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Three strategies for trying out cryptocurrency – least risky to most risky

I was talking to someone on Friday about the risks of cryptocurrency. There are essentially three strategies:

a) LEAST RISKY

In this strategy, one invests something the loss of which one can live with (say, $200) and waits for the value to double (say, to $400). At that stage, one can withdraw the $200 and leave the remaining $200 to grow further, without limit. Any further fiat currency is invested with the same strategy – i.e. always pulling out the capital once the value doubles. [Note, this will need to be adjusted for transaction costs.]

b) MODERATE RISK

In this strategy one invests a fixed amount (say $100) each fortnight or month into cryptocurrency. This will smooth out all variability. The risk of loss is therefore minimised. However, the amount being larger (say $1200), there is a higher overall risk of loss should the idea of cryptocurrency go pear shaped.

c) HIGH RISK

In this strategy (only after one is 100 per cent sure that cryptocurrency is here for the long haul) one should put ALL of one’s savings into cryptocurrency. This is contingent on significant time spent on research. Overall, I’m very confident that cryptocurrency is here to stay on a permanent basis. But … !!

Sanjeev Sabhlok

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