Since the inception of cryptocurrency in 2009 with the pioneer being Bitcoin, it has taken the financial world by storm. It has afforded many benefits to people around the globe, especially those in countries whose fiat currencies are hyperinflated. With this currency, you can smoothly go around bad economic policies made by your government.
What is Cryptocurrency?
This is virtual money. It is a medium of exchange that is internet/digital-based. It is basically a global currency that can be used by anyone in any part of the world that has an internet connection.
You can make huge profits from investing in cryptocurrency regardless of which particular Coin you choose to invest in. There are over one thousand six hundred different cryptocurrencies available, and not all are profitable.
The term for any other cryptocurrency that is not Bitcoin is Altcoins, which is the short form of Alternative Coins. A lot of the Altcoins serve the same purpose as Bitcoin, while others serve very different functions.
Firstly, you need to understand that cryptocurrency is not a get rich quick scheme. Like any investment that will yield long term profit, you must be ready to be consistent and educate yourself.
#1 Invest the Money You Can Afford to Lose
This tip is essential for beginners who are not very conversant with the cryptocurrency world. Keeping your investments low while you learn the market and become conversant with trends, terminologies, and so forth will be a smart thing to do.
Additionally, there is the added risk that your country might Ban cryptocurrency trading. If this happens, you will not be able to continue trading; neither will you be able to liquidate your assets.
#2 Educate Yourself on Cryptocurrencies
There is a saying that “knowledge is money.” The more information you acquire and understand, the more opportunities are open for you to profit from. You should always be ready to do research and obtain valuable information. There is no information that is waste. This will give you more confidence and help you avoid taking unnecessary risks.
There are a lot of terminologies used in cryptocurrency that you need to know if you plan to invest in this virtual currency. Some of the popular ones are:
- ICO: Initial coin offering.
- Whale: A person who owns a lot of cryptocurrencies.
- Fiat: Paper money issued by the government.
- Bull Market: A market with rising coin value.
- Bear Market: A market with depreciating coin value.
- FOMO: Fear of missing out. When prices start to rise, and you do not want to miss out on the opportunity to profit.
- Shakeout: When investors sell at a loss because prices of coins drop low.
- Bloodbath: When several cryptocurrency coins drop in value.
- Strong hands: Investors that hold on to coins regardless of how low the value of the coins drops.
- DYOR: Do your own research
- FUD: Fear, Uncertainty, Doubt.
- And so much more.
Getting conversant with these terminologies will help you in the long run.
#3 Be Conversant With the Value the Coin is Bringing
To decide on what particular cryptocurrency to invest in, you first have to be familiar with the market caps of each cryptocurrency. The “Blue Chip” cryptocurrencies are the best, to begin with.
Blue-chip cryptocurrencies are generally classified as currencies that have a market value cap of over two billion dollars. Some of the blue-chip cryptocurrencies include Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Dash, MIOTA, Binace Coin (BNB), and so on.
To determine the value of a particular coin, you need to start with reading the whitepapers. A whitepaper is a document that gives a detailed explanation of cryptocurrency goals, projects, and what value it brings into the system. It tries to encourage potential investors to be part of a companies ICO.
Reading the whitepapers of a particular cryptocurrency offers tremendous benefits. A poorly written whitepaper is the first indicator that the specific cryptocurrency is of no value. You need to get a sense of the utility a token offers from reading the whitepaper.
A good start in determining if a cryptocurrency is bringing in any value is by looking at the issues the world of cryptocurrency is trying to solve. Some of the problems include scalability, privacy, and interoperability.
#4 Know When to Buy and When to Sell
The consensus is to buy low and sell high. This means to buy a coin when it is cheap and sell it when it has risen in value. It is best to buy a coin when it is stable and cheap.
Knowing the right time to buy is very important, but no one knows how much a cryptocurrency will be worth in the future; therefore, it is always best to buy now.
What is important is that you pick a good coin to invest in. With a good coin, you can hold on to it for an extended period, which will eventually yield a lot of profit. It is not wise to give in to the feeling of the moment when it comes to investing. If you buy a good coin, you need to hold on to it even when the value starts declining because it will eventually appreciate.
Buying a coin when it ss in Accumulation is a great time to purchase coins. The term Accumulation is used when a coin has been appreciating over an extended time.
#5 Learn how to look for and utilize tools/opportunities
The best place to begin when looking for new opportunities is to join a forum or community. A right forum helps you meet people you can learn from and be in on the latest news with regards to the cryptocurrency world. You can discuss things like blockchain technology, ICO’s, and so forth.
You don’t need to limit yourself to communities/forums that speak your language, with the help of tools like The Word Point, you can understand different languages.
A forum is also the ideal place to meet developers who typically announce coins they are working on.
You can utilize social media platforms like Reddit, and twitter to gain valuable information on the cryptocurrency world.
Also, make sure you are using every tool or app available to you. Some suggestions for useful apps that help you track and monitor profit and price movements are CoinCap, Blockfolio, and Coinfolio.
Cryptocurrency is an excellent way to diversify your portfolio if you are knowledgeable. You need to make sure you gauge the risks you take when deciding to invest in any particular coin. Patience and consistency are vital if you want to maximize your earning on this platform
Author Bio: Dominic Beaulieu is a gaming enthusiast turned tech writer who covers an impressive variety of topics like design, development process, game marketing, and helps developers with spreading the word about their creations. He is a fluent French speaker, who also has mastered Dutch, Norwegian, and Swedish. He has an experience in software translation, tech counseling, project management and digital marketing tailored for startups.
Dominic Beaulieu is a guest blogger. All opinions are his own.