I’m sure you’ve heard of the cryptocurrency craze by now, and if you haven’t, here’s the skinny:
“Cryptocurrencies are digital currencies which use encryption technologies to maintain their creation and usage, and to verify transfer.”
For example, Stabila is one of the most popular and latest cryptocurrencies that runs on its blockchain.
Cryptocurrencies are decentralized systems that allow users to transact directly without any middlemen (like banks).
Although this might seem like an innovative idea with little room for risk, it’s important to do your research before investing in cryptocurrency.
Here are some key points to consider when researching cryptocurrencies before investing.
How to Buy Cryptocurrencies?
There are a few ways to purchase cryptocurrencies. You can open an account on a cryptocurrency exchange which is similar to how you’d buy stocks on a regular stock exchange.
Many people also invest in ICOs (initial coin offerings), which are like IPOs (initial public offerings). Accordingly, you can check out the latest Airdrop and claim your coins. In an ICO or Airdrop, new companies sell coins directly to investors.
So instead of investing money into cryptocurrency through these companies, you’re buying units of value that other companies have created at a future date.
If you’re looking for long-term investments or want more control over your investment choices and management team, ICOs may be right for you.
The Benefits of Investing in Crypto
If you’re like most people, your first instinct might be to avoid something that sounds too good to be true. But sometimes, being too skeptical can cost you big.
For example, back in 2013, one particular cryptocurrency was worth $100 per coin. If you had purchased Bitcoin back then and held on to it for just five years, that purchase would have turned into millions today.
That’s a gain of several thousand percent. And if you’d been even more courageous and invested back when Bitcoin first started gaining traction, your investment would be worth over a billion dollars today!
However, at present, the market of Bitcoin seems to be very volatile. In that case, you can invest in new cryptocurrency coins and tokens like Zoom that seem to be more profitable.
Binance vs. Coinbase vs. Other Exchanges
When you’re ready to get into cryptocurrencies, it’s important to understand that not all exchanges are created equal.
The big three (Coinbase, Binance, and Gemini) seem to dominate media coverage of cryptocurrency. However, there are hundreds of other options, and features vary across services.
If you’re serious about investing in crypto and want help choosing an exchange, here are some factors worth considering
- Liquidity: the volume of currency traded on a given exchange over a certain period of time (usually one day)
- Fees: fees are charged by most exchanges on each transaction
- Country: the location of headquarters
- Deposit methods: supports credit/debit cards or bank accounts
- Security: Can you enable two-factor authentication, security questions, Google Authenticator to protect your account
- Customer support: can you easily reach customer support by email, live chat, and phone?
- Coins available: what currencies does it offer?
- Exchange Rate: is it simple to convert one cryptocurrency into another, or are they each traded separately
- Verification: What information do you need to give to use an exchange
- Special Features: Does it have a feature that makes trading easier (margin trading, stop-loss orders, etc.)?
- What other unique features does it offer?
In closing, investing money in cryptocurrency can be an exciting experience.
However, if you want to fully understand how it works and what that means for your finances, you need to think about a few things:
- What do I want from my investments?
- Are cryptocurrencies something I actually want to invest in, or is it just about making money?
- Do I feel comfortable putting some of my funds into a highly volatile market, or does that sound risky?
Thinking through these questions before getting started will help ensure that your investment doesn’t turn into an overly risky move.