Investing in cryptocurrencies is different from traditional investing. There is much less regulation in the world of cryptography, and we must understand many things before investing:
Let’s first see how investing in Bitcoin can yield significant profits:
For example, those who bought Bitcoin on November 25, 2018, for a sum of 3,258 euros and sold them on July 9, 2019, made a huge profit.
The basics:
It is understandable that the crypto market is largely used by individuals to make money, but beware, the opposite can also be true. Cryptocurrency is at an early stage of development and still has many difficult steps to take: if you don’t want to lose money on this market, it is important to do adequate research and ask yourself the right questions:
1. What problems is Bitcoin trying to solve?
2. Do I understand what Bitcoin is?
3. Who are the miners?
4. Do I understand what blockchain is?
The better you understand Bitcoin, the better you will familiarize yourself with other similar cryptocurrencies, such as Ripple for instance. You can learn a lot by consulting Reddit, YouTube, and Google.
The market
Make no mistake, the cryptocurrency market is a market that functions like all other markets. The stock market, the real estate market, and now the cryptocurrency market all operate similarly, and their basic principles can be applied to each one of them. Do not think that this market is different; it’s the same thing and understanding how different markets work will allow you to make better investments. Here are some good reads for better understanding:
[A Random Walk Down Wall Street]
[The Bogleheads’ Guide to Investing]
[The Intelligent Investor]
Investment tips:
Here are the steps to safely invest money in cryptocurrencies over the long term:
1. You cannot predict the market. No one has ever been able to time the market absolutely effectively, and the market we are talking about is no different from others. Guessing its highs and lows takes years of rigorous training and does not guarantee you will make the right bets. Of course, there are people who get lucky, but relying on that is the same as believing you will definitely win the lottery.
2. Emotions? A brief search on this network will reveal a large number of testimonials from people who buy when the price goes up and sell when the price goes down, just because they fear missing out on something. After reading this guide, you will act differently. If you truly believe in your investments and have long-term goals, daily market fluctuations should not worry you. Be logical: if the price drops, buy, but if it rises, sell. There will be highs and lows in the market; keep calm, and don’t trade emotionally.
3. Invest only if you are ready to lose money. Most of the points mentioned in this article appear obvious, but we want to draw your attention once again to some precautions to take. You should never invest all your retirement, savings, and others in the crypto market (actually, in any market), regardless of your belief in profit. If, as a result of your investments, your quality of life deteriorates, it means you bit off more than you can chew; slow down.
4. Stay as far away as possible from ICOs (Initial Coin Offerings). There are many books that describe in detail Initial Public Offerings or IPOs and list the obvious warning signs that should alert you, so be vigilant. The risk of fraud associated with ICOs is very high. Many individuals use fraudulent schemes to make money, and it is an easily applied method. Here is a nice quote from Reddit:
Anyone can create a white paper, put up a Bootstrap webpage, and fill it with pseudo-technological terminology; and it will seem legitimate enough to the community to follow and give away millions of dollars in seconds.
5. An in-depth understanding of the “coin” you are investing in is indispensable: you’d be surprised by the number of Reddit visitors who buy immediately, without thinking or conducting any research, as soon as they see upvoted content stating: "Buy this." It is crucial to make informed decisions. Take the time to inform yourself, research, and review all information on the internet; make your decision based on the information found.
You need to ask yourself some essential questions to make a sensible decision: Are the developers active? What problem are they trying to solve? What kind of community do they have? Is it active? The most important thing is to look for secure cryptocurrency exchange platforms that have all the accreditations you can trust.6. Diversify your portfolio. If you invest in a single cryptocurrency, your chances of losing money are very high. Conversely, the more you spread your money across various places, the higher your chances of winning. You seek to make an investment that will yield a profit, not a lottery mimicking an investment.
Wallets & Exchanges:
Now that you have deepened your knowledge on the subject and understand how much money you need to invest, you are ready for the next steps. There is still a guide to help you with the subsequent steps. Then you can continue alone, but you’ll be fully prepared to face the storm.
Risk factors:
We remind you that cryptocurrencies are volatile. One day the prices can skyrocket, another day they can drop to unimaginable levels. It is essential to be well-prepared and to know all the trading resources available. Investing in cryptocurrencies is no different from traditional investment goals. Follow the mentioned steps, keep your head held high, and happy investing!
