How to Invest in Cryptocurrencies?
Cryptocurrency has excellent potential for massive returns on investment however they are risky and volatile. Although cryptocurrencies have only been around for a short period, they are continuously expanding. What used to be just Bitcoin has now expanded to hundreds of different currencies, exchanges and technologies.
The crypto market has turned the corner and proven its credibility. But like any investments, cryptocurrencies requires knowledge, awareness, research and diligence. There are multiple considerations you should take. Understanding the vital factors and market characteristics is essential before investing. Dig into the details of cryptocurrency investment before starting to invest.
What is Cryptocurrency?
Cryptocurrency is a digital or virtual asset based on blockchain technology, a decentralized network that is distributed across a vast number of computers. They are not controlled or manipulated by governments and central authorities.
How to Invest?
Most probably, everyone has heard about Bitcoin. It was the first-ever cryptocurrency to go mainstream; however, others are also growing in popularity. There are around 2,000 different types of cryptocurrencies.
Cryptocurrency enthusiasts and researchers recommend people to study cryptocurrency first before buying and trading. So how do you invest in this digital currency?
Create a calculated risk. Due to the volatility of cryptocurrencies, they are considered a unique investment. There are many unforeseen risks, so you should only risk the money you can afford to lose.
Study and learn different cryptocurrencies. While Bitcoin remains as the king of cryptocurrencies, new and exciting cryptocurrencies are continually coming out. Some of these are Ethereum, XRP, and Stellar.
Check the whitepapers of your chosen cryptocurrency. It gives you the background and knowledge about the coin and its utility. A poorly written white paper explains why and why not you should not invest.
You need a platform where you can buy and store cryptos. You can purchase cryptocurrency in cryptocurrency exchanges. There are several exchanges, such as Coinbase, GDAx, and Bitfinex. Another option you can have is the Bitcoin ATM, which has more than 4,000 cryptocurrency ATM locations in 76 countries. You can utilize them to procure Bitcoin.
How to Keep Your Cryptocurrency?
You can’t put your Bitcoin in your actual wallet; you will need a cryptocurrency wallet for your digital currency. It safely stores the code of your cryptocurrency portfolio. There are two wallets you can use a software wallet or a hardware wallet.
Software wallets are vital in active trading because it makes your currency accessible. On the other hand, hardware wallets are physical devices that look like a USB. This is more secure than software wallets. Hardware wallets are good to use if you don’t need to use it frequently.
Top Reasons to Invest and Trade in Cryptocurrencies
Cryptocurrency has been the talk of different countries for the last few years. However, most people are still cautious about this topic even if they are interested in investing. Just like any investments, cryptocurrency is also risky, but it has a potentially high return. Here are the reasons why you should start investing.
No Government Intervention
Since the government creates policies, rules, and regulations, it can limit your movement, especially when it comes to money. But, since cryptocurrency has a decentralized nature, the government cannot access your cryptocurrency. Most probably, the value of cryptocurrency cannot be changed or damaged by government control.
High Return on Investment
Cryptocurrencies have existed for a short period, but so far, they have proven their profitability in the investment industry. Investing in cryptocurrency can be riskier, but with proper strategy, you can earn more profits. Many people lose their money because of a lack of knowledge and guidance.
Independent alternative
Some experts believe that cryptocurrency can thrive even after the market crash. Wealthy investors predict that the stock market may crash in 2020, so cryptocurrency may be a safer alternative for your investments. However, pessimists predict that they will also be adversely affected, just like any market.
Independence on Handling Money
Having cryptocurrencies means you can access your money without any consultation from other people. When you keep your money in a bank, you will always need to line up and talk first to the tellers before giving you what you want. Moreover, banks can be robbed and be bankrupt. With cryptocurrencies, you can assure that your money is safe and secured. You do not rely on any financial institutions for any transactions you are undergoing.
Excellent Liquidity
One of the essential attributes of any asset is its liquidity. It refers to an asset that can be rapidly converted into cash close to the market rate. Cryptocurrencies have excellent liquidity; you can buy and sell them quickly. With the technological organization of trading platforms, it allows the use of vast tactics and tools.
Manageable Investment
There are so many investments in the industry that can be too stressful to handle. Stocks and bonds are traditionally complicated and time-consuming. In the case of real estate investment, it needs a too high threshold. On the side of cryptocurrency, you can invest in a portion of it.
Best Crypto Exchange Platform
According to Coin Sutra, when deciding a cryptocurrency exchange website you must consider: the ease of usage, security of funds, past performance, development team, and geographical operations map. By having these parameters, you can assure the success of your investment.
Here are the top 7 Crypto Trading Platforms for Beginners:
- Binance
- CEX.io
- Coinbase
- Bitfinex
- Changelly
- BitMEX
- KuCoin
Some of the best features of trading platforms are letting their users buy cryptocurrencies through their debit or credit card. An easy to navigate interface also helps newbies understand how cryptocurrency works.
Investing in cryptocurrency could sound intimidating, especially to those who are just starting out in the world of investment. Just like in any business venture, it takes a lot of time to research and test which platform would really suit you. Sometimes, it even requires a trial and error process.
No matter how hard the starting point is, all the pros of investing in cryptocurrency outweigh all these challenges.