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How to Invest in Bitcoin Properly - Blockchain and Other Cryptocurrencies

Traders Magazine Online News, April 9, 2019

Alexandr Nellson


People keep asking me how to properly invest into the crypto-economy. What do I need to know? How not to lose money? How should I choose the right cryptocurrency for my portfolio, which will skyrocket in the future?

In this guide you will find an exhaustive list of answers to many of these questions. But first, before giving you an explanation on how to invest, let me address the question: why should you even need to invest your hard-earned money? I’ll try to explain this as simply as possible.

Invest because it is growing.

Over the last 20 years with the invasion of the Internet, many people have earned amazing amounts of money on one simple thing - the Network Effect. What the hell is that? In the 70-s there was an engineer Robert Metcalfe. He invented what we now call the Ethernet. In order to make a profit on this invention, he began selling network cards. At that time people didn’t understand why computers needed connect to the network. Robert realized that it was necessary to find a reassuring argument to prove that his network card was just the right panacea for all their illnesses. Robert said:

The network’s value is proportional to the square of the number of users in this network.


Well, you buy 10 computers without a network card, their conditional costs are equal to 10. However,with network cards the conditional costs of 10 computers will increase to 45! This is 4.5 times more profitable! “Wow”?—?corporate workers said and then they began buying Robert’s network cards.

It turned out that Robert’s idea is quite reasonable! You can use it to assess Telecom companies which have rolled out across the globe with redoubled force. The capitalisation of Telecom companies depends on the number of its users. The dependence is not a straight line but a quadratic. At the dawn of the social networks, venture capitalists quickly remembered the cherished formula and applied it to such things as Facebook, Twitter, Skype, etc. So the Metcalfe’s law was proven correct and gave us millions of Ethernet grids which evolved into what we now call the Internet.

Simple truth?—?if the number of network users is steadily growing, the exponential growth of your investments is expected to grow with it. Thus, Facebook was worth more than $ 300 billion. The formula is simple. Looking for a network which is growing steadily at the very beginning => put money => wait => profit! The question is?—?why Bitcoin? Because it’s the same network and it’s growing. Is growing quickly. Check for yourself:

  • 2010–10 thousand users
  • 2012–100 thousand users
  • 2014–1 million users
  • 2016–10 million users

Of course, these figures are very approximates, because there is no way to determine the exact number of users. The numbers listed above are my own assessment. To make it look more convincing here is a graph of wallets

Question: How long it will grow and when the growth will slow down?

Answer: Blockchain technology refers to a class of technologies “No Way Back”. This is when Homo sapiens starts to use something and could not imagine how they lived without it. Here’s a graph in the case of TV, electricity and other technologies:


Growth will be carried out at the S curve until saturation occurs.

For more information on related topics, visit the following channels:

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