With more and more people using cryptocurrencies and the number of vendors accepting them growing bigger every day, there is no doubt that investing in cryptocurrencies is definitely something worth considering right now.
If you would like to invest in cryptocurrencies, here are some things you need to know to increase your chances of success:
Remember bitcoin isn’t your only option
A lot of people who aren’t completely clued up on cryptocurrencies have heard of Bitcoin, but they haven’t heard of the likes of Ethereum or Litecoin, for example. If that’s true of you, then you need to start researching all of the various cryptocurrencies out there, and their pluses and minuses before you go any further.
Cryptocurrency and commodities investments are similar
Investing in the blockchain and investing in commodities might seem totally different, but actually, they are pretty similar when you get right down to the bare bones of the matter. Both are assets that can be used by real people in the real world. Whereas commodities like gold and silver are used in business and industry for manufacturing products, cryptocurrencies like Bitcoin are used in business for financial applications. Both can also be used for investment.
So, if you know a bit about trading in commodities, it shouldn’t be that difficult for you to get your head around cryptocurrency investments, making the right choices to maximize your success.
Keeping abreast of the market is essential
As with pretty much every type of investment, it’s important that you keep abreast of all the latest cryptocurrency news. However, this doesn’t mean simply taking a look at the market prices each day – when you’re dealing with cryptocurrencies, you also need to be aware of things like how many people are using it, the emergence of new currencies, changes to the blockchain and a million other things. That’s why it’s sensible to use an rss reader, which can aggregate the important news for you. That way, you can see what you need to see without spending a massive amount of time doing it.
Avoid bad sources
On the subject of keeping abreast of the news relating to cryptocurrencies and the blockchain, it is very important that you find the right sources in the first place. There are a lot of people out there blogging about the subject, but there are only a few like Banklesstimes.com and Cryptocoinsnews.com that really know what they’re talking about. Don’t let the fake experts fool you into making a big mistake!
Cryptocurrencies are a minority interest
If you’re considering investing in cryptocurrencies, then you do need to know that they are a minority pursuit. In the real world, usage is still pretty negligible – only 2 percent of Americans use it. This might seem like a bad thing on first glance, but if you think about it, that only means that there is plenty of room for growth.
The adoption of any new technology takes time, and as we have already seen, more and more people are becoming aware of cryptocurrencies. That means, if you get in on it now, there is a very good chance that you could cash in when usage improves – this applies much more to other cryptocurrencies than it does Bitcoin, which is the most well-known and widely used at the moment.
Usage is the most important factor for investors
Before you invest in cryptocurrencies, it is absolutely vital that you analyze its usage in the real world. Cryptocurrencies are all about supply and demand, so you need to know exactly how much is out there and how much demand there is for a particular currency before you even think about investing. It is much the same as the regular stock market in that way.
Position in the market cycle is also important
It is also very important to pay attention to where a currency is in the market cycle. Every market has its highs and lows, and if you want to be successful investing in them, you need to chart these cycles. So that you can strike when the iron is hot, buy low and sell high. Generally speaking, investing in newer, but well respected cryptocurrencies, like Ether and Litecoin, should give you the best long-term results because they will be less desirable, and therefore more affordable now, and should hopefully see more future growth, but as with any kind of investments, you never can tell what is going to happen in the future.
Keep your coins in a wallet
Although it is possible to store your Bitcoins in exchanges online, and most of the time you won’t have a problem doing so, it is much safer to store them in a wallet like the ones at https://blockchain.info/wallet/, and using offline wallets will, of course, be even safer. By doing this, you not only have much more security, but you have much more freedom to quickly move your cryptocurrencies around to maximize your returns, whenever you need to.
Altcoins are to be avoided
One of the cryptocurrencies that look worryingly like it’s going to fail in the future is the Altcoin. It has a bit of a dot-com bubble hype thing going on, and many cryptocurrency experts believe that 75-80 percent of this currency will be wiped out. If you are planning to invest in cryptocurrencies, you should probably give this one a wide berth, despite all of the hype surrounding it. It just doesn’t seem strong enough, in any way, to go the distance.
Cryptocurrencies must serve a purpose
Buying cryptocurrencies willy-nilly and hoping that they will go up in value just for existing is never going to work. As an investor, you need to find the cryptocurrencies that solve a purpose in the real world.
Right now, cryptocurrencies like Bitcoin are solving problems; they are allowing people to make anonymous transactions, which is particularly useful when making sensitive purchases; they are also enabling people who do not have access to traditional bank account functions, like paying for goods online and wiring money (you’d be shocked how many people in the world can’t do this) to do what they need to do. When currencies are no longer needed for whatever it is that they do, that is probably a good time to bail and invest in something that does still offer value. Actually, you need to get out BEFORE this starts to happen if you want to maximize your investments. That means watching the market and changes to payment technology very closely.
Don’t invest in only cryptocurrencies
It’s never a good idea to put all of your eggs in one basket, and that applies as much to cryptocurrencies as anything else. So, if you do want to invest in them, try to spread your cash between currencies, and on other investments like commodities or stocks and shares. A portfolio that includes cryptocurrencies is likely to be enriched, but one that only contains the likes of Litecoin and Ether is probably not going to be the best use of your capital that there is.
It’s never been easier to exchange cryptocurrency for money
There was a time when switching between cryptocurrency and cash was difficult, but with so many exchanges now available, it has never been easier to change between the two to maximize your returns. So, if you have been worrying about investing in crypto because of that, it’s probably safe to say that you don’t have to worry anymore and storing your money in the blockchain is just another option on the table like keeping it in the bank or hiding it under your mattress.
Remember that investments don’t always pay off
If you’re thinking that cryptocurrency is some wonderful new way of making lots of money guaranteed, then you need to think again, the cryptocurrency flash crash that occurred in September 2017, which saw the value of the ten most used currencies fall by 20 percent was a reminder that, like any other investment, cryptocurrencies cannot be, and are not guaranteed. That being said, you shouldn’t be put off by that particular blip either, as because it was market wide it isn’t really as big a deal as you might think, and prices are already recovering.
When you’re crypto’s value trebles in a day or so, it can be very tempting to cash out and enjoy your gains, but it is almost always a bad idea to do that. Buying your Litecoins or whatever crypto you choose, and then parking them, moving them between currencies occasionally as the markets change will almost certainly be your best chance of making big gains, even if it does take a while.
If you still want to invest in cryptocurrency after reading through everything in this article, I can’t stress how important it is that you do your research first. Take everything you’ve read into account, and there is every chance that you can make a real success of your new portfolio. Good luck.