You have finally decided to invest in cryptocurrency. You’ve chosen a great time to satisfy your curiosity. The top cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) have seen explosive growth in 2017, and with the advent of mainstream, institutionally-backed Bitcoin futures, it seems 2018 is poised to see even bigger growth. Not sure where to begin? No problem. We will walk you through the most important points that a beginner should know when investing in crypto.
Investing in Cryptocurrencies
First, you must be prepared for extreme price volatility within this ecosystem. Consider Bitcoin’s recent price rise past $17,000 USD. This is when the number one crypto was just $10k days before.
Investors found this volatility to be a great advantage as it drove the value of their portfolios up. However, the space has also seen the exact opposite happen. Mt. The bitcoin price also fell in 2014 after the Mt.
Then there’s Ethereum. It is the second most popular crypto according to market capital. You won’t believe how much ETH’s price has risen by 6,000% in 2017.
It’s not bad, is it?
The wildness of volatility is evident even in the above picture. You can see how the ETH price was basically cut in half between June & August.
Traditional investors find this volatility mind-bending. It is important to remember that wild price movements are largely due to the infancy of the crypto ecosystem.
There are no guarantees about what the future holds for crypto prices. There is one thing that is certain: the underlying tech and the revolutionary capabilities of the most promising cryptocurrencycoins, primarily Bitcoin, give reason to be optimistic.
Background
Where is this Crypto Craze coming from?
Many uninformed pundits call cryptocurrency a scam. Bitcoin, the genesis cryptocurrency will be remembered alongside the Magna Carta and the printing press as one of the greatest human achievements. This is something potential investors should keep in mind.
Magna Carta, a blood-born expression every human’s soulful longing for justice, was the first to stop a tyrant King. The printing press was able to give voice to the voiceless on a scale unprecedented. It gave thought to those who were not thinking. It opened the door to true human liberty over the centuries that followed.
So, the Age of Freedom was born. An age with its own growing pains, which Bitcoin and the cryptocurrency craze that it inspired can irreversibly alleviate.
It’s not surprising that the first Bitcoin block was signed with the headline “The Times 03/Jan/2009 Bank Chancellor on brink” to prove its birth.
This is because Bitcoin was created to fix the very reason for the Great Recession: the misuse of people’s trust by centralized institutions.
Alas, or the anonymous creators of Bitcoin, coded the solution: a blockchain ledger that allows value, even ideas to be transacted person-toperson, trustlessly, permissionlessly and without any third-party intermediaries.
This is the ultimate expression of personal freedom, right? Because money, according to Andreas Antonopolous, “is a language.” Human beings created money to communicate value to one another.
No one, from President Trump to Kim Jong Un, can stop you from expressing your value to the rest of the world. This is sovereignty unlike any humans have ever had, and the ramifications can be enormous.
Bitcoin is the next Magna Carta. It is the equalizer between those in power and the people. It provides a check on power and is the next major milestone in humanity’s long struggle for freedom. Bitcoin, in a domino-like fashion, will open the door to new blockchains that will make freedom even more perfect.
Imagine decentralized institutions that are powered by blockchain smart contract and not bureaucratic middlemen who have a tendency just about to mess everything up.
Blockchains will decentralize societies from the top down, and the progress made by humanity will be humanity’s best chance to realize unprecedented justice and kindness.
This is the promise of Bitcoin. The Bitcoin Boom is therefore not a traditional speculative bubble.
How much to invest?
How much should I invest? What is the best way to invest? Blockonomi cannot give you financial advice. You are the one who will decide if investing is right for you.
It’s also worth noting that there are hundreds upon hundreds of cryptocurrencies. Some are promising, while others are complete scams. It can be difficult to make generalizations.
We can only point you to what other people think, and at the fact cryptocurrencies are an objectively revolutionary tech that has the potential for revolutionizing our societies from the ground up.
You’ve probably heard it all. But the fact that you are here reading this article indicates that you are interested in investing and want to see what the future holds if you decide to make the leap into the crypto world.
Consider the comments made by Mike Novogratz, former manager of Fortress hedge funds, which suggested that investing between one and three percent of your net wealth is sufficient to provide safe exposure to cryptocurrency without taking on high financial risk.
These are fair and practical guidelines. Even conservative ones can be used. It’s better to be cautious, especially if your investor experience is not extensive.
This is the most important maxim that you can take in at this stage: Avoid investing in cryptocurrencies more than you can afford.
This means that you should only invest a certain amount in crypto if it’s possible to see that sum drop below $0. However, such a terrible crash is unlikely to occur. However, there have been many flash crashes. As the space is still very early, “black swan” events such as China’s recent ban on crypto exchanges and scams continue to abound.
Scammers Want Your $$$
Not all crypto projects are as trustworthy as the space’s heavyweights, namely Bitcoin, Ethereum, and Ethereum. These positions in the market capitalization are well-deserved, according to what these industry titans can “bring to it.”
Also, there are scams in crypto projects that are disguised and marketed to deceive crypto investors.
Some investors have lost their entire investment in the scams that have been exposed in the community. Research is the best way to avoid becoming a victim. You should be careful about what you choose to include in your portfolio. Choose coins with strong track records that have been around for a few months or years.
Where To Invest?
Promising cryptocurrencies to Invest in. Each project has its pros, but the market speaks for itself. Strong projects make up the majority of the top 10 cryptocurrencies based on market capitalization at press-time.
The current top 10 standouts are:
- Bitcoin
- Ethereum
- Bitcoin Cash (BCH).
- Litecoin (LTC).
- Dash (DASH)
- Monero (XMR)
- NEM (XEM).
There are still many interesting projects in the top 100 coin market caps, but it gets riskier the further you go from the top 2. As it stands now.
Buy Cryptocurrencies
We have created guides to help you purchase the major Cryptocurrencies, Ethereum or Bitcoin. These can be used to purchase other currencies on different exchanges once you have bought them.
Let’s get down to the basics of strategy.
Strategy 1: “Hold”
There are two main strategies for investing in cryptos: daytrading and holding. Both strategies have the same basic idea: buy low, and sell high.
For novices and new traders, holding is the best option. Holders are focused on building a portfolio and ensuring long-term price appreciation. It’s an easy strategy with little to no learning curve.
It is best to buy as many coins as possible while markets are “in red,” or when prices are falling. To maximize your potential gains, you should buy when prices are lowest.
This is not an easy task. This principle can be ignored if you are extremely bullish on a project for the long-term. Imagine that Ethereum will reach $3,000 in a day. It doesn’t matter if the projection comes true, but it won’t make any difference if you buy ETH at $300 or $400.
Strategy 2: “Daytrade”
Daytrading is another option. This is where you will execute market buys regularly in the hope of turning your trading investments to something bigger.
We won’t go any further into this strategy as it’s not recommended for beginners. Every day, investors lose thousands trying to outmaneuver crypto markets.
Before you consider daytrading, take your time to learn as much about the ecosystem as possible. The idea is to sell high and buy low.
Long-Term Holding
Secure Your Investments for Long-Term Holding. One bitcoin was worth less than.01 US dollars when Bitcoin first went live. At press time, one bitcoin is worth approximately $16,000. This is the best example of the long-term gains the crypto space has seen.
While it is unlikely that cryptocoin prices will continue to rise in this fashion, there is the possibility that mainstream adoption could increase the value of a few cryptocoins in the next five, 10, and 20 years.
It is risky to predict which projects will win. That’s the risk. While you wait for gains, the best thing to do is to make sure your holdings are secure in the most secure way possible.
This is the best way to do it. Get a hardware wallet for cryptocurrency.
Software wallets and exchanges are far from fully-proof in terms of protecting users’ funds. Hardware wallets, on the other hand are the most secure “vaults” available to crypto holders.
These wallets are extremely safe as they store your crypto offline, reducing the risk of hackers. These devices can interact with infected computers without any concern because they are so secure.
Track Your Trades
You’ll need to keep track of all relevant information if you plan to invest in cryptocurrency. No matter where you live, the tax man will want his cut. To prevent any problems, you can account for all your trades and investments. It allows you to easily plug in all of your trades, which will make it easy for you to be organized when you most need it.
You might also find CoinMarketCap, Coincap.io and CryptoCompare useful for accounting purposes.
Trustworthy Resources
The crypto space is only as good as the resources that you use to support your decisions.
There is a lot to be heard and biased in the ecosystem. It’s important that you find reliable resources. It’s always a good idea to start with people who have a broad technical knowledge, such as YouTubers Boxmining or Ivan on Tech.
You can also consider industry experts based on their motivations. Are X and Y projects trashing X because they are competitors? Or because there are legitimate red flags?
These kinds of quagmires can be solved by having access to trusted resources.
You can find a more casual atmosphere with a lot of information, but it’s also easy to get involved in crypto-related discussions on Reddit. They are brimming with helpful conversations about investing in cryptocurrency.
Keep your finger on the pulse of space. This last point is a reminder that the crypto ecosystem is a news-driven industry. As an example, cryptocurrency prices soared after China banned cryptocurrency exchanges in Oct 2017.
You should be monitoring the news about all the important happenings in the space if you have market orders or investment goals.
Major crypto stories spread like wildfire through social media, so even a simple check of your Twitter can help you keep an eye on what’s happening.
Don’t get too caught up
You might be tempted by cryptocurrencies to put all your energy into them. It’s a good idea, but keep in mind to be healthy. It’s best to have everything in moderation.
Don’t let the fact that you are making gains get in your way. CoinMarketCap is not something you have to check every five minutes. Life will continue regardless of whether your portfolio has gone red or green. Your investment decisions will suffer if you become more obsessed.
This is when portfolios become unrepairable. Don’t let this happen to you.
Keep everything in perspective and try to be balanced. You will be able to invest smarter and give your financial security the best chance.