Investing In Cryptocurrency : In recent years, cryptocurrency has attracted quite a bit of attention in the investing world. You can read about investing in cryptocurrency in the news, magazines, websites and so on. Also, everyone thinks it’s the “new new” when it comes to building wealth.
Digital currency is definitely quite trendy these days! Before you take the plunge into investing in digital currency, there are a few critical things to know. Like any investment, it is important to first educate yourself about it and conduct your own research.
Let’s start by first defining what cryptocurrency is!
What is Cryptocurrency?
Cryptocurrency is essentially virtual money. It is independent from any banking, financial, or currency system. It also allows transfers between individuals without the need for financial intermediaries. It is also used online to buy goods and services.
Cryptocurrency is exchanged for real currency to be used for payment or for investment. The demand for digital currency has grown steadily in recent years.
Even more so now with the media showcasing how many investors have made so far. Examples include Bitcoin (the first and the most popular one), Litecoin, Ethereum… just to name a few—there are currently hundreds.
Is cryptocurrency like gold?
I have seen and heard a lot of comparisons between gold and cryptocurrency. In the past, gold has been used as a way for people to diversify their investment portfolios. Tangible assets such as gold are good hedges against things like natural disasters. disasters, currency declines, or collapses. Now, many people consider cryptocurrency to be a form of digital gold.
Some people believe it is a means to safeguard against risks associated with traditional banking and financial systems that are greatly influenced by government-controlled economies.
It’s no surprise that cryptocurrencies are limited, too. That’s right—there’s a limit to how many can be created by digital mining processes. For instance, they can only be mined due to the digital nature of how they’re created.
However, the primary difference between cryptocurrency and gold is that gold has associated value. Gold has associated value because jewelry is made with it. And so the demand for gold doesn’t just come from the commodity itself; it also comes from the industries.
the cryptocurrency is determined by how much investors are willing to pay for it right now. However, its value comes from the industries and products that use it.
Cryptocurrency, on the other hand, does not have this same derived value (right now).
What risks does buying cryptocurrency have?
Investing in cryptocurrency comes with a lot of risk because it is very volatile and highly speculative (again, right now) based on supply and demand. While high-risk investments also produces high returns, one should only invest what they can afford to lose.
Also, cryptocurrencies are prone to a certain level of hacking, despite high security. That’s because all their online transactions are stored in online ledgers. Just ask Bitcoin—they’ve experienced hacking more than 40 times.
Furthermore, keep in mind that some of these different cryptocurrencies you hear about today may disappear in the future. So when investing in a high-risk asset like cryptocurrency, only invest what you can afford to lose.
Is all cryptocurrency the same?
As such, all currency is not the same. For instance, the American Dollar stands out from the British Pound, which stands out from the Chinese Yen with respect to value. Additionally, their buying power, supply, demand, inflation, and other economic factors differ from one another.
Several cryptocurrencies have no practical purpose or value; the only reason they are selling is because people are interested in buying them. You’ll need to do some serious research before purchasing cryptocurrency.
What is best for cryptocurrency storage?
When you invest in stocks and bonds, you can access your assets through a brokerage account. With cryptocurrency, you store your assets in a cryptocurrency wallet or digital wallet.
This is a secure digital wallet you can use to send and receive digital currency. However, you have to keep your phone backed up and your access details safe. Otherwise it could be a nightmare if you lost access to the wallet.
Should you invest in cryptocurrency?
It’s important to learn about this investment in order to make an informed decision. You should already have broad diversification in your existing portfolio in more stable assets. You should also be aware of the potential risks that come with investing in cryptocurrency!
How do you invest in cryptocurrency?
Several cryptocurrency exchanges give you the option of buying or selling cryptocurrency. Coinbase, eToro, and BlockFi are some of the more popular cryptocurrency exchanges. exchanges. These companies allow you to purchase digital currency with your debit card. Some may allow you to use your Paypal account too.
ATMs allow you to purchase Bitcoin with cash or a card. These kiosks are connected directly to Bitcoin exchanges, so you can buy Bitcoin in person.
Fees associated with buying and selling digital currency will depend on the amount of the transaction and the cryptocurrency exchange used.
Become a savvy investor
If you have been considering investing in cryptocurrency, now you know some key things to think about. Remember, staying informed means not placing all your bets on one investment, no matter how appealing it may seem.