How to Start investing in Cryptocurrency
Cryptocurrency is a digital or virtual currency that uses cryptography to secure its transactions and to control the creation of new units. Cryptocurrency is a relatively new investment, and there are a number of ways to get started. In this blog post, we will explore some of the basics of cryptocurrency investment and how to Start investing in Cryptocurrency
There are thousands of cryptocurrencies, each with its own security standards and value propositions, but Bitcoin is the most famous.
Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control.
How to trade with cryptocurrency.
Many companies have issued their own currencies, often called tokens and these can be traded specifically for the good or service that the company provides.
However, you will need to exchange real currency for the cryptocurrency to access the goods or services. Cryptocurrencies work using a technology known as blockchain.
Block chain is a decentralized technology spread across many computers that manages and records transactions.
The number of cryptocurrencies that are there and what they are worth.
According to CoinMarketCap, a market research website, around 15,000 different cryptocurrencies are traded publicly. The best cryptocurrencies by market capitalization as tracked by coinMarketCap, a cryptocurrency data and analytics provider are:
- Bitcoin – $1.1 trillion
- Ethereum – $536.2 billion
- Binance coin – 102.2 billion
- Tether – $74.2 billion
- Solana – $69.7 billion
- Cardano – $54.3 billion
- XRP – $45.7 billion
- USD Coin – $39.2 billion
- Polkadot – $35.2 billion
- Dodgecoin – $27.3 billion
Read Also Ways to Earn Free Cryptocurrency without investment
Reasons behind popularity of Cryptocurrencies
Cryptocurrencies are popular to their supporters for various reasons. Here are some of the reasons;
- Supporters see cryptocurrencies such as bitcoin as the currency of the future and are racing to buy them now, presumably before they become more valuable.
- The fact that cryptocurrency removes central banks from managing the money supply, since over time these banks reduce the value of money through inflation.
- The technology behind cryptocurrencies, the blockchain, because it’s a decentralized processing and recording system and can be more secure than traditional payment systems.
- Cryptocurrencies are going up in value and have no interest in the currencies’ long-term acceptance as a way to move money.
Are cryptocurrencies a good investment?
Crypto currencies may go up in value, but many investors see them as mere speculations, not real investments.
The reason is because, just like real currencies they don’t generate any cash flow. They depend on the greater fool theory of investment where someone has to pay more for the currency than you did.
This is contrast to that a well-managed business, which increases its value over time by growing the profitability and cash flow of the operation.
How to buy Cryptocurrency
Some cryptocurrencies such as bitcoin are available for purchase with US dollars. To buy cryptocurrencies, you will need a wallet.
This is an online app that can hold your currency. Basically, you’ll need to create an account on an exchange and then you can transfer real money to buy cryptocurrencies such as Bitcoin or Ethereum. Also, there is a growing number of online brokers offering cryptocurrencies. Some of them are eToro, TradeStation, Binance, coinbase, Gemini, Robinhood and Sofi Active investing.
The legality of cryptocurrencies
Cryptocurrencies are legal in most countries. However, China has essentially banned their use and ultimately whether they are legal depends on each individual country.
How to secure yourself
Having cryptocurrency exposes you to a lot of risks such as theft, as hackers try to penetrate the computer networks that maintain your assets.
You need to a lot of market survey before investing in a currency and weigh the chances of it succeeding. In addition to that you also need to ask your self the following questions to ensure that you protect yourself. These are:
- Who owns the company you want to invest in? A well know owner is a positive sign.
- Are there major investors who are investing in it? It is a positive sign if other well-known investors want the same currency.
- Will you own a stake in the company or just currency or tokens? Owning a stake means you get to participate in its earnings (that is you are an owner) while buying tokens means you are entitled to use them like ships in a casino.
- Is the currency already developed or is the company looking to raise money to develop it? You have note that the further along the product is developed, the less risky it is.
Guidelines on how to Start Investing in Cryptocurrency Safely
Cryptocurrency is speculative. Meaning it is an investment involving higher than normal risk in order to obtain a higher-than-normal return. If you are planning to invest on cryptocurrencies, these tips can help you make educated choices.
Research Exchanges
Before you invest a single dollar, it is important to learn about cryptocurrency exchanges. Do thorough research, read reviews and talk with more experienced investors before moving forward.
Diversify your investment
Diversification is a key to any good investment strategy and holds true when you are investing in cryptocurrency too. Don’t put all of your money in one currency for instance bitcoin just because that’s the name you know, it’s best to spread your investment to several currencies.
Prepare for vitality
The cryptocurrency market is a volatile one, thus be prepared for ups and downs. You will see dramatic swings in prices. Therefore, do your research and invest conservatively to start.
Investing in cryptocurrency is a new and exciting way to think about money but is still risky.
You will need to be in a financially secure position before you start putting money into crypto assets.
Experts say the first and most important step is to educate yourself on these emerging technologies they use so that you can understand the risks and rewards.
