As of 2020, the market cap for cryptocurrency is valued at a staggering $265. 55 billion.
The growth of the cryptocurrency industry has been phenomenal since crypto was first introduced in 2009, with users growing to more than 40 million in just a decade.
Chances are you’ve heard a lot about cryptocurrency. Perhaps you’d even like to try your hand at cryptocurrency investing. The fact is investing in cryptocurrency can be incredibly profitable and replete with quick profits, but you have to do it the right way.
But exactly what is cryptocurrency? What makes cryptocurrency a good investment? How can you invest wisely in cryptocurrency?
If you’re asking yourself these questions, you’ve come to the right place. In this comprehensive guide, we tell you all you need to know about investing in cryptocurrency.
Read on to learn more.
What Is Cryptocurrency?
Cryptocurrency refers to a form of virtual or digital money that you exchange online for goods or services. This currency is secured by cryptography, making it almost impossible to double-spend or counterfeit.
Most types of cryptocurrency are based on blockchain technology. They are decentralized by nature, meaning that there’s no central authority that controls them. Digital currencies are thus immune to manipulation or interference by governments.
Many companies today have their own cryptocurrencies. These currencies are often referred to as tokens and may be used to buy the goods and services the company offers.
Which Cryptocurrencies Should You Invest In?
Currently, there are thousands of cryptocurrencies traded publicly. Of course, not all cryptocurrencies are created equal. If you’re considering buying and selling digital currency, you need to know which crypto you should deal with.
The most popular cryptocurrency at the moment is Bitcoin. It’s also the oldest and most valuable type of cryptocurrency. For those considering investing in digital assets, Bitcoin is undoubtedly the best place to start.
Is Cryptocurrency a Good Investment?
Buying cryptocurrency is speculative investing. In other words, cryptocurrencies carry a significant degree of risk where your focus is on price fluctuation. The price of the currency you’re buying could plummet precipitously or experience a dramatic run-up.
This has been the story of Bitcoin over the years. The great news is that even when the price of Bitcoin crashes, it has still retained a significant percentage of the gains it made before the crash. Thus traders of the currency seldom lose in the long run.
Is Cryptocurrency Legal?
There’s no question that cryptocurrencies are legal in Australia. In some countries, the use of digital currencies may be banned, so it’s best to do your research to find out whether investing in crypto is legal where you live.
How to Invest in Cryptocurrency
Investing in cryptocurrency is largely similar to investing in stocks. The main difference between the two is that crypto is far more volatile due to the momentary swings in the value of digital currencies.
So what steps are involved in investing in cryptocurrency?
You begin by opening a brokerage account at a firm that allows people to make cryptocurrency investments. Next, you deposit funds into the brokerage account and buy cryptocurrency using your deposited funds. Later, you sell the stock for a gain or loss.
Of course, the flow of the steps above depends on the trading platform or exchange account you’re using. Many platforms allow you to buy Bitcoin using your trading card or by transferring money from your bank account. Some platforms require you to transfer Bitcoin directly, also known as direct Bitcoin deposit.
Different countries have different laws and regulations about who can invest in cryptocurrency. Some countries require you to provide more private details to verify your legitimacy.
Tips for Successful Cryptocurrency Investing
While investing in digital cryptocurrency promises huge profits, making the wrong move can result in huge losses. In this section, we provide four guidelines to help you make the right decisions.
Know the Market
Before making any type of investment, it’s critical to understand how it moves. As we mentioned earlier, there are numerous coins you can invest in, which makes for a highly complex marketplace.
Some coins are more stable than others. Bitcoin and LTC are good examples. Keep the majority of your holding in these coins.
Use the remaining smaller percentage of your holdings for coins with small market caps but a higher reward potential.
Research the Coin
Successful investing starts with careful research and patience. Find out the team behind a cryptocurrency and what their goals and vision are. This way, it’s easier to know which cryptocurrencies have the biggest potential.
Take the time to study the coin’s charts. Do they seem extremely volatile, or are they reasonably stable? A few months of careful studying can help you decide on whether a particular coin is a worthy investment.
Get Guidance From the Experts
As you’re going to find out, investing in cryptocurrency is no walk in the park. For many beginners, the venture can be quite complex and confusing.
The good news is that there are countless experts out there willing to help you make smart decisions when it comes to your money. These experts can provide live bitcoin trading signals, so you make the right moves at the right time. There’s also a bevy of helpful tools to help you along the way.
Start Off Small
Sure, you want the highest possible returns from your investment as quickly as possible. But as a beginner, it’s best to test the waters first by starting off small.
Like every other cryptocurrency investor, you’re bound to take a loss at some point. That’s how investors learn to be smarter with their investments.
Starting small helps you avoid taking huge losses. More importantly, it helps you keep learning, which is vital for future success as a seasoned cryptocurrency investor.
Experience Success in Cryptocurrency Investment
Anyone can create wealth through cryptocurrency investing. All it takes is thorough research, patience, and making the right moves at the right time.
Are you interested in buying Bitcoin? Keep reading our articles for important tips and news.