How to Invest in Cryptocurrency
UPDATED: March 2022
How to Invest in Cryptocurrency - When it was first introduced in 2009, Bitcoin was considered to be nothing but a fascinating phenomenon. However, futurists and technicians saw the immense potential of cryptocurrency and how it will shape future markets. Even though there was interest generated by cryptocurrency, no one looked at them as an investment opportunity. Part of the reason behind that was because there was little to no government regulation surrounding cryptocurrency.
How to Invest in Cryptocurrency
Fast forward to the current day, and cryptocurrency is ruling the roost and everyone wants to get their hands on it. It is seen as the future of all money transactions, and even though banks and governments still have limited regulations set in place for cryptocurrencies, its value has sky-rocketed. People want to invest in cryptocurrency due to its value and how it is expected to increase further. If you are someone who wants to invest in cryptocurrency, you have come to the right place. We share everything you need to know to invest in cryptocurrency.
How Cryptocurrencies Work and What Are They?
Cryptocurrency is built around blockchain technology, a chain of information distribution and registration that a single institution doesn't control. It works as recorded digital transactions which the central banks don't control. Understanding blockchain technology can be complicated, but in simple terms, it removes the middleman, like the bank, and allows business transactions between buyers and sellers individually. That serves to eliminate any transaction fees, and that is part of the appeal of cryptocurrency.
Bitcoin is the most prominent cryptocurrency whose price is tracked regularly in the financial media. However, there are hundreds of cryptocurrencies, which makes investing in them complicated. There are two main reasons cryptocurrency is so attractive to investors:
- You can use and own it anonymously
- It experiences price explosions, which make it feel and look like an investment
Investors who bought cryptocurrency before the 2017 price explosion and the recent 2020 price increase have benefited from their investment. So, what should you do if you want to invest in cryptocurrencies? Find the answer below.
Investing in Cryptocurrencies
You can't buy cryptocurrency from a brokerage firm or a local bank because financial institutions don't fully understand and trust cryptocurrency. As it is unregulated by the government, most financial institutions refuse to deal with cryptocurrencies, so it still functions within its network right now. Here are our tips for investing in cryptocurrency:
* Make It a Small Part of Your Investment Portfolio
You should make cryptocurrency a small part of your investment portfolio, even though the price of Bitcoin is going through the roof. You shouldn't invest more than 5% or 10% because investing in cryptocurrency isn't the same as investing in stocks. It doesn't pay you dividends or interests like silver and gold because cryptocurrencies were designed to be mediums of exchange.
* Choose The Cryptocurrency You Want to Invest In
One complication you will face when investing in cryptocurrency is that there are hundreds and even thousands of different options. The entire concept of cryptocurrency only started a decade ago, and you need to be careful when looking to invest in it. Bitcoin is the largest and most reliable cryptocurrency available right now, followed by Ethereum.
NOTE: For More Detailed information on How to Invest in Cryptocurrency, see the excellent article Crypto Trading For Beginners - How To Profit 5 Ways .
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