The other key technology used with cryptocurrencies is “blockchain,” which essentially amounts to a digital ledger used to track and verify transactions. If you are not a coder or tech-savvy person, this may all sound very confusing. Not to worry. There is plenty of information available on the internet—just Google “what is cryptocurrency” or “what is blockchain,” and you will find myriad articles and papers on the subject. While you should certainly understand what you are investing in when it comes to cryptocurrencies, factual information is easy to find and gather. The more important and challenging question to ask before investing in a cryptocurrency (or any other investment, for that matter) is: “Why are you making the investment?”
Now, don’t get me wrong, Google will purport to have the answer to this question as well. Just Google “Why should I invest in cryptocurrency?” and you will find an equally impressive amount of information and reasons why someone should invest in cryptocurrency. But you are not just someone—you are you, and your reasons for investing in cryptocurrencies may differ greatly from someone else’s reasons. Perhaps you just want to make a lot of money. Well, there are many ways to make a lot of money, and cryptocurrencies are a highly speculative investment—which means you can also lose a lot of money. Still, if making a lot of money is your goal, again ask yourself: Why? What purpose will making a lot of money serve you—retirement, a life of luxury, funding your own company, etc.? Once you define the purpose behind your investment or the goal you are trying to achieve, only then can you properly evaluate whether any cryptocurrency is the best investment to achieve that purpose and goal.
Before you decide the purpose or goal of any investment, however, you must first decide on your own purpose and goal—you must know your why. After all, your financial plan should be helping you achieve your purpose. It should be propelling you towards your greatest success. In essence, your investments are helping to fund your legacy—everything you ultimately become in your lifetime. Who do you want to be? What is the totality of your person? The answers to these questions are complex and fluid and will change over time. But if you do not know who you are and who you want to be, then you cannot make an informed investment decision. Instead, your investments, like your life, will be a series of accidents, coincidences and circumstances. Why drift when you can take control of your life and give it direction? Why invest blindly when you can bring vision to your portfolio? Before you seek to understand cryptocurrencies or the stock market in general, you must first seek to understand your self.
DISCLAIMER: The information contained in this article is for informational purposes only and is not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal issues.