…[While] there are risks, cryptocurrencies can reap huge rewards for those who make the right investment decisions. In this blog post, we discuss how to invest in cryptocurrency and what you need to know if you want to get involved!
What Is Cryptocurrency and How Does It Work?
Cryptocurrency is a digital currency that:
- uses cryptography for security. These are decentralized currencies, meaning they can be traded or exchanged without government interference and also
- uses blockchain technology to keep the transactions secure and updated in real-time on all network nodes so that no one person has control over it…
The supply of bitcoins will eventually stop due to predetermined parameters. At that point, new coins cannot be generated but only obtained through mining or exchanging with someone else who already owns them. In this way, bitcoin’s value comes from its utility and scarcity.
How Is Bitcoin “Mined”, Exactly?
- Programmers who use their computing resources and time to locate hidden coins are called bitcoin miners. Once they have found the new coin, they must complete complex mathematical equations before retaining it themselves.
- When one of these miners finishes a task, it receives bitcoins so it might not make sense that as more eyeballs are watching them, the number of rewards decreases per group but, in fact, an increase in CPUs leads to increased difficulty and a greater need for hardware acceleration.
- A successful miner “walks away” with the newly added coins in a system that requires confirmation. That is how we get to the name and technology known as blockchains. You might think of these miners as paid auditors.
Is Cryptocurrency Safe As An Investment?
The crypto market has its own set of risks that do not exist in other areas:
- cryptocurrency exchanges have been vulnerable to hacking and scams that have resulted in significant losses for investors. Fraud and scams are also rampant in the crypto industry.
- There is currently hype around cryptocurrencies, with some traders promising investors sky-high yields not uncommon in the market. These promises are typically built on shaky ground, turning out to be fool’s gold rather than legitimate blockchain projects.
Investors who want to buy into these traps can suffer severe losses when these projects inevitably fail.
Moreover, it is not as easy to store cryptocurrencies as it is to store stocks or bonds:
- While exchanges…make it fairly easy to buy and sell cryptos…many people fear holding their digital assets on exchanges due to the above-mentioned risk of cyberattacks and theft. Instead, some prefer offline “cold storage” options such as a hardware wallet…
- Cold storage, however, comes with the risk of your private keys being lost, meaning you would never be able to access them as we have seen happen in many cases.
- There’s also the risk that the “crypto project” you invest in will not succeed. There are thousands of blockchain projects, and competition is fierce.
- Regulators could also crack down on the entire crypto industry if more governments begin to view cryptocurrencies as a threat rather than just innovative technology.
As you enter an emerging market such as cryptocurrencies, it’s important to understand the risks. Breaking into this cutting-edge technology may be a chance for growth; however, much of the cryptocurrency development is still in progress and is not yet tested in real-world scenarios.
Cryptocurrency is an emerging technology, and early-stage investors should expect similarly poor outcomes in which a majority of projects fail. It’s unclear if these successful ventures will be enough to offset losses incurred from these failures. That said, the blockchain industry is steadily growing. Necessary financial infrastructure–such as institutional-grade custody services and futures markets–is being built, which provides legal and individual investors with the tools they need to manage and safeguard their crypto assets….
Is Cryptocurrency A Good Investment For Beginners Or Veteran Investors?
One must weigh out the risks and rewards of investing in the cryptocurrency market.
- Crypto assets come with a host of risks that can be mitigated through careful research and diversification of one’s portfolio. At the same time, these assets offer ample opportunity for massive gains if invested wisely.
- Cryptocurrency is a good investment because direct exposure to the demand for the digital currency will generate potential gains. However, if you would like a more focused investment in cryptocurrency or blockchain projects, investing in alternatives such as bitcoin will give you flexibility and greater financial return.
How Does One Buy Cryptocurrency?
A popular place for purchasing bitcoin Bitcoin is on the cryptocurrency exchanges. You will need a cryptocurrency wallet and a form of payment. You can use your credit card or bank account via an online exchange like Coinbase, which supports the purchase of most coins in circulation on the market through their app for iOS or Android…
How Can Cryptocurrency Be Stored Securely?
To store your cryptocurrency securely, you’ll need to download hardware wallets on the device that it will be stored [on]. This way, you’re not holding funds with an exchange that could get hacked or go offline and then lose all of your coins. The most popular digital wallet is Exodus (desktop only), while Hive OS offers a mobile app for Android users and Mycelium for iOS users. Make sure these hardware wallets:
- are supported by the currency you want to purchase because some services – such as Coinbase – can’t support every type of crypto out there
- offer robust security features because if someone gains access to your account, this will allow them to steal any funds stored there.
What Things Should Be Considered Before Investing In Cryptocurrencies?
- Consider how much you can afford to lose.
- Be wary of people who promise quick and easy profits.
- Make sure funds are not stored on an exchange that could get hacked or go offline and then lose all of your coins.
- The best way to buy Cryptocurrency is with another type of currency such as US dollars, euros, etc.—be careful because some banks have been known to block these transactions due to the risk associated with them! If this happens, it may be necessary to use a wire transfer with its own risks… so always keep in mind what kind of transaction works best for you before investing any money.
These are just a few things that I suggest everyone should know about cryptocurrencies before they invest. There are many scams out there, so please be very careful and do your research before investing in anything.
Which Cryptocurrency Will Explode In 2021 & Beyond?
The top 9 cryptocurrencies currently are:
- Ethereum (ETH): Ethereum is a decentralized blockchain that uses Ether as its native currency. The Ethereum blockchain is used to facilitate smart contracts, and it serves as a platform for building applications such as crypto-coins…As of January 11, 2021, the market cap was $119.63 billion.
- Ripple (XRP): The RippleNet platform is a global payment system that comes with its token, XRP. The company created this open-chain, XRP Ledger, to power the transactions faster than Bitcoin with low energy usage…As of January 12, 2021, $13 billion worth of XRP existed on the market cap.
- Cardano (ADA): Cardano…uses the Ouroboros peer-reviewed blockchain protocol to protect privacy, payments and verify transactions on the chain more efficiently than Bitcoin’s “proof-of-work” system. As of January 12, 2021, Cardano has one billion tokens in circulation with an $8.91 billion market cap.
- Litecoin (LTC): Litecoin…is faster than Bitcoin because its blocks are produced every 2.5 minutes instead of 10 minutes with Bitcoin. There will eventually be 84 million litecoins available on the network, which equates roughly to four times bitcoin’s total issuance of coins (21 million). Litecoin’s market cap is currently at approximately $11 billion.
- Bitcoin Cash (BCH): Bitcoin Cash was created in 2017 via a hard fork of the bitcoin network. It is a separate cryptocurrency with limited supply and a market cap of $9.39 billion.
- Polkadot (DOT): Polkadot is a platform and architecture that facilitates the operation of other blockchains and cryptocurrencies. DOT is the Cryptocurrency on Polkadot, which has a market cap of $7.27 billion.
- Stellar (XLM): Stellar is a decentralized protocol for global payment transactions. The network facilitates payments between fiat and digital currencies at a low cost… Stellar’s market cap is approx. $6.14 billion.
- Binance Coin (BNB): The Binance Coin is the token issued by blockchain and cryptocurrency company Binance….It still works on Ethereum’s blockchain, but its chain now operates independently of that network.
- Bitcoin SV (BSV): Bitcoin SV, also known as Bitcoin Satoshi Vision (BSV) was created in 2018 by a fork of bitcoin core. This new Cryptocurrency has the same max supply limit of 21 million coins. Bitcoin SV has a market cap of $3.65 billion…
Other crytocurriencies include: Dogecoin (DOGE); Monero (XMR); NEM (XEM); THETA; TEZOS (XTZ); Neo (NEO); VeChain (VET); Dash (DASH); Uniswap (UNI); Filecoin (FIL); USD Coin (USDC); IOTA (MIOTA); Wrapped Bitcoin (WBTC); EOS and TRON (TRX).
Is Investing In a Cryptocurrency Exchange Right For You?
- …Given its speculative nature, investing in Cryptocurrency is not advisable for many people because it is risky, and funds should only be used if they can afford to lose everything invested.
- Cryptocurrency prices are volatile, so prepare for both increasing and decreasing stock. If you’re not able to handle the stress, cryptocurrencies might not be worth investing in.
Are There Cryptocurrency ETFs To Consider
For those desiring an easier and safer way to purchase bitcoin, ETFs such as The Ether Fund (QETH-U.TO), The Bitcoin Fund (QBTC.TO) and Purpose Bitcoin ETF (BTCC-B.TO) are available for easy access through an online broker at your financial institution. They can be purchased just like you would a stock and but are subject to different tax implications in registered accounts than non‐registered brokerage accounts.
Finding the right cryptocurrency to invest in is difficult, but an article like this will help you…become well informed…[but] it would help if you did your research before making an investment decision as it’s always risky no matter what you are investing your money in…
Cryptocurrency’s popularity makes it a compelling investment opportunity, but remember, it still has flaws and challenges that need to be addressed.
Editor’s Note: The original article has been edited ([ ]) and abridged (…) above for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.
A Few Last Words:
- Click the “Like” button at the top of the page if you found this article a worthwhile read as this will help us build a bigger audience.
- Comment below if you want to share your opinion or perspective with other readers and possibly exchange views with them.
- Register to receive our free Market Intelligence Report newsletter (sample here) in the top right hand corner of this page.
- Join us on Facebook to be automatically advised of the latest articles posted and to comment on any of them.