How to invest in cryptocurrency?
Investing in cryptocurrencies is a matter of extensive research. If you are keen on investing in cryptocurrency considering it to be the fastest way to make some easy money, then you are mistaken!
To be brutally honest, nothing comes easy in life. I would rather not recommend you to invest your hard earned money in cryptocurrency without getting the basics right. Don’t just blindly jump into the pool. Allow some time for homework. I hope some of the following tips will ease your crypto voyage:
Decide on the cryptocurrency you are interested in: To get an insight into this aspect, it is pivotal to learn the fundamentals of the digital assets as the risks are determined on the basis of each asset’s underlying mechanism.
Decide on the kind of investment you look forward to: Question yourself if you want to go for a long-term investment or a short-term one. This decides the amount of money you are planning to place in your investments.
Crypto market statistics do matter: For a well-planned strategy, the gauging of crypto market statistics is very important. Market dynamics should not be overlooked even if you go for short-term investments.
Figure out the credibility of the digital asset you are investing in: Global acceptance and trust associated with the digital assets are crucial for prospective cryptocurrency investors. Although I agree that this is very much intuitive yet you can take the help of several unbiased opinions of the crypto experts flocking all over the internet.
Take a look at the major crypto players till date: The knowledge of predecessors always tend to prove beneficial in every sphere of life and cryptocurrency is no exception. This is a significant move that you must take into account considering the market’s volatility.
Invest the right amount of money: It is advisable that you remember the thumb rule, “invest only what you can afford to lose.” I absolutely second the fact that losing money hurts. However, a wise investment will not make it a devastating event for you.
Tips to invest in cryptocurrency
1) Start Small
Like the stock market, the crypto market is extremely volatile which means prices will rise and fall unpredictably. It is only wise to invest in cryptocurrency after you make sure you have enough liquid funds for at least 6 months without any debts. Once you’re clear on this, start by investing in stocks (if you haven’t already) to understand your capacity to deal with risks. Once you know you can handle the ups and downs, set aside a small part of your money to invest in cryptocurrency. If possible, limit your investment to 5-10% of your income.
2) Select your cryptocurrency
Yes, there is more than one cryptocurrency in the market right now with different price points. But it is advisable to not jump board and invest in 5 different small cryptocurrencies. A lot of homework is required to select the right crypto coin. Be aware of what is happening in the market, make a list of the 5 best performing cryptocurrencies and observe their growth chart. Right now Bitcoin is the largest cryptocurrency in the world, it’s also the most trusted one next to Ethereum, Ripple, Litecoin, and Binance Coin.
Here’s why this is the most important part of your investment journey. In the past decade, a lot of cryptocurrencies that entered the market either flatlined or disappeared without a trace. This means your $100 investment can turn into a big fat zero with just one hasty decision.
3) Pick the right cryptocurrency exchange
Basically, it’s a place where you can buy, sell or hold your crypto assets. Analytics Insight has a detailed list of the best cryptocurrency exchanges with information about transaction fees, pros, and cons here. Like how banks and other financial institutions are designed to loan money, store money, and provide mortgages, these crypto exchanges are specifically designed to manage cryptocurrencies and their volatile nature.
4) Choose a cryptocurrency wallet
What is a cryptocurrency wallet? It’s software that stores the private and public key that adds as a link between you and the blockchain where your crypto assets are. Many people confuse crypto wallets with a storage place for cryptocurrencies but in technicality they just let you access your cryptocurrency on the blockchain with a crypto address known as the key. Without the key, you cannot complete a crypto transaction. You can send and receive cryptocurrencies during a transition with any company that accepts cryptocurrencies for payment.
If you follow the above-mentioned steps, you are ready to invest in cryptocurrency. No matter what cryptocurrency you invest in, prepare yourself for some instability, and analyze the price regularly.