The world of cryptocurrency has expanded into a complex universe that can be difficult to understand by anyone who is not a stakeholder.
Although cryptocurrency has been around for a relatively short time, one cannot deny the fact that it has had a substantial impact on the future of payments. But with the volatility of the cryptocurrency markets, there lies an opportunity to make big gains for investors who can take risks.
There are now several digital platforms that now make it easy for anyone to buy and trade popular cryptocurrencies like Bitcoin – a good example is Coinbase. Although the process of buying cryptocurrency is now easier than it has ever been, the entire process is a bit more complex than investing in traditional currency.
If you are considering taking advantage of the volatility in the cryptocurrency market to make some profit, this article is for you.
Investing in cryptocurrency
If you are reading this article, chances are that you are quite close to making up your mind about investing in cryptocurrency. Thanks to the advancement in blockchain technology and other areas of cryptocurrency, you can get started right away. You must have heard several stories of people making huge gains from their cryptocurrency investments, but it also comes with its risks.
There are some steps that you need to take before you can become a crypto investor. The most important things that you need to figure is where to buy and store it. You also need to figure out what cryptocurrency you want to invest in, and there are quite a number of them.
The popular currencies include Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Ripple ( XRP). When you have decided on the cryptocurrency you want to purchase, the next step is to find an exchange. Well, the most popular place to buy your currency is an exchange. These digital platforms allow investors to trade their bitcoins securely anywhere in the world.
Choose an exchange
There are more than a dozen exchange platforms to choose from, with Bitfinex, Coinbase and GDAx. These exchanges allow investors to purchase cryptocurrencies including Ethereum, Bitcoin directly with your debit card.
The great thing about investing in cryptocurrency is that you do not need to invest thousands of pounds all at once. For instance, Bitcoin allows you to buy fractions of a coin.
However, if you have your eyes on altcoins, there is a great possibility that you need to have some Ethereum or Bitcoin to buy it.
This is as a result of the fact that you cannot purchase altcoins with fiat currency (traditional money/cash like dollars and pounds). But this is likely going to change in the nearest future.
Storing your cryptocurrency investment
Your cryptocurrency assets should be stored in a ‘wallet’. Unlike your regular money or fiat currency, cryptocurrencies are made up of numbers or codes, which need to be securely stored.
You choose between software and a hardware wallet. Storing your cryptocurrency investment in a software wallet allows you to enable active trading, making your crypto assets easier to access for trading. Coinbase automatically gives you a software wallet when you sign up for an account on its platform.
On the other hand, hardware wallets are physical devices, they are also sometimes called “cold storage” – and they are preferred by many serious crypto investors because they are more secure.
Since they are not online, hackers are unable to gain access to them, making them one of the safest methods to store your investment.
If you are not looking to trade very often, or you just want to buy some crypto so that can sell them at a later time when the prices skyrocket (if it ever happens again), then a hardware wallet might be your best option.
Another option is paper wallets, which store your asset on a piece of paper in the form of a QR code. All you need to do is scan the code whenever you need to make a transaction. It is also a variant of cold storage.
As with other types of investment, you need to keep yourself updated about the cryptocurrency markets. There is always something new in the world of cryptocurrencies and you need to have that information to make the most out of your investment.
Think about your cryptocurrency investment like shares – where global events can have a direct impact on its value.
Is there a good time to invest?
No general rules are guiding when to invest in cryptocurrency. However, it is always a great idea to buy when the market is a bit stable. Some investment experts warn against buying at the peak of the bubble or when the market is in free fall.
While cryptocurrency investments have the potential to be profitable, you must be prepared to make loses. The market will not always be favourable because it can be extremely volatile, and you can make some bad decisions as well as good ones. Expert cryptocurrency investors warn against investing huge sums money to protect your finances from the negative impact of a loss.
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