Guestpost by Abby Bootman
As crypto is gaining more traction in the last month, my friend Abby is back with yet another article on cryptocurrencies.
What to pay attention to if you want to invest in crypto?
Why do people invest in something? They want to make some money, of course. And why do people invest in crypto? They want to make money quickly.
The Bitcoin price jumps are here and there in the headlines. It comes as no surprise that many people are interested in buying this digital asset expecting to get profit over time. Thanks to numerous crypto exchanges, buying crypto is not a big deal today. You just need to register on the platform and link your card.
So you can be a crypto investor without the need to study the finance system, trading strategies, and price indicators. Still, there are some key points everyone should know before buying digital assets.
[Jonathan: I recently started using the Crypto.com Ruby card and I could not be happier with it, and it offers a risk-free way to get cryptocurrency. More on this in a future post.]
Simple rules for confident investments
Imagine one day you saw an advertisement promising you income by investing in real estate. Maybe this idea was already on your mind for a while and you even have some bucks to put up. Would you just click on the ad and spend your funds on this?
I doubt so. When it’s all about money people become very cautious and tend to make a deep research about the things they’re going to buy or invest in.
When just starting, you can join the community of crypto fans to know some latest trends and share experiences. There you can learn about young crypto projects with innovative ideas, discuss the latest news of the industry, find some tips for your investments, and more. By the way, we’ll highlight the main points in this article.
Blockchain — a network where cryptocurrencies are running
In the most common understanding, Blockchain is a decentralized network for financial transactions. Yet, it’s an innovative technology offering a range of solutions for business, healthcare, goods shipping, etc.
Here’re the key advantages that make blockchain unique and useful for different spheres:
- Decentralization. All data saved on the blockchain is stored online without a single server. It’s copied between all network participants — every visitor, user, miner. This decreases single points of error, reduces DDoS attacks to zero, increases fault tolerance, etc.
- Security. When you create a transaction on the blockchain no one can modify or cancel it. Say, you send funds to your friend’s wallet and want to receive the part of the sum back for some reason. The only way to do this is to create one more transaction. That’s because all data is recorded in strict chronological order. Additionally, every wallet is protected with a private key or your digital signature. All this means that blockchain records can not be compromised or falsified.
- Transparency. As already mentioned, blockchain records are available for everyone with a good internet connection. Together with the anonymity of the transactions, it contributes to the trusted relationships between the network participants.
Cryptocurrency as a digital asset
We define traditional and digital assets as something you can convert into cash, preferably for a profit. Even though Bitcoin, the first cryptocurrency, was created with the aim to serve digital finance, it quickly became a medium of exchange and even a payment instrument.
Nowadays, different crypto projects offer a range of services of different kinds. Still, they all have native or utility tokens that can be traded on the crypto exchange platforms.
How to choose the crypto to invest in
If you ask crypto experts how to make sure whether the coin you’re interested in is a reliable asset, they’ll likely recommend you to check the whitepaper. This is good advice, but what should you actually check in this document? They usually provide statistics, charts, program codes, and so on. And if the whitepaper is written in a complicated language with weird terms it’s not easy to understand what that stuff is about. So, look for:
- The project mission and what problems they solve.
- What are the use cases of their network and cryptocurrency
- Who are the team behind it, their reputation and social network activity
By studying this info, you can understand whether this blockchain is unique and whether it offers a relevant solution for specific problems nowadays. If it’s just a copy of existing projects, then no one will be interested in the development of the network. Thus, it has low market potential.
Here is the trick: Reliable and regulated crypto exchanges apply strict due diligence procedures for assets they support or are going to list. So you can narrow down the list of your research to those that have already been checked to be robust resources.
Looking for reliable crypto exchange
The point that needs no explanations. With a trusted exchange you can be sure of the security of your assets and transactions and focus on your investing goals. Nowadays, a lot of government regulations are applied to businesses dealing with cryptocurrencies. So you can easily identify a robust company by checking their licenses.
Some countries, like the US and UK, require crypto platforms to pass the independent audit. Also, regulatory bodies require a comprehensive AML (anti-money-laundering) compliance program to guarantee the high-level security of clients.
Naturally, the convenience of the exchange is also a crucial factor, especially for those just starting with crypto. Take some time to study the interface of the platform, whether it’s easily navigated and has a variety of options. Additionally, make sure they give you a good selection of assets. Check out the CEX.IO supported coins and payment options, there is plenty to choose from!
[Jonathan: I have been using Coinbase and Binance over the years, both are reliable and while Coinbase is better known, the lower fees on Binance make it more interesting]
Where to store your crypto investments
Every investor and trader knows this rule — don’t keep all eggs in one basket. Firstly, this means diversifying your portfolio. So when the value of your investments falls one day, your other assets could help to cover your possible losses. For instance, most altcoins tend to follow the Bitcoin price shifts. Yet, there are stablecoins whose value is pegged to fiat funds or real-world items, like precious metals. So if you have BTC, ETH, XLM in your portfolio and suddenly the bears enter the market, your AWG and USDT holdings could help you to stay afloat.
Secondly, that means storing your assets in different highly secured places. You can keep your crypto coins in:
- Hot wallets — online storage that require an Internet connection to access.
- Cold wallets — offline devices that you can only access when connecting this item to your computer or laptop.
Online wallets are convenient because you can log in and manage your funds anytime. Still, cold storage is considered more secure as they keep your funds away from online hacks. Meanwhile, you can deposit, withdraw and trade crypto anytime from your account.
Whatever crypto wallet you choose, remember that it’s your duty to keep your private keys, seed phrases, passwords, and 2FA codes a secret. No one, even the support team of the wallet, should know them.
We wish you safe and successful investments!
About the Author
Abby Bootman studied at Pace University as a psychologist, last year she worked at the casino reception desk in Vegas, and later remained there for a permanent job. She has been working in this area for about 5 years and during this time she has seen many people who have suffered from various types of addictions. Because of this, she chose game addiction as the theme of her thesis. Now he is writing articles on this topic as a hobby.
I would like to thank Abby once again for giving us these useful guidelines on investing in cryptocurrencies. Of course, before diving into this type of investment it is crucial to get educated and do your own research.
Back in 2018, I followed the course by Ivan On Tech and was very satisfied with the quality of the course. It really gives you the tools to make informed decisions for your investments but above all, it is a must to get educated on Blockchain technology. You can read the review Deep Blockchain Fundamentals – Ivan on Tech Academy review or access the Moralis Academy directly here.
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