Why it is or isn't good to invest in crypto?

 

The demand for cryptocurrencies is skyrocketing as a number of individuals have expressed an interest in these assets. However, as an investor, one must understand that there are several factors to consider before putting one's hard-earned money into these. The investor must first understand that coins with market valuations that have already crossed the threshold may not grow further, or at least not at the same rate.

 

Investments are always risky, but according to Consumer Reports, some experts believe cryptocurrency is one of the riskier investment options available. However, digital currencies are among the most popular commodities. CNBC predicted earlier this year that the cryptocurrency market would be worth $1 trillion by the end of 2018. If you want to invest in cryptocurrencies, these tips can help you make informed decisions.

 

1. Research Exchanges

 

Learn about cryptocurrency exchanges before you invest a single dollar. These platforms allow users to buy and sell digital currencies, but according to Bitcoin.com, there are 500 exchanges to choose from. Before proceeding, conduct research, read reviews and consult with more experienced investors.

 

2. Know-How to Store Your Digital Currency

 

When you buy cryptocurrency, you must keep it somewhere safe. You can keep it on an exchange or in a digital "wallet," such as one of the crypto wallets described in our blog post Which cryptocurrency wallet should I use? While there are many different types of wallets, each has its own set of advantages, technical requirements, and security features. You should investigate your storage options before investing, just as you would with exchanges.

 

3. Diversify Your Investments

 

Diversification is essential in any good investment strategy, and it is especially important when investing in cryptocurrency. Don't put all of your money into Bitcoin, for example, just because the name is familiar to you. There are thousands of options, and it is best to diversify your investment across multiple currencies.

 

4. Prepare for Volatility

 

The cryptocurrency market is volatile, so expect ups and downs. Prices will fluctuate dramatically. If your investment portfolio or mental health can't handle it, cryptocurrency may not be the best option for you.

 

Cryptocurrency is all the rage right now, but keep in mind that it is still in its early stages. Investing in something new comes with risks, so be prepared. If you intend to participate, do your homework and begin with a small investment. 

 

Security of investing in cryptocurrency 

Blockchain technology is commonly used to create cryptocurrencies. The term "blockchain" refers to the method by which transactions are recorded into "blocks" and time-stamped. It's a fairly complex, technical process, but the end result is a digital ledger of cryptocurrency transactions that hackers find difficult to manipulate.

Furthermore, transactions necessitate a two-factor authentication process. To begin a transaction, for example, you may be asked to enter a username and password. Then, you may be required to enter an authentication code sent to your personal cell phone via text message.

  

Checking legitimacy

It is not a good idea to invest in a project that has just been launched with a team that has no backing or is unknown. Rather, it is always preferable to choose projects that have been around for at least 1-2 years. Furthermore, those projects that were present during the difficult period for the crypto industry in 2018-2019 have more credibility. After all, those that have survived difficult times and are still operating are less likely to be scams. Scammers typically appear during peak hours.

 

Understanding the value proposition

Understanding the project's value proposition is also critical. It is also recommended that investors investigate the history and purpose of a project. Determine the gap that the project is attempting to fill. Aside from the purpose, the uniqueness of the project must also be considered.

 

Doing proper homework

An investor should conduct thorough research and analysis before deciding on which assets to invest in. Those who invest solely in hearsay will undoubtedly fail to understand market behaviour, lose money, and then criticise the project.

 

Knowing the risks

It is always a good idea to assess risk before embarking on any project. Decentralized finance (DeFi), for example, may see tremendous growth from here, but that does not imply that all DeFi projects are good. It is necessary to comprehend the technology behind it and assess its robustness.

 

Going for long-term

Investors should always buy the dip and keep a long-term perspective. Investors who bought Bitcoin at $19,000 at the peak of the 2017 bull run saw their investments fall by 75-80%. However, the believers held on to their investments and gained 300%or more after three years.

Source