Do I have the financial and technical know-how to invest in or spot trading in cryptocurrency? This is a common concern that many prospective investors have each time they consider cryptocurrency. How is it that something that is already earning many people millions can be shrouded in so much controversy? You worry about losing everything in the market because you are a beginner investor. You are concerned about being scammed in the process.
These are all valid concerns. However, did you know that even many of the expert investors in the market who have made millions from trading in cryptocurrency were at that very point you are? A lot of them actually made many mistakes before they got to the point they are in today. It is actually from theirs and other people’s mistakes that the cryptocurrency community has learned and grown so much that you have access to lots of information, to ensure that you never have to make similar mistakes.
To answer your question, at CoinCheckup, we believe that anyone can invest in cryptocurrency. You do not necessarily need technical or financial know-how to get started, but if you do, it will be a bonus for you.
Basic Cryptocurrency Information
Assuming you have zero-knowledge of cryptocurrency, there are some terms, concepts, and conventions you will come across all the time which you need to learn about. With this knowledge, you should be able to go about your investment without any concerns.
- Currency and Stock
One of the terms you will come across is Fiat. This is a common term used in the world of finance to refer to the regular currency, like USD. It is interesting to note that while crypto is about currency, they actually are considerably more likable to investment stocks than currency. A possible explanation for this is because each time you purchase or sell cryptocurrency, you are pretty much buying stock in the blockchain.
- Exchanges
You might not be financially savvy, but you are aware of the stock exchanges like the NYSE. An exchange is simply a platform where investors buy or sell the cryptocurrency that they hold. In an exchange, you use fiat currency to buy crypto, or sell your crypto and earn fiat currency.
There are lots of exchanges available in the crypto community at the moment. As a beginner investor, you need to research and ready about them so that you know what or where you are investing your money.
When researching crypto exchanges, you will primarily be trying to ascertain the quality and reliability of the exchange. Not all exchanges share similar features, so you have to be keen on where you invest your money. Some of the features that you should be looking for include how secure the exchange is, the volume of investments traded, whether they have withdrawal or purchase limits, the transaction fees and so on. These are things that will affect your returns, so you have to give them the attention they deserve. Another thing you need, especially if this is your first time investing in cryptocurrency, is a good user interface. You don’t want something that is too complex or loaded with too much confusing information. You need a simple platform that is easy to understand.
- Exchange Wallet
Every cryptocurrency exchange has an online wallet where you store all the coins you buy. While online wallets are good and make your work easier, you might also have read about online wallets getting hacked. To avoid falling victim, you can store your coins using digital wallet services. These platforms take away that risk, and they also handle the task of storing your currency.
Building an Investment Portfolio
When it comes to investment portfolios, everything you do is going to be subjective. It is all about what works or feels right for you. You might have heard about a lot of people who made quite a killing in the crypto business online. While some of these stories are true, some are not. The best thing is to conduct due diligence to ensure you know what you are getting into.
Regarding your portfolio, consider investing in cryptocurrency as you would gambling. Only stake the amount of money you are comfortable losing. Do not put all your eggs in one basket. These instructions sound simple, but many people ignore them and lose everything. Take note that these are investments pegged on a highly volatile market. Therefore, the market can be amazing for your investment at one moment, and then it goes under shortly after.
You also should not invest all your money in one currency. That is a big mistake because if the tide swings against you, you could lose everything. This is simple financial investment advice, by the way. If you have been an investor in the traditional financial markets, you should consider committing a portion of your capital to invest in cryptocurrency.
Points to Consider Before Investing
There is a lot that you need to think about when it comes to cryptocurrency investment, especially for the first time. Go over the following points to determine whether you are doing things the right way.
- What is your plan?
Why are you really investing in cryptocurrency? Are you just following the wave, or do you have a plan in place? Many people who invest in cryptocurrency without a plan have a high chance of losing everything. This is because when you outperform the market and earn some good returns, it is easier to get greedy and reinvest everything. That is where you lose. If you have a plan, you might apportion a percentage of your returns to savings, and some of it to reinvest in the crypto market.
- What is the coin’s plan?
You need to know what the plan is for your preferred currency. The dev teams behind different coins usually release white papers detailing their mission, goals, and objectives of the project. This way, you can treat this as you would an investment prospectus before you buy stock in the stock market. These documents tell you a lot about the coin and what the future plans are. If it aligns with your personal goals, you can invest in the coin looking forward to great returns, both financially and psychologically.
