Investing in cryptocurrency has now become one of the major headlines in the investment community. Learn more about how To Invest In Crypto Currency.
Years ago, many people would rather invest in anything than cryptocurrency. Crypto was like a creepy house promising great treasures to whoever had the courage to come in and find them. So, they walked past it. They thought it too risky, too dangerous.
But today, it’s a different story. Investing in cryptocurrency has now become one of the major headlines in the investment community. Instead of being scared of its volatile nature and looks, people are now trying to understand cryptos better. And that’s what this post is about. If you want to learn about investing in cryptocurrency, stick around.
A lot of people have been asking questions about how they can invest in cryptocurrencies. While there might be hundreds of cryptocurrencies in the crypto market today, not all boast of good prospects. But the question now is, “How do you invest profitably in cryptocurrency?” “Which crypto should you invest in?
To refresh your memory, let’s talk about what cryptocurrency is.
What is Cryptocurrency?
Cryptocurrency is a digital currency that can be used as a means of payment online or exchanged online for goods and services. For you to be able to have access to cryptocurrency, you have to exchange it with real currency. The method through which cryptocurrencies work is called ‘Blockchain Technology.’ It is a decentralized ledger. It simply means digital information stored in a public database. It is a database that is used across a network of computers.
Blockchain is very secured because all data, information and transactions are stored and can never be manipulated.
Cryptocurrency appreciates with time and patience. Bitcoin, the first and largest cryptocurrency was about $12 when it started gaining exposure and now it’s over $55k. If you had bought one or two bitcoins then, you would have been rich by now.
With the wild fluctuations in the price of cryptocurrencies, including the popular Bitcoin, it is possible to make big gains if you’re able to stomach the risk it takes. Every investment involves risk-taking.
You should be able to weigh the options of potential gains and losses and how risk tolerant you are. If you tend to be risk-averse with investment, cryptocurrencies are probably not the best for you. The cryptocurrency market is very volatile and cannot be accurately predicted. Make sure your life or financial stability is not dependent on the success of your cryptocurrency investment.
If you’re willing to take the risk, read on.
So the question now is what should you do if you want to get in on the cryptocurrency action?
Below are steps you can take to invest in cryptocurrency.
ONLY A SMALL PERCENTAGE OF YOUR PORTFOLIO SHOULD BE ALLOCATED TO CRYPTOCURRENCIES
You will have to make a decision regarding how much of your portfolio you are willing to allocate to cryptocurrency. At times making a logical decision can be difficult especially with the increasing prices of Bitcoin. You must make sure you keep your greed and fear in check as they make you take irrational decisions. Cryptocurrencies have advanced too much in recent times so it is very easy to give in to greed when investing.
It is very important to allocate only a small part of your portfolio to cryptocurrencies when it comes to investment. Investing in cryptocurrency is not the same as investing in a stock. The positive outcome of cryptocurrency investment is largely dependent on the significant increase in the price of the crypto.
Originally, cryptocurrency was supposed to be like a medium of exchange and has been viewed as an alternative to other common currencies like the dollar, yen and euro. It is more used on the web for e-commerce because its value is not subjected to manipulation like common currencies are likely to be. The value of cryptocurrency is decided solely by the market.
Although there are many good prospects for cryptocurrency, it’s still not 100% certain. So it is advisable to allocate 10% of most of your portfolio to cryptocurrencies.
PRACTICAL STEPS TO TAKE BEFORE INVESTING IN CRYPTOCURRENCY
Analyse the market
Before you invest your money in cryptocurrency, it is important you know what you’re getting into. You need to understand how the market works and have basic knowledge about the cryptocurrency market. Make research and read articles on cryptocurrency, prospects of cryptocurrency and check analysis of cryptocurrency.
This will help you know exactly what you’re going into.
Choose your coins
This can seem very difficult and challenging to do. There are many coins today. So many that you will have a hard time getting to choose the one you want. Even with the available cryptocurrencies, more are still coming in. But not all these coins pass the test of time. Many had come and disappeared and cryptocurrency generally started about a decade ago.
Bitcoin is the most popular cryptocurrency and the one that is currently dominant in May 2021 and has been drawing the most attention for a very long time. Ethereum is distantly after Bitcoin. Other cryptocurrencies include Dash and Ripple.
There are also diverse kinds of altcoins today you can choose from. Some are close variants of Bitcoin, like Bitcoin Cash. Some derived their names from Greek Gods (Apollo Currency), reptiles (Komodo) and even internet memes (Dogecoin). Interesting!
Bitcoin has proven to be the most reliable cryptocurrency over the years. There are some other coins that are also doing well. That is why you must make thorough research and analysis. Investing in Bitcoin is advisable due to its high volatility. You can also invest in other cryptocurrencies in smaller portions in your portfolio.
But you need to be very cautious, cryptocurrency can disappear at any time and your investment could completely vanish into thin air.
Choose where to buy the cryptocurrency
Cryptocurrencies can’t just be purchased anywhere. It can’t even be purchased Banks. There are limitations as to where you can buy from, where you can sell or even hold cryptocurrencies. This is why you need to look for and choose a platform that is suitable for you and for your location.
Some of these exchanges include:
These platforms can also be used to trade popular cryptocurrency pairs. They are specifically deuba for cryptocurrency activities. In the usage of these platforms, expect to be charged a network fee when buying or selling.
Robinhood is another platform that makes cryptocurrency available. This platform doesn’t charge commissions. You get to buy options, stocks, exchange-traded funds (ETFs) and cryptocurrencies without paying any commission. Although not all cryptocurrencies are available on the Robinhood platform, you can purchase Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Dogecoin and Litecoin.
This platform may be the best and less expensive means to buy, sell and hold cryptocurrency especially for investment purposes.
Buy the cryptocurrency
After being sure of where to purchase cryptocurrencies, you can go ahead and buy them. You don’t need to spend thousands Of dollars to get in the game. You can buy as you have the ability, including the almighty Bitcoin.
Most of the time in order to buy other coins and altcoins, you will need to have Bitcoin since you can’t purchase them with fiat. You can buy Bitcoin from exchanges from Bitcoin ATMs. There are about 4,000 cryptocurrency ATMs located in several places in 76 countries today. These ATMs can be used to buy Bitcoin and transfer them to your wallet.
Store your cryptocurrency
After purchasing your cryptocurrency, the next thing is to store them. Cryptocurrencies are not stored in a bank account but accessed through wallets.
A cryptocurrency wallet is a software program that saves the private and public keys that allows you to access the blockchain in which your cryptocurrency exists. You only get to access your cryptocurrency through a wallet by providing your public key which is your cryptocurrency address and your private key, which is only known by you. Without both keys – public and private, you will not be able to successfully complete any transaction.
Records of all transactions that are stored on the blockchain are provided in your wallet as well as your current balance. You are also enabled to send and receive cryptocurrency through your digital wallet.
Types of Cryptocurrency Wallets
The types of cryptocurrency wallets include:
This kind of wallet is installed directly on your own personal computer. Your information is more secure on desktop wallets than online wallets.
This type of wallet is in the form of an app on your smartphone. It is easily accessible and can be used to make transactions where different cryptocurrencies are allowed.
These kinds of wallets are located on the cloud and can be accessed from any computer system. They are easy to use but are less secure because your private key is stored online and managed by a third party.
These wallets are very secured because the private key isn’t stored online or managed by a third party but is stored in an external and physical device such as a USB device. No unauthorized persons can access the private key. Since it’s an external device, you can use it to access your stored cryptocurrencies from different devices.
Aside from these, some cryptocurrency exchanges provide wallets for you to access your cryptocurrencies. Whichever wallets you choose to use, is up to you. Just be sure to strike a balance between convenience and security. Let’s ride on!
After buying and storing your cryptocurrency, what next?
You need to keep checking the news and monitoring the growth of your cryptocurrency. The truth is that cryptocurrency won’t be stable.
Over the years, Bitcoin for example has experienced many highs and lows but is currently on the high side. So no matter how you choose to buy, sell and hold your cryptocurrencies, be ready for the worst. Cryptocurrencies are generally unstable, so be prepared for instability and be patient.
Cryptocurrencies are not easily predictable so you have to put your emotions aside and be patient. Remember, with cryptocurrency as with any other kind of investment, what goes up can come down and what comes down can go up. The amount you are willing to invest is dependent on the amount of risk you’re willing to take and your investment time frame.
So, what are you waiting for? Enter the crypto house today and invest, for there are no treasures without risk.