Starting out with cryptocurrency can be confusing if you have never done anything that is similar to it. You wonder where to start and what all the terminology means. Investing in cryptocurrency can be an exciting and quite profitable experience as long as you do your homework beforehand. Here is how you can start your journey into the cryptocurrency world.
The Growing of Cryptocurrency
As the use of internet goes global, the cryptocurrency is turning into a legitimate currency. Over years, the price of Bitcoin has grown and people are increasingly investing in it. In one period of four months, the market cap of the crypto space has increased by 10 billion USD. This is what happens when the market is doing well.
Different Cryptocurrencies
There are numerous cryptocurrencies that started appearing after the original Bitcoin cryptocurrency. They are known as ‘altcoins’. Each of them aims to be better than the original Bitcoin cryptocurrency and strip its dominance of the market. Some of the more popular ones are Ethereum, Ripple, Litecoin, Dash, Monero, and PIVX.
Stocks and Fiat
The currencies we use in the economy today are known as ‘fiat’ in the cryptocurrency world. Cryptocurrency is more like stocks and less like the standard currencies. Any purchase of a Bitcoin, for example, is a purchase of a tech stock that is a part of the network or the blockchain.
Exchanges of Cryptocurrency
Exchanges are the websites where cryptocurrency is traded. At the exchanges, you can use fiat to buy or sell cryptocurrency. The numerous criteria for measuring the reliability and quality of the exchange are liquidity, spread, limits of purchase and withdraw, fees, the volume of trading, security, insurance, and ease of use. Some of the more popular options for exchange are Coinbase, Xapo, and Blockchain. You can use these apps both on the desktop and on the mobile phone. Enter your name and email address, set up a password, and you are ready to start. You must set up an intermediate bank account and verify your details with the exchange you are using. To secure your account, use a two-factor authentication with anything but your phone number since it is too easy for someone to steal from your wallet with your phone number. You can instead use Google authenticator or a security key.
Volatility of Cryptocurrency
Cryptocurrency has certainly made some people go from ‘rags to riches’, but the unpredictability of the market makes it a risky endeavor. As a general rule, only invest money that you are willing to lose. The psychological torment of losing lots of money is very real, and it’s not worth placing your emotional stability on a highly volatile market unless you really like taking the risk.
Being on the Winning Side
How do you go on the winning side? Consider how safe your invested money is. Make sure that the founders holding it have not been involved in scams in the past. Does the coin you are investing in have a long-term agenda? Set up a time frame for coins that you are not considering on keeping forever. If the value starts dropping, have an exit price so you do not risk your emotional health with losing too much money. Cut the losses on time.
Helping Resources
On Coinmarketcap you can look at the various coin’s prices and market cap. At cryptowat, you can check out the prices of popular cryptocurrency on different exchange platforms.
Above all, be smart and wise about how you invest in cryptocurrency.