Investing in cryptocurrency is a profitable business as long as we know what to do. Beginners need to learn a lot in order not to be mistaken.
Let’s remember that safety comes first.
We will tell you how to invest money with the lowest risks.
What Is Cryptocurrency?
Cryptocurrencies are so-called digital currencies. It is not the same as traditional money, because it does not have a medium – physical banknotes.
They are completely decentralized. This means that they have no controlling institutions – no central bank, no other administrator. All related issues are under the control of the users themselves.
Where Can You Buy These Mysterious Currencies?
First of all, you will need a cryptocurrency wallet.
How to become the owner of digital currency if it has no physical form?
This is done through exchanges where you can buy the most famous virtual currencies – Bitcoin, Ethereum, or Litecoin. There are also less popular cryptocurrencies, and, in addition, new ones are constantly appearing.
When choosing your first exchange, it will be better to choose a reputable marketplace to make sure your savings are not at risk. Visit the ratings of cryptocurrency exchanges. There you will learn important information: where is the best place to buy, what to look for, what formalities to complete, etc.
How to Store Cryptocurrency?
This can be done on an exchange or on websites, but this is not a very secure way. Mainly because such places are susceptible to hacker attacks.
Even worse, once the cryptocurrencies are stolen, it will be difficult to get them back because there is no way to reverse the deal.
So which is safer?
Store your savings on your desktop wallet. Of course, there is a risk that someone will get access to it, but it is much lower than on the exchanges.
To mitigate the risk, some users use wallets. They can be thick (store the entire Blockchain), thin (Blockchain on an external server), and mobile (as the name suggests, installed on mobile devices).
How to Ensure the Highest Level of Safety?
When you keep your savings on your computer, you need to remember to install an antivirus program and scan your computer regularly.
Software updates are also important.
The wallet must be encrypted and made by an experienced software development company.
Also, remember to keep copies of the private keys in a safe place.
Always log in from secured Wi-Fi networks.
Back up your wallet and keep it away from your device.
Which Trading Strategy Is Better to Choose?
You can and should make good money on the difference in exchange rates – the main thing is to think about the future strategy.
Long-term investments in Bitcoin – you buy crypto and wait for the rate to rise.
It is important to have the patience not to fold coins at the first crisis or a sudden drop in price.
Short-term investments in Bitcoin involve speculative exchange trading. Coin value fluctuations sometimes reach 10% during the day.
You buy the coin when the price goes down – you sell it when the price goes up.
You should first calculate the trading commissions of the exchange and the possible income in order to stay in profit.
What Does a Novice Investor Need to Know about the Cryptocurrency Market?
Bitcoin has a share of about 50% in the capitalization of the cryptocurrency market. Sometimes it falls, the minimum value was around 34%.
Therefore, we can say that the Bitcoin rate is responsible for the state of the entire cryptocurrency market. It cannot be that the price of Bitcoin will fall, and all other cryptocurrencies, such as Litecoin, will rise.
In the case of short-term investments, cryptocurrencies differ from other assets (for example, fiat currencies). These are volatile assets with high liquidity, and these factors allow you to earn a lot in a short time.
The management of cryptocurrency assets, in general, does not require specific knowledge, the basic investment rules are the same everywhere:
- do not invest borrowed money;
- diversify your investments;
- do not be greedy, do not believe offers of 100% guaranteed profits;
- do not be nervous – this is especially important in a volatile market.
Of course, it is desirable to know the features of each cryptocurrency project, which will allow you to objectively assess its future, but you should pay attention only to the economic side.
But we can say that many of the most popular cryptocurrencies have no other future than an asset for investment. This also applies to BTC.
That is, they will cost money as long as you are willing to invest in them. But there are also projects that will exist regardless of the fate of the cryptocurrency market (for example, Ripple).
Advantages and Disadvantages of Investing in Cryptocurrency
- high-income opportunity;
- the minimum personal involvement of the investor;
- becoming an investor is easy even for a beginner;
- you can start with a small investment.
- profitability is not guaranteed;
- legal uncertainty;
- investments can be unprofitable in the short term.
Cryptocurrency Investment Risks
Investing in cryptocurrencies is not safe. Main risks:
- there is a risk of losing access to cryptocurrency due to your own inattention or hacker attack;
- the risk that transactions may be recognized illegal and prohibited at the legislative level. So far, the legal status of cryptocurrencies in some countries remains uncertain, although transactions with them are not prohibited.
- the risk of a fall in the exchange rate and losses of the investor.
Investing in cryptocurrency is a promising but risky way to invest money.
You should not sell your home or take out loans in the hope of getting extra profitability.
It makes sense to invest a part of your capital, the loss of which will not be critical for you.
In this niche, you can get high profits due to a significant increase in the value of assets, but no one can guarantee that the chosen coin will rise in value.
The most important thing is to think about the safety of your assets. A doubtful wallet or unpopular exchange can take your money, or, if they are legit, can be hacked due to the low level of security.