As any other investments, investing in cryptocurrencies demands one proceeds with caution as it could be very unpredictable.
However, one thing you should know is that cryptocurrencies are growing in popularity and use. And that is why the best time to invest in cryptocurrencies was yesterday.
The adaptability of cryptocurrencies keeps growing as people are getting more acquainted with technology and many possibilities it holds.
Imagine, if cryptocurrencies are worth more than 30 billion USD about two years ago, imagine how much it is worth presently and how much it would some months from now. However, do not be fooled by the very high rising gains, because it also the slippages come.
This is why you have to be sure about the kind of cryptocurrency you are investing in. The golden rule, however, investing in cryptocurrency is not to test the waters with more than you can handle at once.
Cryptocurrencies are coins that run on the blockchain technology for safe and easy facilitation of payments and transactions. Unlike traditional currencies, they are very secure because of the blockchain technology they are based on.
Also, what makes cryptocurrencies different from other traditional currency called fiat is that they are not backed by any regulations. This is another case in point why you should tread carefully when investing in cryptocurrencies.
The Major vs the AltCoins
These are the two kinds of coins you will get to encounter in your investment pursuit in cryptocurrencies. Major coins are the very popular coins in cryptocurrencies.
They are the kind of coins that have maintained a level of sustainability over the years. These are cryptocurrencies that have surpassed their market’s soft and hard caps.
Popular examples of major coins are Bitcoin, Ethereum, and Ripple. Recently, other coins are joining the stack like Hydro and Havven.
On the other hand, AltCoins are minor coins that are still trying to reach their soft caps and surpass their hard caps. There are many of them out there. You can get most of them through their individual ICOs (Initial Coin Offerings).
Here are therefore the 7 core tips you need in investing in cryptocurrencies:
Invest what you can handle
Again, this is the premium rule of not just investing in cryptocurrencies but any investment. Do not let greed drive you sore into investing all your life savings into cryptocurrencies; you could get burnt because of its high rate of instability. The crypto market is still very volatile.
The same goes for any investment. Investment wisdom demands you put in money you can afford to lose. That may be just for expression sake anyway, no matter how small, nobody likes losing money.
What that means, in essence, is that you should part away with money that would not emotionally drain you in the case that your investment takes a dip. This is the very first rule you should never forget.
How much to be invested into cryptocurrency is relative. It all depends on you and how much you have in your bank. In this case, it is good you factor in your sustenance costs such as food, health and mortgage before you decide on what to invest.
Make a research on the cryptocurrency
Who is a good investor without research anyway? Nobody invests into any market blindly. Blind investment is a fast lane to lose money before you even begin. Before you invest in any cryptocurrency, it is very important you carry out deep research on the coin.
Most coins or cryptocurrencies are created to solve a problem. This is the first place you may want to focus your research on. If the coin does not have a gap it is filling; then you might want to rethink putting your hard earned money into it. The point of focus should be to know the people or team behind the cryptocurrency.
If any of the people on the team had been involved in a scam before, do not even rethink it, bolt! That is a very strong red herring that you are heading to lose your money in a swoop. Also, if the cryptocurrency had been in the market before then, check its market strength over time and see if it is worth investing in.
Get a compatible wallet
This is very important so that you do not lose your money or coin. Before you put your money into a coin, know the kind of wallet compatible with your wallet. The best wallet for the coins on the Ethereum blockchain is the ERC-20 compatible wallet. Simply go to my My Ether wallet.
Also, you could store your coin on the inbuilt wallet on exchanges, but it safer in your personal wallet. You can also store your coin on hardware called KeepKey.
Identify with an exchange early
You should register with an exchange very early even before you begin trading on it. Some very popular exchanges require verification of identity. In some cases, this could take hours or even days.
You do not want to be caught in this kind of bureaucracy when you are in the heat of making some profitable trading. The process could make you lose money if you do not get it sorted out on time before attempting any transaction.
Know your goals
Every investment plan should have a goal. Do you want your cryptocurrency investment to be long term or short term? Knowing your goal will also inform your decision on how much to invest and what not to invest. For instance, it is not advisable you invest money you may need soon into a long-term investment.
Know when to cash out
The basis of any investment is to make a profit. Cashing out in cryptocurrencies is turning all your coins into money to know how much you have profited. Knowing when to cash also will help you to avoid failures.
Again, in investing in cryptocurrencies, do not allow greed to be the motivator. You may consider cashing after your investment has reached some level of profit, as not doing so could see the investment go deep down.
Be security conscious
Being security conscious will ensure you do not fall prey to hackers. Always keep the private key to your wallet very safe. Because it is a complicated string of digits and alphabets and you want to store them in as many places as possible, do not be tempted into storing your private key on your public email. Your email could be hacked and your key stolen with all your investment in it. Go the traditional way and write them down in your home diary for good safekeeping.
You can also invest into cryptocurrencies by creating your own cryptocurrency exchange. It takes more time. You need professional crypto exchange software for it. But this investment may bring you much more income, than simply buying cryptocurrencies.
Of course, such a big project may be started only if you are seriously interested in this kind of business and ready to learn everything about it or hire professional specialists in this field.
Cryptocurrency, as the world would have it, is pushing through the media. Everyone seems to be making one step or the other. However, it is pertinent to understand that mistakes, in business, are inevitable. What are the top mistakes you have made while starting out as crypto investor?