During the last decade, the cryptocurrency market has come a long way. Since the explosion of Bitcoin in 2017 when it reached its value peak, the larger masses have seen the appeal and started investing in digital currencies more than ever. During 2020, people are looking for alternate ways of investment, and virtual currencies are at the very top as a user favorite way of making more money.
While most people today know a lot about cryptocurrencies and what they are, potential investors still have a lot to learn before making their first move. If you want to start investing in cryptocurrencies but are not sure how this article is for you. It serves as a guide for beginners, and after reading it you will have all the information you need to make a profit. To learn even more, visit sysadminslife.com
What are Digital Currencies?
Before we tell you what you need to know about investing, you first have to know a little bit about cryptocurrencies. Digital currency is a unique virtual medium used for trading, investing, and exchanging money and services. It exists thanks to the blockchain and cryptography technologies, which allow it to have all the beneficial features people love it for. Differently from traditional currencies like dollars, pounds, or euros, cryptocurrencies are fully decentralized. This means that no governments or banks control them. Governments are looking for ways to regulate the use of cryptocurrencies, but so far, there is not much they can do. What is more, users can exchange their digital currencies without any fees or intermediary third parties, another advantage over traditional currencies.
Why you Should Invest in Cryptocurrency
The benefits of cryptocurrency investments are many, primary of which are listed below.
1. Ease of access and security
Spending cryptocurrency is faster, easier, and more secure than spending regular fiat currencies. Sending and doing business is also much safer. Each person or business has their own private key without which the digital currency balance cannot be accessed. As long as you do not give your credentials to anyone, nobody can access it.
Since it works through the blockchain technology, which is basically an online ledger of all cryptocurrency transactions, the transparency levels are vastly higher than with regular money. Dollars, for example, are extremely hard to keep track of, but with Bitcoin, it is easy to verify transactions and be honest about the exchange.
3. High return potential
Since cryptocurrencies appeared, millions of people have become successful and rich thanks to their investments. The high return potential of Bitcoin and other virtual currencies is unparalleled. Of course, not everyone is guaranteed success, especially from the start, but there is a pretty high chance of increasing your wealth through investing in cryptocurrency. The reason behind this is the fact cryptocurrencies are very volatile with their value with unpredictable jumps and plunges. This is where most of the potential to win lies, but also a chance to lose money if you make the wrong decisions.
Now that you got familiar with the basics, it is time to start the process of investing in cryptocurrency.
1. Choose an exchange
First thing’s first, you must choose an exchange, the place where you will both purchase and trade your digital currencies. Many exchanges exist online and the key is to find the best one possible. Look for those with the happiest users and the best reviews, because this means the exchange is trustworthy. You buy cryptocurrencies on these services with your regular debit cards, and fractions are also possible for purchase if you do not want or cannot buy a full single coin immediately. For example, 1 BTC is currently worth over $9,000.
2. Choose a digital currency
When you pick the right exchange service, it is time you decide what cryptocurrency you want to deal with. At the moment, and for the foreseeable future, Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Litecoin (LTC). Bitcoin has a huge lead in popularity and value over the rest, which is why it is the best move to start with it as your primary cryptocurrency investment.
3. Open an e-wallet
After choosing and buying your first amount of digital currency, you have to own a place to safely store it for future use. This place is called a wallet or an e-wallet that holds your cryptocurrency. Software and hardware wallets exist, and they are used for different things. A software wallet is for then you want to be a part of active trading, while a hardware wallet is like an external hard drive and therefore more secure. Software wallets are quicker to use and better for frequent access, while hardware wallets are better if you do not need a certain amount soon or often.
4. Diversify your portfolio
Exactly like you would diversify your stocks, you should keep in mind dealing in multiple currencies has many benefits. That way you will not be stuck on one digital currency and suffer from a period of high volatility. To escape large losses, invest in more than one virtual currency and be smart about it.
5. Prepare for ups and downs
The market of cryptocurrency and the whole business can be a very frustrating place. Be ready for the ups but always expect some downs too. The value of your balance could drop immensely, but it will get back to its former glory too, often within a span of a week. Make sure you are ready and calculated.
Takeaways and Conclusion
After reading our guide, you are no longer a beginner. You can consider yourself a new investor ready to make their first big move onto the exciting digital currency market. Choose the most secure and trustworthy exchange you can find, purchase an initial amount of your favorite virtual currency, store it in a good and protected e-wallet, and start from there. When you start making regular profits, think about diversifying your investments and expand your presence on the market, and never let the frequent ups and downs discourage you. Cryptocurrency is the future that has already started, and it is great that you decided to be a part of it.