Last Updated on March 7, 2023 by Ben
Ever heard of Cryptocurrencies? Or maybe Bitcoin? I’m sure you do; it’s been the fuss over the internet these past few years. Bitcoin is the most well-known and popular cryptocurrency on the market today and it’s only one of the many Cryptos out there. And here are the reasons why you should invest in Crypto.
Table of Contents
- What is Cryptocurrency? How Does it Work?
- How Many Cryptocurrencies are there? What are they Worth?
- Things to Know Before Investing in Cryptocurrency
- 6 Reasons Why You Should Invest in Cryptocurrency
- How and Where to Invest in Cryptocurrency
- 4 Tips to Invest in Cryptocurrency Safely
What is Cryptocurrency? How Does it Work?
Cryptocurrencies, or Crypto, are digital currencies that do not have any central authority and can be transferred instantly from one person to another without the need for a third party. They do not rely on a central bank to process transactions.
Instead, cryptocurrency transactions are held by a digital ledger known as blockchain. The blockchain is an open ledger that records and displays all transactions. Blockchain consists of blocks, which hold individual transaction information and are always stored linearly and chronologically. That is, they are always added to the “end” of the blockchain. The blockchain obtains this security by distributing it across a network of personal computers that are referred to as nodes. All the transactions are public, but the users of the system are anonymous.
What Can You Buy With Cryptocurrency?
There are many things you can buy with crypto. For example, you can pay for a Tesla Model S using bitcoin! And that’s just the tip of the iceberg. From purchasing goods via online retailers, bill payments to donations, there are several ways you can spend cryptocurrency.
In the recent years, as people see potential for Cryptocurrencies, many companies started introducing new and improved payment methods to sell products using the cryptocurrency. Online vendors like Newegg, Overstock, and Microsoft offer products for sale to customers who pay in Bitcoin. You can also use cryptocurrency to order gift cards from major retailers like Amazon. Even Tesla, which made headlines by investing $1.5 billion in Bitcoin earlier this month, announced it will begin accepting it as a form of payment for its products in the near future.
Other products and services you can buy with Crypto include real estate, video games, clothing and even holidays.
How Many Cryptocurrencies are there? What are they Worth?
As of early this year, over 4,000 cryptocurrencies are currently in existence.
When Bitcoin was first introduced in 2009, it was the only cryptocurrency available and for some time it was the market leader with no serious competition. As the years went on, new cryptocurrencies began to pop up, each one with their own benefits and drawbacks. New tokens like Litecoin, Dogecoin, Ethereum and hundreds of others act as competitors to Bitcoin.
Other websites that track the value of different cryptocurrency include CoinMarketCap and Coingecko.
The Pros and Cons of Investing in Cryptocurrency
Pros of Crypto
Cryptocurrency has been around for a while, but it is only now that we are seeing its full potential. Many people are asking, “should I invest in cryptocurrency?” The answer is yes. Here’s why:
- Cryptocurrency is decentralized, anonymous, and don’t require any central authority to operate
- It has the potential to be a global currency that can’t be manipulated by any one country or government.
- Bitcoin is already being used as a currency and is accepted all over the world.
- Crypto coins protect your identity, so you don’t have to give out personal information when making transactions online.
- There are limited coins available which means they will only increase in value as time goes on!
- Massive potential for returns
Cons of Crypto
There are several disadvantages to using a crypto currency if you don’t know what you are getting into.
- High volatility and potential for large losses
- It can be difficult to comprehend and understand at first.
- Not accepted everywhere. Cryptocurrency payments are not widely accepted, at least not yet
- No Buyer Protection
- No Physical Form. Cryptocurrencies are Digital currencies and The only record of their existence is in transaction history stored on databases around the world
Things to Know Before Investing in Cryptocurrency
Cryptos are Highly Volatile
Cryptocurrencies are the most volatile amongst all others. Crypto markets swing between extreme highs and lows and can cause chaos, uncertainty, and loss on oneself. It usually petrifies new entrants before knowing the greatness of Crypto. Cryptocurrency is still an emerging market and there are still many opportunities to come. The technology is still developing and has a lot of potential for improvement.
Cryptocurrencies Can be Used for Fraudulent Activity
Cryptocurrencies, such as Bitcoin, are a new form of currency that is changing the way we do business. While they may seem like a great idea because they are not regulated by governments, this actually makes them more susceptible to fraud and theft.
Cryptocurrencies Have an Unproven Rate of Return
The market is also very uncertain and highly volatile. Even currencies like Bitcoin Cash, Ripple, Monero etc. are not risk-free. It’s a good choice for a short-term investment vehicle but don’t keep your funds in cryptos for too long and don’t keep all of your money here. Instead, you should spread it out over several coins and keep only a portion of your savings in digital currencies.
Due to the volatile nature of this sector, holding only one type of Crypto is a really huge risk. Instead, our recommendation is to invest and trade in different Cryptocurrencies to minimize the risk and try to keep your holdings “close to the chest.” By this we mean consider taking your profits when you’ve gained as much as you can and exchanging them for a more reliable currency. Of course, you might lose money by doing this.
This is a key risk when trading in cryptocurrencies since they are so new. You need to make your own decisions about how much you value your gains and what you are willing to risk losing.
6 Reasons Why You Should Invest in Cryptocurrency
Cryptocurrency is a highly volatile and risky market, but it also has some incredible opportunities that can make you rich. It is one of the most talked about topics in the world, especially among those who are looking for new ways to grow their money. And since it is relatively new, the future looks bright for this cryptocurrency which means its potential value continues to increase over time making it an excellent choice for your portfolio.
The world is changing, and old financial institutions are failing. Bitcoin and other cryptocurrencies have been steadily increasing in value for the last few years. This trend has not gone unnoticed by investors looking for an alternative to traditional investments like stocks, bonds, annuities and mutual funds. Cryptocurrency offers a way to invest your money outside of the system that controls it now- with more control over what happens with your money than ever before. Your money is yours alone.
Your Money is Yours Alone
In Crypto, the money you invested in is yours alone. You are in charge of your money. You do not need financial institutions to manage your investments in Crypto.
The crypto market is a great place to invest your money since there are many coins out there, and the liquidity of these coins is very high. You can quickly and easily buy and sell them. The crypto market is always changing and evolving, so it can be difficult to predict what will happen next – but that’s also part of the fun!
Traditionally, getting into any kind of investment is complicated and usually has a high investment threshold. But in Crypto, you do not have to deal with any financial institutions or sign papers, and it doesn’t need a very high entry threshold. You need to create an account, get a digital wallet to track all your assets easily.
Cryptocurrencies are a new and exciting investment opportunity with an incredible upside that is unlike anything the world has ever seen. While most of us know Bitcoin, Ethereum, and Litecoin by name, there are hundreds of other cryptocurrencies out there waiting to be discovered.
How and Where to Invest in Cryptocurrency
It can be difficult to know where to invest in cryptocurrency. There are many platforms out there that offer the chance for you to buy and sell, but which ones should you use?
The first step is understanding what type of currency you want. Bitcoin is different from Ethereum, which is different than Litecoin. You need to decide if your investment will be in Bitcoin or some other form of digital currency before deciding on a platform.
Once you’ve decided, there are several different platforms to choose from. Some of them are:
- Bitcoin IRA
Investing in Crypto is similar to investing in stocks, except it is far more volatile.
Here are some steps to invest in Crypto from the beginning:
- Open an account at your desired platform.
- Deposit funds from your bank into the account.
- Buy a Crypto using deposited funds (cash balance).
- Later sell the Crypto for a gain or loss. Funds are returned to your cash balance.
The steps above are similar in most cases but it still depends on the platform you are trading.
4 Tips to Invest in Cryptocurrency Safely
There are a lot of Cryptocurrency exchange platforms currently available. Researching over these exchanging platforms and knowing what best works for you is the first thing to do if you want to start investing and trading in Crypto.
Diversify Your Investments
Diversifying in Crypto means investing your fund in a different range of Cryptocurrencies, rather than having everything in one or two. Having a diversified investment is a really great strategy to minimize risk. Cryptocurrency is still a fairly new industry. Diversifying your investment reduces the risk of permanent loss, because even if one asset crashes, your other assets will be performing differently
Know How to Store Your Digital Currency
With the recent rise in popularity of digital currencies, it is important to know how to store them securely. With so many different wallets and exchanges out there, it can be overwhelming sometimes. But knowing how to store your Cryptocurrencies is a must in order to safeguard your assets.
Prepare for Volatility
The volatility of the Crypto market is enough to make your head spin. It is a new and exciting investment opportunity. The market is still very young, with no signs of slowing down any time soon. As the industry continues to grow, it’s important for investors to understand that these fluctuations are not only normal but expected. You not only need to prepare for your funds but also your emotions for the ups and downs, and for the dramatic swing of the prices.
If you’re a little paranoid like I am, then do your research and find out what exchanges and wallets have good security. Then you’ll have to decide whether you want to keep your assets on the exchange or if you want to transfer them off the exchange and store them in a wallet.
The next step is to distribute your investments across several different currencies and exchanges in order to minimize your risk. This is a general rule for all investment strategies. While the cryptocurrency market can provide some great returns, you need to be prepared to weather declines in the market, and stay objective. Always do your research, and remember that your main goal is to increase your personal wealth over time. If you do that consistently, you will be a winner in the long run!