Investing in Cryptocurrency for dummies; What you need to know
Cryptocurrency has developed so much over recent years that it is no longer an idea only tech savvy computer geeks relate to.
At the moment, cryptocurrencies are enjoying a time like no other. Everybody is excited to get in on the action and digital currencies such as Bitcoin and Ethereum are sky rocketing in value.
Since 2009 when Bitcoin introduced as the first decentralized cryptocurrency, many have come and gone. Over this time, the technology behind cryptocurrency has slowly permeated into different industries.
The currencies themselves have become an investment avenue which has real potential for making money. As a matter of fact, Bitcoin reached an all-time high in value as of August 17th with one Bitcoin going for over $4,500.
Anyone with the slightest financial acumen will tell you that you can make a killing investing in such. However, the thing is you have to know what you are doing to make money investing in cryptocurrencies.
This article is meant to elucidate the world of cryptocurrency and tell you all you need to know before you go about investing your money.
Is Cryptocurrency worth investing in?
There are those who think of investing like playing the lottery. You either win or lose. In some cases this may be true, but this is not one of them. For the savvy investor, cryptocurrency can be the way to build a nest egg, but only if you play your cards right.
Even so, there are aspects about digital currency that you have to know about before you start. To begin with digital currencies have the problematic characteristic of going through wild shifts in value.
A prime example of these extreme swings is the time when Ethereum went from $US319 to $US0.10 on GDAX.
The momentary plummet in value occurred back in June and Ethereum is back to its high flying ways, but this is something that can happen.
The other thing worth noting is the tech behind cryptocurrency which is virtually impenetrable.
The technology makes it impossible to counterfeit digital currency and also ensures that all transactions are legitimate while keeping them safe.
This is one of the reasons cryptocurrency has remained popular despite the fears that there might be a bubble developing around them.
To start you off you will need a wallet:
Investing in cryptocurrency needs you to have a wallet where you can keep the tokens. There are several choices of cryptocurrency wallets that you can choose from including the following;
- Electrum – is one of the oldest wallets, and has been there since 2011
- Blockchain – currently the most popular wallet for cryptocurrency at the moment, and who I use myself.
- Gemini -a popular wallet that is regulated by the New York State Department for Financial Services (NYSDFS).
How to invest in digital currency:
There are a number of ways to invest your money in cryptocurrency some of which don’t involve buying digital currency. You can choose not to buy currency when the value is high and invest in a startup.
Blockchain companies and stocks you can invest in:
There are companies and stocks that have become popular investment options for reasons such as the high return on investment and stability. Some of them include;
- DigitalX: the company has developed AirPocket which is a mobile product that assists in money transfer across borders and covers over 30,000 locations spread out across 14 countries. AirPocket functions primarily in North and South America and has the scalability to become something bigger.
- First Bitcoin Capital: It is a company that specializes in finding promising bitcoin startups which they acquire and them to develop them further. The company focuses mainly on startups that work on software and hardware components for cryptocurrency.
- BTL: A Vancouver based company that offers blockchain services across several markets such as banking and even fantasy sports.
- BTCS: The company has reached a market cap of $US7 million with the shares trading at 14 cents (which might have shifted), it is one of the best investment options for cryptocurrency investors who are still new to the technology. It was one of the first companies to enter the blockchain arena and the first company to go public having focused on blockchain technology.
Find an initial coin offering and invest some money
One of the first ways most new investors choose to introduce themselves into the world of cryptocurrency is finding a solid ICO and buying tokens.
There are two types of ICO which are the capped and uncapped ICO. A capped ICO is one where there are a limited number of coins that can be sold.
An uncapped sale on the other hand, is one that has no limit to the amount of coins to be sold until the coin offering is closed. The coins are then listed on an online exchange, usually a few days after the ICO is complete. The coin exchange
The coin exchange
Once you buy the coin you will probably need to go to an exchange or use the appropriate method of trade the ICO requires.
This way you can exchange your cryptocurrency for another or put it up for sale. In most cases an exchange is the way to get cryptocurrency even though you could also open an online store that accepts cryptocurrency.
Buy a coin that has an established track record
There is one problem about digital currency that you would hate to find yourself entangled in. While an ICO may be a great way to get a good chunk of some new digital currency, it is also important that you start off with a currency that has been there for a while.
This is mostly to protect you from Ponzi schemes which can easily make away with billions from an unsuspecting public.
Cryptocurrency has a lot of potential
There is the well-known story of the guy who invested $US100 and ended up making $US70 million. It may sound like an anecdotal account but the truth of the matter is that cryptocurrecy is beginning to take hold in industries that never had any links to it before.
It is changing industries all over the place and has even begun to challenge the concept of FIAT money as we know it.
Cryptocurrency is used to purchase all sorts of things from multi-million dollar mansions to everyday online goods. However, you should seek the advice of a financial expert to know what exactly your chances of making money are. Check out the Palm Beach Confidential Newsletters for monthly Crypto and Stock Picks, and more!