Cryptocurrencies have become a hot topic in recent years. 2021 saw an increasing birth of crypto millionaires. That was the time when NFT projects such as CryptoPunks and Bored Apes were selling for millions of dollars. Hearing news like this, you might wonder, “can crypto make me rich?”. The short answer is yes, crypto can make you rich, but the longer answer may be more complicated.
The Brief on Cryptocurrency
Cryptocurrency is a digital or virtual currency that uses cryptography to secure and verify transactions and to control the creation of new units. It operates independently of a central bank and uses a decentralized ledger technology called blockchain to record and manage transactions.
Crypto is akin to digital cash that allows you to make transactions with anyone in the world without the need for a middleman like a bank or a government. Each transaction is verified and recorded on the blockchain maintained by a network of computers worldwide.
Recently, there’s an increasing interest in ‘halal crypto’ which basically refers to cryptocurrencies that are compliant with Islamic finance principles. In Islam, financial transactions are governed by Sharia law, which prohibits certain types of financial activities, such as interest-based lending (riba) and speculative investments that involve excessive risk or uncertainty (gharar). We will explore more on halal crypto but for now, let’s find out how to create wealth with crypto.
How tо Gеnеrаtе Crурtо Wеаlth
Firstly, it’s important to understand that investing in cryptocurrencies is risky, just like any other form of investing. Cryptocurrencies are highly volatile, and their values can fluctuate rapidly and dramatically. For example, in 2017, Bitcoin’s value skyrocketed to almost $20,000, but then crashed down to around $3,000 the following year. Such fluctuations can be financially devastating for investors who don’t manage their risks properly.
That said, there have been several success stories of people who have made a fortune by investing in cryptocurrencies. For instance, the Winklevoss twins, who famously sued Facebook’s Mark Zuckerberg for allegedly stealing their idea, invested $11 million in Bitcoin in 2013. At the time of writing, their investment is worth over $1.5 billion. So it is indeed possible to get rich with crypto.
The Winklevoss twins generated their crypto wealth by investing their money into Bitcoin. Investing long-term is one of the most common ways to generate wealth through cryptocurrencies. Besides Bitcoin, you can also buy Ethereum, another crypto market leader, and holding it for an extended period of time in the hopes that the value will increase. This approach is also known as “HODLing” (hold on for dear life).
Active trading is considered the opposite of investing. This involves buying and selling cryptocurrencies on an exchange to try and take advantage of short-term price movements. Successful cryptocurrency traders often use technical analysis to identify trends and patterns in price movements and make informed trading decisions.
Cryptocurrency mining involves using powerful computers to input data into a mathematical function and produce an output. This is done to verify transactions on the blockchain network. In exchange for their efforts, miners are rewarded with new units of cryptocurrency. While mining can be profitable, it requires a significant investment in hardware and electricity costs.
Some cryptocurrencies use a proof-of-stake (PoS) consensus mechanism, which rewards users for holding and staking their coins in a wallet or on a network. By staking their coins, users can earn rewards in the form of additional coins, similar to interest on a savings account. The MRHB Token is one such halal crypto that uses PoS and will soon launch a staking mechanism for token holders.
Participating in ICOs
Initial Coin Offerings (ICOs) are a way for cryptocurrency startups to raise funds by selling tokens to investors. If the project is successful, the value of the tokens can increase, and investors can earn significant returns on their investment.
Cryptocurrency Riѕkѕ vs Rеwаrdѕ
Cryptocurrencies are vоlаtіlе. Crypto experts can speculate to their heart’s content but in reality, nobody trulу knоwѕ thе futurе оf сrурtосurrеnсіеѕ. For convenience, we will compare the two most significant currencies – Ethereum and Bitcoin.
In 2021, Ethereum mаdе 1,500% gаіnѕ while Bіtсоіn gаіnеd around 400%. Dоgесоіn, a сrурtосurrеnсу thаt bеgаn as аn іntеrnеt jоkе, асhіеvеd оvеr 15,000% gаіnѕ. This was during a bull market where the hype was picking up.
However, while Ethereum’s price hit $4,300 in 2021, it has now (at the time of writing) plunged to around $2,000. If you had purchased Ethereum in 2021 and held the cryptocurrency, you would be looking at a loss right now.
It’s important to remember that the crypto market is volatile. Depending on your crypto wealth strategy, you can prevent big losses from happening. If you’re trading, you can put a stop-loss order. But if you’re investing for the long-term, you would just have to hold tight through the tough times.
Tips for Investing in Cryptocurrency
If the risks do not deter you and that you’re keen on reaping the rewards, here are some tips to increase your chances of becoming a crypto millionaire:
Do Your Research
Before investing in any cryptocurrency, it’s essential to do your research. You need to understand the technology behind the cryptocurrency project, its potential applications, and the risks involved. Reading whitepapers, following the news, and consulting with experts can help you make informed decisions.
Diversify Your Portfolio
Investing all your money in a single cryptocurrency is a risky move. If the cryptocurrency’s value plummets, you could lose everything. It’s better to spread your investments across several cryptocurrencies, and even other assets such as stocks, bonds, and real estate. Diversification can help reduce your risks and increase your chances of making a profit.
Crypto investing is risky, but there are ways to manage your risks. One way is to invest only what you can afford to lose. Don’t borrow money or use your life savings to invest in cryptocurrencies. Additionally, consider using stop-loss orders, which automatically sell your cryptocurrencies if their values fall below a certain level.
Have a Long-term Mindset
You need patience and a long-term mindset when investing in cryptocurrency. Don’t expect to get rich overnight or make quick profits by day trading. Instead, focus on investing in promising cryptocurrencies that have long-term potential. HODL onto your investments for several years and don’t panic when the values fluctuate.
How MRHB Halal Crypto Can Help in Wealth Creation
MRHB (pronounced ‘Marhaba’) is the world’s first halal DeFi ecosystem with a mission to promote financial inclusion to satisfy the needs of faith-based and ethically conscious communities. This is primarily in response to the lack of interest-free financial wealth creation opportunities on Web3 thus excluding the 1.7 billion plus faith-based community.
At the time of writing, MRHB has released three DeFi products – Sahal Wallet, TijarX commodity exchange, and Souq NFT marketplace. The Sahal Wallet is a powerful all-in-one self-custodial wallet that is multichain and also with cross-chain bridge functionality. You can only invest and trade halal crypto as the Sahal Wallet has a filter layer that only lists halal crypto verified by MRHB Shariah Governance Board.
With this halal DeFi Sahal Wallet, you can build your crypto portfolio and invest in halal crypto for wealth generation. You can also access the tokenized commodity exchange, TijarX, and invest in gold or silver. The tokenized gold and silver on TijarX are 100% backed by fully allocated gold and silver bullion respectively. The precious metals are secured in a reserve vault by the Gold Silver Standard of Ainslie Bullion Group Australia.
Soon to be released are the liquidity harvester and staking solution, which can also be accessed via Sahal Wallet, the gateway to the entire MRHB ecosystem. Once those platforms are live, you can stake MRHB Tokens to earn rewards.
We hope to garner more support in the vision of an ethical and halal DeFi ecosystem as we continue to build financial products that will help you generate crypto wealth. By downloading the Sahal Wallet app today, you will be starting your journey in halal crypto while also supporting the future of a fairer and ethical financial system.