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The crypto investment market is fast-rising every day – leading as the most rising virtual market globally. Cryptocurrencies such as Bitcoin(BTC) and Ethereum(ETH) are rapidly gaining popularity, but some investors may still be skeptical about whether crypto is a good opportunity for them or a risk they wouldn’t want to take.
Opinions about cryptocurrencies may vary widely, but there’s no denying that crypto assets are in widespread demand from individuals, companies, and many global investors. Bitcoin is the first cryptocurrency to exist and shares a total of roughly 43% of the crypto market, making it the most well-known and widely owned cryptocurrency, but the crypto universe is vast. There are more than 17,900 crypto coins available for investment, which holds a total global crypto market capitalization of about 1.9 trillion dollars. In 2021 alone, the crypto sector market cap. grew by 187.5%, according to World Economic Forum.
Bitcoin’s price reduced by 11% for the year, but some alternative currencies have outperformed. For example, the price of smart contract altcoins Solana(SOL) and Terra (Luna) are up about 660% and 1600% respectively.
With the development of crypto sub-sectors like decentralized finance applications, smart contracts, and nonfungible tokens(NFT) on the rise, cryptocurrencies are making themselves essential. With the constant rise of investors and entrepreneurs engaging in crypto to facilitate their work operations, more traders are interested in learning the dynamics of the crypto world and investing in it.
Here’s what you need to know about investing in cryptocurrency:
- What is Cryptocurrency?
- How to Invest in Cryptocurrency?
- What to consider before investing in Cryptocurrency
- How to make money with cryptocurrency
What is Cryptocurrency?
Cryptocurrency is simply a digital or virtual currency in which transactions are verified and records are maintained by a decentralized system using cryptography, rather than by a centralized authority.
Bitcoin, the first blockchain cryptocurrency is a form of digital currency invented by an anonymous founder using the pseudonym, Satoshi Nakamoto. Cryptocurrencies are not managed by a bank or public agency, instead, transactions are typically recorded on a public blockchain comprising digital information stored on a database. Blockchain Technology is used to keep records of all the transactions and it provides a data structure for the ledger that is considered secure. This system is used to track bitcoin transactions and other cryptocurrencies.
Unlike fiat money or government-issued currency that is controlled by Central Bank, cryptocurrencies don’t require banks to verify transactions and are independent of a central banking authority. Each of the thousands of crypto-coins has its own security standard and value propositions. You are your own Bank.
According to Max Branzburg, Vice President of product at Coinbase Global Incorporation,
“Cryptocurrency is a new asset class that is at the foundation of the crypto economy, an entirely new set of financial services, commerce, and global payments that will be built on top of this new technology.”
In simpler terms, cryptocurrency can be described as digital, meaning it is intangible, abstract, and not physical, but effective. Just like money in the bank, but not withdrawable but can be converted to fiat currency.
[Read also: Top 5 Altcoins to Invest in 2022]
How to Invest in Cryptocurrency
Many cryptocurrencies in the market have different fundamental values. Investors should be able to understand that a crypto coin can be here today and gone the next, which could leave your investments useless. That’s why it’s important to have a working plan and what strategy you can apply in investments and know how to manage your risks.
New crypto traders may want to consider elements such as transaction fees, types of currencies available on the platform, available educational resources, and other features that may align with their interests and goals.
There are many crypto exchanges from which to choose: Breet, eToro, Coinbase, and Gemini, among others, offer easy, accessible, and secure platforms for owning and conducting crypto transactions with cryptocurrencies. You should be able to recognize what crypto coin works for you, generally, bitcoin and Ethereum can be a good start. Do your research on top cryptocurrencies you should invest in and strategize on your game. How much are you willing to invest? Look through the price rates of these crypto exchanges and transaction fees. What’s the process of trading on these platforms? Review users’ testimonials and pick your best option.
What to Consider Before Investing in Cryptocurrency
Investing in cryptocurrency is highly speculative. Despite numerous stories of investors making millions, entering the market at a bad time could result in extreme loss of money. Be sure to make up your mind on what you’re entering; it is a win or loses graph. You’re most likely to profit from your investment but sometimes you may lose badly. It’s paramount to weigh the potential imputes of volatility. It is also advised to research if your country adopts cryptocurrency as a legal tender so as not to appear illegal or be banned.
How to Make Money with Cryptocurrency
There are numerous ways crypto investors can grow the value of the assets and secure gains when investing in cryptocurrency. Just like the stock market, the way to make money is investing in crypto coins when the values are below and then selling the cryptocurrencies when the value increases or is higher than when it was bought.
“You can get more out of your money with cryptocurrency than with other traditional assets.”
And this is because the price swings. The first method he points out is staking. Staking simply means buying a crypto-currency and leaving it in your crypto wallet for a long time. Staking allows you to earn with crypto by participating in the network of the assets. When you stake your crypto, you make the underlying blockchain of that crypto more secure and more efficient. Some cryptocurrencies that offer staking rewards are Cardano, Ethereum, Tezos, and Algorand.
Cryptocurrency is a modern and exciting way to think about money. The first thing you should take into consideration is educating yourself about these digital currencies and what technology they use to help you understand the risks and rewards. Also, understand the art of trading cryptocurrency to make profits regularly. Statistics show that crypto traders who educate themselves are likely to earn more than novice investors. In all, the crypto investment universe may not be for everybody, but those that get it, get it.