If you decided to enter the cryptocurrency market, be ready to devote a good deal of your time to it. It is a rapidly expanding market which has seen an enormous increase in volume for the past couple of years. Take a look at the things you need to know before you proceed to buy Bitcoin or any other coin for the first time.
Learn How Cryptocurrency Investment Works
Investment in crypto is not the only thing that you can do. In fact, there are three essential actions that can be done: invest, trade, and hodl with crypto calendar. Let’s see what each of this means.
Investing In A Cryptocurrency
An action of investing is rather simple – you use your fiat currency in order to buy cryptos. There are so many different types of cryptocurrencies and some of them even work the similar way as shares. This means that if you buy them, you bought a share for a certain company that uses crypto. This leads us to the introduction of ICO. ICO stands for Initial Coin Offering and it is a type of a crowdsale where people can invest in a company by buying their specialised crypto. If the company grows, the crypto value grows as well – simple as that.
Trading Cryptocurrencies
The action of cryptocurrency trading involves constantly buying and selling various cryptos. Since their values fluctuate a lot, the traders usually buy when they think a crypto is at its low and sell when it supposedly reaches its high. This type of action requires a lot of research and a basic knowledge of how trading and economy work.
Hodl
Hodl is a netspeak for hold. Basically, once you buy a certain amount of cryptos, you just need to leave them be and watch their value change every day. In other words, you just hold your cryptos hoping for the value to become enormous and make you richer. Although it seems like a futile tactic, just remember that some of the current millionaires got rich this way with Bitcoin.
Research The Potential Security Issues
Although cryptos are supposed to be much safer and more practical than the traditional currencies, there are still some problems which you might come upon that you’ll not really like.
Price Manipulation
The crypto prices are very volatile. This simply means that the value of a crypto can change by a lot in less than one day. Some of the people who are able to boost or lower the value instantly are called “whales”. Simply put, whales hold a lot of cryptos and whenever they make a big transaction by buying or selling a huge amount of the cryptos, the price will change drastically. This opens a way for them to manipulate prices and suit their needs.
Pump & Dump Schemes
Pump and dump scheme involves people who are behind an ICO and are talking about it in order to raise the prices of the coin. When the investors pay attention and buy a lot of coins that were previously pumped, the entrepreneurs usually take the money and disappear.
Hacking Attacks
Finally, the most important aspect of security issues are the hacking attacks. Usually, it is the crypto exchange and trading services that get attacked the most, and there has already been one famous case where the whole exchange was shut down due to the attack – Mt. Gox. However, it is not the only one, and some of the currently active exchanges still have problems securing their platforms. There are some ways which are completely hacker-proof, but they require sacrifice – speed and convenience. One such way includes keeping the funds in an offline wallet instead of keeping them online. However, whenever you want to trade those funds, you must first go online, thus creating turmoil in an already undefined environment.
Know The Difference Between Cryptocurrencies
Entering the crypto world requires that you understand this – Bitcoin is not the only crypto. In fact, there are hundreds of cryptocurrencies out there and each of them has something unique. Yet, several have separated from the rest as the most popular:
- BTC
- BCH
- ETH
- LTC
- ZEC
- XRP
- DASH
- XMR
- XML
You are probably wondering right now – which should you choose for your first investment? Well, there’s no definite answer to that since every crypto has its pros and cons. This requires that you do a further research on the cryptos that you are interested in and make a decision accordingly.
Find A Reliable Exchange To Buy Cryptocurrency From
There are so many cryptocurrency exchanges out there that it becomes increasingly difficult to figure out which one to use. In order for you not to get lost in the variety of trading platforms, here is an exchange that is worth your attention.
To the beginner’s advantage, allows for buying cryptocurrency with a credit card that takes only a couple of clicks. The process is as simple as this – you register on the platform, verify your identity, link your bank card to the account, go to the Buy/Sell section and pick the cryptocurrency you are willing to buy. Along with Bitcoin, exchanges supports a number of other cryptocurrencies that top the portfolio of each seasoned investor – ETH, BCH, ZEC, XRP, etc. Just like any other cryptocurrency exchange, exchanges charges fees for its services. So, be sure to check them before buying your first coins.
Be Prepared For A Lot Of Ups & Downs
Cryptocurrencies will dictate your emotions. The more you start trading and investing, the more effort and valuable time you will put into it. It is up to you whether to allow them to completely take you over or not. Therefore, be prepared for huge ups and downs. Put yourself in a position of a person who bought Bitcoin when it was at its peak value, believing that the price would go up from there – but it didn’t. These people were probably the ones who lost the most in the crypto industry, but these things happen and are still a natural part of how cryptos work.
If you decide to make your first purchase of cryptocurrency, you need to know one thing – nothing is still certain in this area. You can read thousands of reviews and listen to the advice of many professionals who make educated guesses. However, that’s more or less it – an educated guess. As soon as you accept that there is no safe investment, you will start making informed decisions and will be ready to enter the magical world of cryptocurrencies.
