Entrepreneurs Trading In Bitcoin For A Living
Every ‘next big thing’ that gets widespread media attention tends to attract first time entrepreneurs who believe that they can strike gold. Forex trading, antique hunting and buying abandoned storage lockers are some of the popular choices these days. Reality TV has played a big part in it as well as media hype. Bitcoin trading is no different.
For people who scored on the boom in Bitcoin prices in the second half of 2013, the allure of working from home and trading Bitcoin may be enough for some to give up their day job. And there are always individuals who have never had any experience or gain in this regard but hear the tall tales and success stories of others and jump into it head first.
If you are thinking of becoming a Bitcoin trader to make a living, then there are some points you need to consider. It could work out fantastically well but it could also be a dismal failure.
Price Volatility Means Profit Uncertainty
Entrepreneurs take on risk to yield the reward (profit). Entrepreneurship is not necessarily like investing. With regards to the latter, the greater the risk the higher the profit. Entrepreneurs use their knowledge and other abilities to mitigate risk and derive the greatest profit. Bitcoin may seem like the right way to go but with the prices being relatively stuck, those who can profit now must have a large inventory of Bitcoin. And Bitcoin is bound to go up like everybody says, right?
Not necessarily so. Bitcoin is highly volatile which could be profitable for some, but may see others lose a large amount of their capital if not all of it. The volatility means that yielding a profit is uncertain which makes Bitcoin trading for a livelihood very unstable and often inconsistent. Even hardcore Bitcoiners understand this point but it does not stop newcomers to the Bitcoin scene in believing that they can be the person to make it big in the cryptocurrency hype.
Knowledge About The System
You read about Bitcoin. You hear about it in the news. And you own a couple of Bitcoins. None of these points are an assurance of generating profit from Bitcoin trading. While sufficient capital can allow you to get professional advice, entrepreneurs need to understand their business in-depth themselves. Educating yourself about all aspects of Bitcoin and the cryptocurrency is extremely important and this takes time.
Impatience leads many a newcomer to jump into the Bitcoin trading scene and believing that they will learn the rest along the way. However, this is downright foolish. The Bitcoin concept may seem simple but the system is quite complex. Understanding these complexities will allow you to understand the trends and identify the situations where you can consistently yield a profit rather than hoping for another boom to pay the bills.
Accepting That There Is A Good And Bad
True entrepreneurs know that they take on risk and may profit or lose money in the process. The risk is calculated and mitigated as far as possible. Bailing out when the market takes a downturn is not necessarily being business savvy. There is a time and place to turn your back on a business if it is truly not working but never get caught up in panic selling.
As with any money-making activity in life, there are the ups and downs. Entrepreneurs know to how to capitalize on the ‘ups’ by expanding and diversifying and how to minimize the adverse effects of the ‘downs’. They accept that the good times will come but often these are interspersed among the bad times. Therefore being prudent with larger profits during the goods times is key to weathering the bad times.
With Bitcoin there are certain parties that can make a business out of trading the cryptocurrency. But these are mainly Bitcoiners who mine the cryptocurrency or have massive stores of Bitcoin to trade. The nature of Bitcoin means that success or failure is largely out of the entrepreneur’s hands.
Government restrictions, public panic and bad publicity are some of the factors that drive Bitcoin prices down and cannot be controlled by the entrepreneur. The highly speculative nature of Bitcoin, nod of approval from authorities and positive sentiment from celebrities can push the prices up but here too it is not within the entrepreneur’s power.
The bottom line is that life as a Bitcoin entrepreneur is going to be uncertain to say the least. Unless you can develop a new technology related to cryptocurrency or find some other innovative use for Bitcoin, chances are that simply making a profit from trading Bitcoin is a tall task to say the least.