What Is Cryptocurrency and How do I Profit?
Have you ever wondered about what is cryptocurrency and how to make money with cryptocurrency investment strategies?
If not, then it is the time that you should.
Money is an important thing in the world.
While it is not something that you can directly consume, it acts as the medium that people use to get what they need.
Every day, money is exchanged between buyers and sellers.
This is in order for a person to have what he wants.
Money can buy every material thing.
From food to shelter and clothing, money is used every single day.
With the advancements in the internet, purchasing products online is now possible.
Users can simply link their credit cards to an online site.
They can then use this to get whatever product or service they want.
In seconds, transactions are made.
For a lot of people, this has been a great advancement.
Especially if you have a busy and hectic schedule.
Online transactions have truly made things easier.
You can get whatever you want through your computers or smartphones.
But have you ever heard of cryptocurrency?
In the recent years, this term has been gaining more popularity in the digital world.
In 2017, cryptocurrency has boomed even more.
Because of this, even the news media and governments pay attention to it.
What Is Cryptocurrency?
In simple words, cryptocurrencies are virtual currencies.
There have been numerous attempts since the nineties to create a digital currency.
However, these attempts failed for various reasons.
Most common reasons are fraud, company issues, and financial problems.
It was only in 2008 when a person under the alias Satoshi Nakamoto introduced Bitcoin.
He was able to create a digital currency successfully.
Bitcoin is a ‘peer-to-peer electronic cash system’.
Unlike the first attempts at creating digital currency, Bitcoin was able to continue running up to present.
The main reason is that there is no single authority that controls everything.
This process is “decentralization”.
Every user is responsible for everything that is happening.
In essence, Bitcoin sharing is like sharing files in between peers.
Cryptocurrencies are created through the process called “mining”.
Mining involves powerful computers to solve algorithms and numbers.
Currently, for Bitcoins, they are solved and created at the rate of 25 coins every 10 minutes.
The number of Bitcoins will reach its cap at 21 million which is expected to be reached by 2140.
During this time, it is expected that all algorithms would have been solved.
What Can Cryptocurrencies Do?
When cryptocurrencies started, there was not much it could do.
Online merchants and sellers seldom accept cryptocurrency as a medium of payment.
Nowadays, however, cryptocurrencies has become widely accepted.
For example, the Apple store has authorized at least 10 types of different cryptocurrencies.
You can use these cryptocurrencies to purchase anything from the Apple App Store.
In some countries, cryptocurrencies can even be used to make offline purchases.
You can use them as payment in bars, restaurants, hotels, etc.
There are even marketplaces like OpenBazaar that exclusively accepts only cryptocurrencies.
It can be seen that from 2009, this medium of payment has become widely used and accepted.
Should You Engage in Cryptocurrency Investment?
A lot of individuals believe that cryptocurrencies are the newest investment opportunity.
If you watch the news, cryptocurrencies made the headlines of news channels.
This is because of the high value that they have.
There have been numerous stories of individuals becoming millionaires just by investing in cryptocurrency.
Currently, Bitcoin is still the most popular cryptocurrency all over the world.
It had the value of about $800 per bitcoin at the beginning of 2017.
This value spiked to $7,000 by early November of the same year and continues to spike.
The second most popular cryptocurrency, called Ethereum, has also received a fast increase in value.
Accordingly, Ethereum had a 2,700 percent increase from its past value in 2016.
If you have been asking yourself whether you should join in on the bandwagon of engaging in cryptocurrency investment, there are a few things you must know.
People from various countries have started investing in cryptocurrency for investment.
They see this as a way of protecting their assets from the continuing devaluation of their currencies.
Businesses and companies have also realized the importance of cryptocurrency.
They understood that having a cryptocurrency investment will give them an edge.
As an individual, you should realize beforehand that this is not a normal type of investment.
It is not something that you can have on paper.
When you lose your investment, you cannot get it back.
Cryptocurrencies Can Be Outlawed
Cryptocurrencies are not regulated by a central authority like the government or a bank.
Because of this, governments can easily outlaw them.
In this case, it will be difficult to use cryptocurrencies in your country.
Furthermore, the value of cryptocurrencies will also decrease.
Countries like Bangladesh, China, Bolivia, Kyrgyzstan, Nepal, Morocco, and Ecuador have banned using digital currency.
A country that bans a cryptocurrency means you cannot use it for any type of transaction.
Recently, the governments of Russia and Korea are also considering banning cryptocurrency.
Cryptocurrencies Can Be Stolen
While cryptocurrency uses cryptography or encryption, it is still susceptible to hacking.
There are numerous instances of cryptocurrency owners whose coins are stolen.
Once cryptocurrencies are stolen, there are no chances of getting them back.
Cryptocurrencies Are Unstable
With cryptocurrencies, you will never have the assurance and stability.
The value of coins that you have in your wallet will always change.
One day it can have a high value, but it can go down to zero the next day.
The value of cryptocurrencies is wholly dependent on the amount that investors are willing to pay.
Because of this, you should never invest a huge portion of your money or your savings on cryptocurrency.
Doing so can lead to losing all your money once the value goes down to zero.
What Are the Cryptocurrency Investment Strategies?
If you want to invest your money in digital currency, you should know various cryptocurrency investment strategies.
This can prevent you from losing all your digital currency investments and going bankrupt.
As we have said, the fluctuation of cryptocurrency is faster than regular currency.
A coin that is worth $100 can increase to $1000 in a few days.
In the same manner, it can crash down to having a value of a dollar the following day.
It is then important that an investor is aware of the risks with cryptocurrency investment.
Cryptocurrency is like a game where you can either win or lose.
1) Learn Everything About Cryptocurrency
The first and most important cryptocurrency investment strategy starts with education.
You cannot expect to join the world of cryptocurrencies without understanding anything about it.
It may be tempting to just go ahead and invest.
This is true especially if you have the money to purchase coins.
But not knowing about this type of market will only lead to losing thousands of dollars.
Learn about cryptocurrency, how trades and investment work, and the purpose of digital currency.
Since you will be buying coins with real money, you should understand the risks of investing.
You should understand as well as what you can do to avoid losing your investment.
There are millions of forums and articles explaining everything you need to learn about cryptocurrencies.
Take the time to read them and understand how they work fully.
If you know someone who has been investing in cryptocurrency for some time, seek advice from him.
He will be able to explain things to you and show you what to do.
If you are unable to understand the basics of cryptocurrency, you should avoid investing in this market altogether.
2) Invest Only in What You Can Afford to Lose
The first cryptocurrency strategy that you should understand is that you should only invest the amount you are willing to lose.
Since investing in cryptocurrency is very much like gambling, you won’t know what will happen.
You can either win or lose everything.
Steep crashes in cryptocurrency have happened before.
As such, there is no assurance that it won’t happen again.
Given this, you should never invest all your saving in cryptocurrency.
You should start out by investing a small amount then gradually increase.
Never place all your savings on investing in cryptocurrency.
3) Research the Cryptocurrency You Will Be Investing In
There are thousands of cryptocurrencies that people can use currently.
With this, it is easy to become a victim of a scam.
There are hundreds of crypto projects that only have the aim to deceive investors.
A beginner can easily buy coins from a crypto project and end up losing all his investment.
To prevent this, it is important that you choose the right cryptocurrency.
It can be tempting to invest in cheap coins.
One may easily think that the value will increase after some time.
However, new cryptocurrencies that have not been around for long tend to lose value easier.
To prevent this, research about coins that have good track records.
Make sure that they have lasted for at least a year and have a good number of users.
Reviews of cryptocurrencies are available everywhere online.
You must always take the time to read them.
4) Buy Low Then Sell High
For this cryptocurrency strategy, one must have extreme patience.
The key to this is simple, buy coins when their prices are down or at their lowest.
Wait for a time when the value of the coin has increased.
When it has, use this to trade or sell your coins.
This strategy may sound simple.
But you have to know that values can take some time to increase.
You cannot expect to have your purchased coin increase its value in a few days.
Most successful investors have had their coins stored for a period of time.
They wait for it patiently to increase its value as more individuals are willing to invest.
5) Don’t Try Day-Trading
In line with holding your investment, you should stop yourself from day trading.
This means trading a number of your coins within just a number of days.
You should be patient and learn to hold your investment in your wallet.
Wait until the value has significantly increased.
While it may be enticing to trade coins on a daily basis, doing so will only make you lose your money.
No matter how the value of coins increase or decrease in a single day, you should learn to leave it be.
Stop yourself from constantly watching your coins and investment.
6) Have a Secure Wallet
When you buy coins or exchange them, it is never safe to keep them there.
Keeping your coins on an exchange site is very susceptible to hacking.
Make sure that you have the right device to keep your coins safe while waiting for the value to increase.
The best way to do this is by getting a cryptocurrency hardware wallet.
You can have this as an addition to your online wallet.
Hardware wallets keep your coins and your keys safe.
This keeps them secure to prevent hackers from accessing them.
The reason behind this is that you can store your cryptocurrency offline.
7) Track Your Coins
Since you will be investing your money into cryptocurrency, you should know how to track.
An important cryptocurrency investment strategy is knowing how your coins are doing.
You should have a software or site that will let you keep track of all the trades and investment that you contact.
Sites like CryptoCompare will let you easily monitor your trades.
Doing so will let you easily account for your investments and transactions.
8) Never Buy or Sell Based on Your Emotions
For first-time cryptocurrency investors, the constant changes in the values of coins can easily affect you.
Watching the changes in value can tempt you to buy or sell coins on impulse.
As such, never let your emotions get to you.
You should not panic and sell all your coins when you see that prices have been dropping.
Investing in cryptocurrency means you are willing to wait for long-term results.
The right cryptocurrency investment strategy is to wait for the price to drop.
When this happens, you should buy more.
You should never risk selling when prices are low.
Simply put, if you cannot manage your emotions with this type of fluctuating market, you should not invest at all.
Being emotional in investments is a sure way of losing money in a matter of days.
9) Have a Diverse Portfolio
If you are really keen on investing in cryptocurrency, you should have a diverse portfolio.
This means you should not invest in a single place.
While it seems right to invest everything in the most valuable cryptocurrency like Bitcoin, doing so can be very risky.
As we have said multiple times, the value of one cryptocurrency can change drastically.
If you place all your investments in a single cryptocurrency, you can lose all of your money when it goes down.
To prevent this, diversify your portfolio by investing in various types of cryptocurrency.
Take note that you should not go ahead and invest in ALL the cryptocurrencies.
It is important to be picky when investing.
The right cryptocurrency investment strategies entail that you invest on the right ones.
This means you should only invest on those listed on the Top 10.
Doing this strategy will lower your risk of losing your investment.
When one cryptocurrency loses value, you won’t risk all your investments.
There is also the chance that when one goes down, another will go up.
In this manner, you will always have coins that have a high value.
10) Join Cryptocurrency Forums
Joining cryptocurrency forums is one way you can keep watch over what’s happening in the cryptocurrency market.
You cannot simply invest and not know what is happening in this market.
Cryptocurrency forums will let you see new projects.
You will also see how other users are faring with their own investments.
If you have been wondering why coins are staying low for some time, you should browse online forums.
It is most probable that these topics are already being tackled in them.
Doing so will help you understand things better.
You will also have a better peace of mind on what to do.
Use a two-factor authentication
If you think that having a password to any of your online accounts already provides you security, then you’re wrong.
Passwords can be easily hacked especially if you open your accounts across multiple devices.
To prevent hackers from accessing your accounts, use a two-factor authentication.
This type of authentication provides double protection from hacking.
Two-factor authentication involves entering the first password like you always do.
After this, you will enter the second one.
The second password is given to you by authenticators like the “Google Authenticator”.
The codes that you receive changes every 30 seconds.
This means that no two codes will be given to you whenever you log in.
In this manner, hackers cannot easily access your cryptocurrency wallet.
The only way they will be able to do so is if they manage to steal or access your phone.
Should You Invest in Cryptocurrency?
This article has been saying from the start that investing in cryptocurrency is a risky matter.
It is not something for someone who makes drastic decisions.
Cryptocurrency investment is not for someone who does not have the patience to wait.
The cryptocurrency investment strategies above serve as a guide that beginners can use and apply.
Following each strategy will increase the chances of a new investor to increase the value of his investment.
You need to prepare yourself to face the risks and changes in cryptocurrency.
If not, you better stay clear of this market than risk losing valuable money.
Cryptocurrency as an investment is something that can either make you gain or lose money.
It is important that you understand everything before jumping in.