Cryptocurrencies have proven themselves time and time again to be the most volatile asset class out there. As the price of Bitcoin tumbles over 50% from its all-time high just a few months ago, could now be a good time to consider crypto investing?
With increasing news reports of investors losing their entire savings, it’s safe to say that cryptocurrency is certainly not for the faint-hearted. However, with volatility comes the potential to make money as well as lose it.
In this short guide, we’ll take a look at the ins and outs of cryptocurrency investing so you can decide whether or not it’s time to start buying and trading crypto.
What Is Cryptocurrency?
Cryptocurrency is a digital asset class that is supported by a relatively new technology called “blockchain”. The main reason behind cryptocurrency is to provide individuals with a store of finance that doesn’t require government or banks.
The blockchain means that all transactions that involve cryptocurrency are logged and the data of where a cryptocurrency has been and who owns what cannot be tampered with.
As with all new technologies, cryptocurrencies have had their fair share of teething problems. Because cryptocurrency is entirely digital it is most at risk from hackers.
Cryptocurrencies now exist in many different forms. From gaming tokens to stores of value. Stablecoins or tokens that are used to help run computer networks. It can be difficult to get your head around what each cryptocurrency does, but most people looking to invest are chiefly interested in potential gains.
What Cryptocurrencies Should I Buy?
When it comes to buying crypto, the dawning reality that there are thousands to choose from can quickly become overwhelming. Do you buy STORJ or ETH, BTC or XRP?
There is no one size fits all answer to this question. It all depends on your goals as an investor or trader. If you’re just looking to invest, then the more well-established cryptocurrencies such as Bitcoin and Ethereum are a good choice. They are less volatile than a lot of newer assets.
If you’re looking to trade and maximize profits in a short period then more volatile assets such as Dogecoin or Fantom are probably more to your taste. Unfortunately, volatility can mean both up and down, so it’s worth practicing your trading with small amounts before you try and make it big.
Be wary of people shilling tokens on the internet and always do your due diligence when researching different cryptocurrency projects.
Where Can I Buy Cryptocurrencies?
Cryptocurrencies are bought online through exchanges such as Binance and Coinbase. You simply deposit your fiat currency and convert it to a stable coin such as USDT and then use this to buy crypto.
Many exchanges offer “staking”. This allows you to store your crypto and earn interest. Depending on your crypto, and the exchange you use, you might find some very lucrative APYs.
Is Crypto Investing for You?
Crypto investing is not for the faint-hearted. The volatility of these assets means that it’s just as easy for a coin’s value to plummet and never recover as it is for it to make you rich.
As with any investment, it’s important to only invest as much as you’re willing to lose. If you’re considering being an active trader then be sure to test out your trading strategies before using real money.
The crypto space is a rollercoaster ride, so be careful out there.
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