Cryptocurrency and Buyers Tips For Investing In It
The shift towards a cashless economy is inevitable. Due to the rapid innovations in technology on a global scale, the traditional structure of commerce is slowly being altered. Consequently, these advancements have paved the way for the digitalization of trade systems in many industries.
The Rise of Electronic Cash System
The advent of the internet has provided a seemingly infinite platform for the payment of goods and services via an electronic medium. Many marketers have banked on online businesses to reach a more diverse group of clients around the world without the hassle of cash payment transactions.
In recent years, a more sophisticated way of electronic payment has emerged. Cryptocurrency is a system of exchange that uses digital encryption or cryptography. It is capable of transmitting data in an unreadable form so only those intended receivers can read and process it. Unlike central digital currencies previously introduced, cryptocurrency is issued by a decentralized, peer-to-peer network.
Due to the advanced nature of codes used to run cryptocurrency transactions, it is considered fraud-proof. Here are some revolutionary properties of cryptocurrency:
- Independence from a central authority
- Prevents double spending
- Purely digital in form
- Transactions are validated and recorded by a network of computers
- Verified transactions are added to all other existing transactions as a new block of data to the blockchain, a public ledger
- Transactions are permanent and unalterable
Investment Tips in Cryptocurrency
Many self-made millionaires today have given credit to the discovery of cryptocurrency for their financial success. If you are one of those hopefuls wanting to jump into the world of this new money, here are tips to get you on the right foot:
Tip # 1: Know the Basics
Buying your first cryptocurrency
At the core of buying cryptocurrency is exchange. You need to trade in your fiat currency—dollars, for example—into a cryptocurrency like Bitcoin. Today, one of the most popular places to buy, sell, and manage your cryptocurrency is Coinbase. Four cryptocurrencies can be purchased through Coinbase, namely, Litecoin, Ethereum, Bitcoin, and Bitcoin Cash.
Safekeeping your converts
Just like storing your money in a wallet or a bank, your cryptocurrency also has its own security vault in the digital space. By default, exchange platforms like Coinbase provide an account where you can safely keep your digital assets. Although these assets are protected by insurance, it is also vital to keep in mind other options to store them for optimum security.
What is a cryptocurrency wallet?
By definition, a cryptocurrency wallet is a software program that stores public and private keys, and interacts with various blockchain transactions. It enables users to send and receive digital currency and monitor their balance. It is important to note that, in order to use your crypto coins, the private key stored in your wallet must match with the public key assigned to the currency.
Here are a few crypto wallet alternatives:
- Online wallet platform - This kind of wallet runs on a cloud and can be accessed on any device regardless of your location.
- Hardware wallet - Unlike the online wallet, this kind of crypto wallet accesses private keys via a hardware device such as a flash drive. It provides stronger security by storing your coins offline while still enabling you to make transactions online.
- Paper or offline wallet - This kind of wallet is also termed as “cold storage.” It is basically a physical print-out of your public and private keys in QR code format.
Tip # 2: Assess Exchange Platforms
The best way to kick-start your cryptocurrency journey is to understand how buying is done in different areas in the world.
With the help of this guide on buying cryptocurrencies, you are able to assess which are the cheapest and fastest ways to purchase cryptocurrencies.
Here are a few metrics that can aid you in choosing the right cryptocurrency exchange platforms:
- Identify the well-known digital currency exchange platforms based on location
- Cryptocurrencies catered for exchange
- Find the market data of each cryptocurrency
- Know their white paper or the technology used in the project
- Deposit methods
- Trading fees
- Withdrawal fees
- Trading volume
Reading up on articles that provide a list of alternatives for cryptocurrency exchange platforms is also a good way to start off.
Tip # 3: Analyze the Market Trend
You can’t play the game if you don’t know the rules, let alone the major players in cryptocurrency. However, given the volatile nature of the crypto market, it is often difficult for newbies to identify which coin can give them quick and positive returns on investment.
For a time, Bitcoin, the world’s first cryptocurrency, dominated the cryptocurrency market. However, in 2018, it turned out to be the most unprofitable investment versus other financial instruments.
Thus, it is crucial that you keep yourself up-to-date with the latest buzz in the digital economy. Analysis from industry experts as featured in reputable web-sources and knowing their market capitalization ranking is a good place to start.
Tip # 4: Identify Metrics for Each Cryptocurrency
Meanwhile, in spite of the volatility in cryptocurrencies, you can still bank on certain determinants as a cryptocurrency investor:
- Mining Difficulty — A measure of a cryptocurrency’s difficulty to hash or approve a transaction they can verify.
- Mining Rewards — Successful miners are rewarded coins for every 1MB of transaction. Since it takes so much computing power to successfully secure a transaction in the blockchain, it is crucial to know the reward rate for each cryptocurrency.
- Transaction Speed — This the speed of travel from a giver to a receiver in the context of processing a payment. Thus, this determines how long it will take for your money to reach its designated crypto wallet.
In a nutshell
If you wish to dive into this new venture, think smart and remain vigilant.
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