Investing in cryptocurrency has become simpler over the years. It is now relatively easy to invest in crypto and there is more of a variety of virtual currencies to choose from as well.
However, the industry still remains new and there are still a few things to bear in mind before entering the investment market to avoid losing money.
In this post we'll go over a list of the things that should be a hard pass for you if you want to get started in crypto investing.
Also read: How to pick the right crypto exchange for you.
The original niche and purpose of cryptocurrencies
Bitcoin was the first virtual currency, launched in 2009, but thousands of other alternative cryptos have since developed.
There are fallacies about cryptocurrencies that are spread solely to discredit them, but their progress is continual and growing.
Some virtual currencies were designed as a replacement for the traditional payment system, which relies on physical money.
Society lost faith in banks as a result of the global financial crisis, and cryptocurrencies were seen as a way out. Bitcoin is a decentralized virtual currency, meaning it is not backed by any existing institution or government. Although the blockchain technology on which they are based is the most important feature, it is a currency, which is one of its most valuable aspects.
There are other cryptocurrencies with different fundamental goals though. An alt coin that does not aim to be a currency can still be a valuable part of your portfolio, if it gains a solid user base like for example Ethereum.
If you decide to dive into the world of crypto investing, you should first learn more about the different types of coins in the market. The jargon can sometimes feel like gibberish - for instance, nobody knew knows the difference between stablecoins vs altcoins vs bitcoin.
In short, always do your due diligence before investing, and keep in mind the following three basic things to avoid.
Things not to do when investing in cryptocurrencies:
1/ Don't take out loans to buy high risk assets
If you don't have enough money to invest in cryptocurrencies, you should just avoid investing.
You don't need to take out a loan; instead, save some money and then invest.
One of the most essential investment guidelines is to invest with money that you can afford to lose.
That is why having a financial cushion is preferable, and why buying crypto on credit is a bad idea. Consider this advice.
2/ Don't go out and buy the first cryptocurrency you come across
There are various types of cryptocurrencies in which you can invest. Read some news and stay updated with the latest releases.
You should not invest in the first coin you come across; instead, you should conduct research, study, and observe several before making a decision. Make sure the cryptocurrency you buy in is the greatest option for you to reach your objectives.
You don't need to purchase a large number of cryptocurrencies, not even to diversify. Simply knowing which ones to purchase is sufficient.
It is a good idea to buy more than one cryptocurrency, but we don't recommend purchasing a large number of them. Examining the one that best meets your requirements is more efficient. Keep your impulses under control!
3/ Don't invest without first learning about cryptocurrencies
Before investing in bitcoin or alt coins, we recommend that you first learn about them.
Understand how cryptocurrencies work, how they differ, how they were invented, and why they exist.
You are setting yourself up to fail if you put your money in anything about which you have no information.
The best ways of investing in cryptocurrencies
A multitude of methods are available for purchasing virtual currency.
There is no one-size-fits-all solution; the way to onramp that will be a good fit for you is dependent on your location, amount you want to invest as well as what you want to achieve with your investment.
Below there are some of the most prevalent methods:
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Use investment funds: They are made up of a foundation on which various assets are placed. You can store your cryptocurrency investment if you use an investing fund wisely and securely. One of the most powerful and positive factors of developing trust in the individual who invests is safety. Knowing that your investments are secure gives you more confidence.
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Cryptocurrency mining: This is a popular strategy for acquiring new virtual currencies. To carry out this method, you'll need to build a mining rig and have a decently cheap supply of electric power. Mining gets more resource intensive with time, so this won’t be a one man operation unless you’re mining a brand new cryptocurrency. In established cryptos, such an operation will need a computer-savvy technical team, as they'll be performing tasks that require a particular amount of computer expertise.
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Purchasing virtual currencies through a crypto trading platform: This is the most common method. This page has a list of the most popular trading platforms where cryptocurrencies may be bought and sold as well as exchanged. Furthermore, it allows traders to deal directly with the market, which makes actions easier and faster.
These are also other options available. Did you know who they were? What are your thoughts about it? If you've previously invested in cryptocurrencies, you've almost certainly done so in one or more of them.
Do you wish to invest in cryptocurrencies but are unsure how? Virtual currencies are not as complicated as they appear. It's an alternative in which you can choose to utilize money that is digital rather than traditional. Dozens of platforms throughout the planet are waiting to provide you access to thousands of coins.
And, in order to choose the best one for you, you must first choose which attributes are most significant to you. Choose wise and be wise.