Should you invest in cryptocurrency? It is a legitimate question, considering the ups and downs of crypto trading.
Governments around the world are struggling to regulate cryptocurrency. On the other hand, cryptocurrency is highly volatile, and your returns can fluctuate in seconds.
So, is it safe to invest in cryptocurrency?
Cryptocurrency has come a long way and is now supported by many global leaders as the best alternative to fiat or traditional currency. You may have seen many people becoming millionaires or even billionaires with cryptocurrency in the last few years.
To become a successful investor in cryptocurrency, you should devise a sound crypto trading strategy.
So, let us find out how you can increase your returns by investing in cryptocurrency.
What is Cryptocurrency?
Cryptocurrency is a hot debate worldwide and people like to talk about its benefits and risks.
When investing in cryptocurrency, you should understand what cryptocurrency is. It is a golden rule in the trade market to have complete knowledge about the asset in which you are investing beforehand.
Cryptocurrency is a digital currency that exists online. The transactions of cryptocurrency are recorded online on a public distributed ledger called a blockchain.
The following points further elaborate on cryptocurrency:
- Cryptocurrency operates freely from the influence of banks or the government.
- Cryptocurrency is created using cryptographic techniques.
- There is no physical form of cryptocurrency that exist like paper currency.
- You can make cryptocurrency transactions at any time across the globe, thanks to its 24/7 availability.
Carl Runefelt, alias, The Moon, is a global crypto leader who is pushing for the mass adoption of cryptocurrency.
He says, “We live in a digital world, we need digital money, and we need non-political digital money and Bitcoin is the resolution and I think that right now people are realizing it, but it will take some time before we see the full transformation.”
How You Can Buy Cryptocurrency Safely?
According to recent estimations, over 18,000 cryptocurrencies are circulating in the market with a total value of around $1.3 trillion.
This may make it difficult for you to decide which cryptocurrency you should buy.
Here are some simple tips that you can follow when investing in cryptocurrency.
- Choose a cryptocurrency exchange: you should decide where to buy a cryptocurrency for which, you should select a crypto exchange. Some of the popular crypto exchanges include Coinbase, Bisq, Binance.US, and Crypto.com.
- Select a payment method: you can purchase cryptocurrency with fiat such as the U.S. dollar. The other way is to trade your existing crypto holdings for other cryptocurrencies – for instance, Bitcoin for Luna.
- Fund your account: once you select a payment method, you should fund your account. You can add value to your account by using fiat currency or can send cryptocurrency from your digital wallet if you already own crypto.
- Select a cryptocurrency: the last step is to select a cryptocurrency that you want to buy.
According to Carl, “Everyone should at least hold one Bitcoin for success in cryptocurrency.”
Risks Associated with Cryptocurrency
Before you buy cryptocurrency, ask yourself what your goals are for this investment. You should know what you are investing in and be clear about the risks associated with it.
Cryptocurrency is defined by extreme volatility, which means that you could lose everything. Yes, this is true!
Since there is no regulation of cryptocurrency, no policies are in place to make it a stable asset. The risk of fraud is always present in cryptocurrency and a criminal can hack your account and freezes you out of it.
Furthermore, if you lose the password of your exchange account, there is no way of getting it back and everything is gone.
Things to Remember When Investing in Crypto
Cryptocurrency is extremely volatile, and you may lose your cool with it after some time.
But you can avoid such a scenario by following these simple tips:
- Cryptocurrency is a long-term investment. So, you should avoid making decisions based on short-term changes.
- You should always invest in crypto what you can easily afford to lose. Never invest all your money.
- Do market research to understand crypto trading. This will help you find out the right cryptocurrency to invest in.
- Read trade charts of a particular cryptocurrency that you want to invest in.
Carl on his YouTube channel, The Moon, says, “To make huge profits from investing in cryptocurrencies, one must carry rigorous market study and notice the factors which affect a particular cryptocurrency.”
Cryptocurrency is relatively new to the market and its volatility is understandable.
But this does not mean that you should invest in cryptocurrency without devising any strategy.
You can follow the above-mentioned tips to safely invest in cryptocurrency and increase your returns.