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ANSWERS TO SOME BIG/TOP QUESTIONS RELATED TO CRYPTO
Cryptocurrency is gaining the attention of investors worldwide. The beginning of 2021 saw a huge spike in crypto prices as Bitcoin hit its record high of $62,575 in April and Ethereum price soared above $4,000 with the rest following the trend. Presently, Bitcoin is the highest-valued crypto in the market but that’s not the only investment option available. Here are certain links providing the framework and working of cryptocurrency,
REASON FOR SPIKE IN INVESTORS: Many researchers are of the opinion that cryptocurrencies have the potential to transform the world. Its obvious impact will be on the financial aspects of lives and the economy. Currently, cryptocurrency is not globally accepted as a payment method but many countries are coming up with their model for incorporating cryptocurrencies in their economy. So, by investing in cryptocurrency one can be assured of having a high-valued asset in the future.
Another reason for investors to switching to cryptocurrency would be to diversify their portfolio. In a volatile stock market, investing a little in cryptocurrency would somehow diversify the risk. Also, they will gain a better perspective about the crypto industry with more research and real-time insights. But it is believed that, unlike the stock market, the crypto market is a bit more unpredictable.
DANGERS ASSOCIATED WITH CRYPTO INVESTMENT: cryptocurrencies are more volatile than any other market. The best example is Bitcoin, the golden crypto. Bitcoin lost approximately 80% of its value and even though the value is better today, it still sees heavy fluctuations for the future. Investors need to be good enough to diversify the risk, as the crypto market is associated with unexpected losses/risks. In the long-term aspect, going through the short-term ups and downs can be a tedious task.
As many countries are still not convinced regarding the applications of cryptocurrency, no one can predict the performance of the crypto market. And as it is a new concept, it is really difficult to predict its shortcomings.
RISKS ASSOCIATED: Apart from the investment risk, there are other risks like, Cryptocurrencies are not traded on stock markets but are bought and sold through cryptocurrency exchanges. Also, the investor is required to have a crypto wallet to safeguard the asset without which one cannot make any transactions. While the blockchain technology behind cryptocurrency is supposed to be solid and secure, cryptocurrency wallets are not secured from hackers’ points of view. Most importantly, if the password to the wallet is lost, there’s no way one can retrieve the wallet.
FINAL ARGUMENTS: Looking after the pros and cons, it is advised that an organized person with good memorizing skills and risk-taking nature, can afford to bet some money on these futuristic assets,
SAFETY GUIDE FOR INVESTMENT IN CRYPTO
In 2009, Bitcoin, being the first cryptocurrency, had no investor belief. While the blockchain technology behind Bitcoin was impressing the tech community, it wasn’t drawing any interest from the common public as an investment option. After a decade, a lot of cryptocurrencies entered the crypto market, and Bitcoin is the first in line to emerge as the most valuable currency with the highest value.
Currently, investors from all across the world are looking for investing in cryptocurrency, and those who bet on it in 2017 before the price explosion, are reaping the benefits for their risk.
HELPFUL TIPS TO FOLLOW IN CRYPTOCURRENCY
1. STARTING WITH A SMALL AMOUNT
Just like the stock market, the crypto market is extremely volatile i.e., the prices will rise and fall unpredictably. Therefore, it is wise enough to invest in cryptocurrency after making a corpus of funds to survive the debt liability of at least 6 months. Once the investor is familiar with the ups and downs, they can set aside a small part of their money to invest in cryptocurrency. Analyst suggests a limit of 5-10% of income, for investment purposes.
2. CHOOSE THE CURRENCY WISELY
It is a very important aspect to consider for long-term prospects. It is advised not to diversify the Virtual Currency portfolio. A lot of research is required to select the right crypto coin. Investors are advised to list 5 currencies based on their research and constantly keep a watch only on those 5 currencies for a month and then make a choice and invest in the best performer.
The same is advised because, during the last year, a lot of cryptocurrencies that entered the market either flatlined or disappeared without a trace. This means the whole investment can become zero within a single night,
3. SELECT THE RIGHT EXCHANGE FOR TRADING
Exchange is a place where one can buy, sell or hold their crypto assets. There are many exchanges available and the investor needs to select one from them. the best, be the one with information about transaction fees, pros, and cons. They should make a detailed bifurcation of the exchange on the basis of how the banks and other financial institutions are designed to loan money, store money, and provide mortgages, these crypto exchanges are specifically designed to manage cryptocurrencies and their volatile nature.
4. WISELY CHOOSE A DIGITAL WALLET PROVIDER
What is a cryptocurrency wallet? As discussed earlier, it is software that stores the virtual money and is encrypted using the private and public key, thereby adding a link between the investor and the blockchain where the crypto assets are. Many people are confused and mistakenly believe crypto wallets as a storage place for cryptocurrencies but technically they just provide a means to get access to the currency. The currency on the blockchain is encrypted with a crypto address known as the key. Without the key, one cannot complete a crypto transaction. The investor can send and receive cryptocurrencies during a transition with any company that accepts cryptocurrencies for payment.
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