Know some of the most important things to consider before investing in cryptocurrency.
There are things you need to consider before investing in cryptocurrency. First things first, cryptocurrencies are currencies just like your local currency. Just as you need to know what does the value of your local currency, you also need to know how much a cryptocurrency is worth.
One of the things to consider about cryptocurrency is knowing there's no central entity behind them, printing or minting them so they can't be counterfeited. Another thing about cryptocurrency is the fact that most of the time, they're decentralized which means they don't rely on any single governing body so transactions can happen across a global scale in seconds very easily and securely. Overall, it's not hard to see why more people are getting into cryptocurrencies as an investment and even using them now for everyday transactions.
There are some things you need to be aware of from the get-go and consider before investing in cryptocurrency so please read on.
What is Cryptocurrency and What Makes it So Unique?
There are many virtual currencies out there today such as Bitcoin, Litecoin and Ethereum but what exactly makes them different? Well, simply put, they're all decentralized meaning no single governing body can control or manipulate their value. Any governments or banks have no control over these specific currencies which makes it safe to say that this type of currency is free from any one controlling factor and because of this certain authority you can expect each cryptocurrency to act differently compared to the others.
Just a couple of things that make cryptocurrencies popular and in high demand is because of its history as well as its inherent security benefits, there's no one entity that controls or can manipulate them, they're also pseudo-anonymous which means transactions can be made without giving out any personal information.
Cryptocurrencies are usually purchased via an exchange but if you'd rather go through an alternative route than using an exchange then you have the option to mine some of them. Mining may seem difficult for beginner users but with your computers processing power you can do it yourself at home without needing any special equipment and accessories just like Bitcoin mining.
With over 1,000 coins out there today, new ones are constantly popping up which means the competition is starting to get stiff. This gives investors a large variety to choose from and see what fits their portfolio best because there are so many things you need to look into before investing in cryptocurrency.
What You Should Know About Crypto Exchange
When choosing an exchange, make sure that they're trustworthy and reputable to avoid any theft or scams using your information. If you decide to invest on a platform that doesn't have proper security measures set up then you might not only risk losing your investment but also your information such as personal information, bank account details and much more depending on what kind of malicious activity happens within the exchange itself.
What is a Decentralized Exchange (DEX)?
A decentralized crypto currency exchange tends to differ from the regular exchange market since it's completely open source, this means that the information will be available to everyone. This also helps when you want to trace anyone who has used the platform before. The best part about a decentralized crypto currency exchange is you can transfer or withdraw your money at any time regardless if their servers are offline since everything is done on your local system.
There are some exchanges out there right now that allow instant deposits and withdrawals which is very convenient for people looking to use cryptocurrency for transactions but don't know much about them so they're willing to give it a shot.
How to Earn Free Cryptocurrency
You've probably heard of all these ICOs (Initial Coin Offering) where new coins/tokens are being sold in exchange of other cryptocurrencies but what if I told you that you can actually earn new coins or tokens for free without having to spend a single cent (excluding the cost of electricity and your computer)? By joining a faucet site you can collect satoshis for free, satoshi is the smallest unit when it comes to Bitcoin which equals 0.00000001 BTC.
Things to Consider Before Investing in Cryptocurrency
When it comes to investment, you should always consider the pros and cons before actually taking the leap. You'll want to look into what's being offered on a particular platform, research its history and if there are any news about new updates then look for them and most importantly never invest more than you can afford to lose because some of these platforms don't have insurance when it comes to their users' money.
Read Cryptocurrency White Papers for the Future
To avoid being scammed out of your money, always read white papers for any cryptocurrency you're interested in. It will give you a list of what the coin does and how it's likely to grow in value overtime with more people using it compared to other coins out there. If they don't have a written document then this is usually an indication that they should be avoided since not everything can be explained by pictures or images which is why it's important that they also explain their project in detail through written words.
Keep In Mind There Are No Guarantees When Investing in Cryptocurrency
Even though people say that in cryptocurrency you can get rich overnight, the truth is there are no guarantees when it comes to investing so never invest more than you're willing to lose since anything can happen. You'll want to choose a coin with an active community and team behind it because this will give a good indication of how well their project is doing. A team might not always reveal everything they have planned but if they don't show anything at all then this is usually an indication that they have nothing going on which should be avoided.
Always Keep Your Coin Wallets Secured
Coin security should always be your top priority when buying any coins or tokens. Make sure that you have 2-factor authentication set up for every account whether it's email, exchange, or even linked to your phone. This will make it harder for hackers to get into your account and steal your funds.
Join an Online Cryptocurrency Community
Getting involved in a community is usually the best place where you can find new information about coins before anyone else finds out as well as help spread the word about their project if you think it's worth investing in. You'll want to pay attention to what people are saying about any coin whether they're talking positively or negatively since this makes some sense that not everyone has the same opinion of something but that shouldn't be a reason why you should completely avoid a project either since their point of view might have been irrelevant. It's always a good idea to keep in mind the legitimacy of a particular coin project, don't be hasty and make sure you do due diligence before making any final decisions.
With all the new cryptocurrency projects coming out every day, it's almost impossible to invest all your money into every single one of them. If you do decide to get involved with a project you like, then there will be plenty of opportunities for you to position yourself so that your investment can help safeguard within inflation such as gold and silver. This is something worth considering if you don't believe that paper fiat currency from your country will have any value in the future due to inflation or other economic factors which could affect the economy.
Read the Entire Cryptocurrency Investing Series
- How to Buy Cryptocurrency Safely | Step-by-Step Guide
- Road to Financial Freedom: Steps to Take to Be Financially Secure
- Where to Invest to Get the Best Returns with Less Risk
- How to Get Rich in a Year: 7 Things Worth Investing Your Time
- Get 150-Times More Interest on Your Savings (Best High Interest Savings Account 2021)