocurrencies in Singapore
In Singapore, you can trade cryptocurrencies, very much like any other parts of the world. But investing in any money market means you need to always remember how much you can invest and how much you can afford to lose before you jump in. The exchanges available in Singapore include:
- NuMoney: Based in Singapore with presence in Singapore through some physical stores. You can make your payment through bank transfer with very low fees. You can trade Ethereum, Ripple, and Monero here
- LocalBitcoins: A very popular P2P (peer-to-peer) trading site. Comes with escrow services and you can make payments through various modes. You can only trade Bitcoin here and the people you are trading with are unknown (no verification needed)
- Remitano: Another popular P2P trading platform. You can use bank transfer to make payments and has the same identity problem like LocalBitcoins. Cryptocurrencies supported here include Bitcoin, Ethereum, Tether and Bitcoin Cash.
- Luno: This exchange is based in the UK that supports Bitcoin and Ethereum trading