Cryptocurrencies like bitcoin are a big deal right now. Everyone is running to invest in them, and those that already have are looking to increase their investment. If you are still struggling to understand how you can invest or seriously considering wetting your feet with this venture, here are five things that will get you started on the right footing.
What is cryptocurrency?
Understanding what cryptocurrency is all about is essential so you can make an informed decision. Cryptocurrencies like Bitcoin, Litecoins and Ethereum are virtual coins and are not tied to any form of traditional currencies or financial institution. The coins can be transferred from one person to the next without the need of having financial intermediaries.
The beauty of cryptocurrency and perhaps the reason why they are growing in value is that they are hard to counterfeit because they use cryptography for security. Because the currency is not issued by a central authority, it is hard to govern and even harder to manipulate.
It is a risky venture
Is investing in cryptocurrency profitable? Yes. Is it dangerous? Yes! Investing in cryptocurrency is a high-risk venture because the coins are highly volatile and the investment is largely speculative. On the flip side, high-risk business investments are known to generate high income and investing in cryptocurrency is not any different. The golden rule of thumb when investing in cryptocurrency should be to invest what you can afford to lose.
There are fake coins everywhere
When it comes to cryptocurrency, you can have to be very careful where you invest your money. There are counterfeit coins everywhere, and the number keeps growing as the value of cryptocurrency increases. Even MLM schemes are now masking themselves as cryptocurrency coins. Any cryptocurrency coin should have related technology attached to it when it is getting launched. This is what differentiates the authentic ones from the fake ones.
Guard your investment jealously
You should know that just as you work hard to get your coins the right way, there are people working hard to steal them from you. To date, Bitcoin has been hacked over 40 times, and phishing sites and scams aimed at crypto investors are on the rise.
It is essential to invest in the right security features like a hardware wallet if you plan to hold the coins for some time. Also, make sure that you choose a complex password to protect your account. When buying any cryptocurrency, make sure that the person selling them to you is legitimate.
Develop a thick skin
Like any other form of investment, it is important not to be an emotional investor. Cryptocurrency, as mentioned earlier, is very volatile and sometimes the drops can be drastic. Panic-selling at that point will only secure your losses. You need to have a strong stomach to ride out such episodes and make sure that you can benefit from your investments in the long run.
There is no question that cryptocurrency is proving to be a worthy investment to most. However, before deciding to jump in, you should do your due diligence and make sure that you understand the functioning of cryptocurrency and how it works. After all, knowledge is power.