Introduction to investments
It’s not new information you need money to make money. Heck! It’s even a quote by bestselling author, Sol Luckman. If you look around you, you’ll notice every profit-making venture started with some money. Some of these ventures constantly have money put into them to make sure they keep making a profit. In simple terms, this act of giving money to make money is what investment is.
Investment involves putting in all kinds of resources to make income or profit, including time and attention rather than just money. It’s giving in the hopes that it’ll come back to you with a extra on top. Innovation has made it possible for this process to happen with decentralized money, which is cryptocurrency. It’s literally making money by trading money. How’s this possible? You definitely want to keep reading to find out.
What are cryptocurrencies?
Cryptocurrencies are, as the name implies, digital currency. They’re technically money but decentralized and on the internet. Cryptocurrency is quite like fiat money in your bank account. You can’t physically see or touch it, but you’re aware of a certain amount in your name. Owning Cryptocurrency is just like owning any other asset with its value rising as the demand for it increases. And falling when demand reduces. Different types of cryptocurrencies are called altcoins and they have different values.
When you visit a different country or want to carry out business in another country, you have to convert the currency of your country to that of the other country. For example, an American man visits France. The American man can’t spend the US Dollars he owns in France because France’s currency is Euro. The man will definitely need to pay for certain things once in a while, especially if he’s staying in France for a while. How does the man spend money in France then? Currencies have values in each other. Euros are worth a certain amount of USD, so the American man can exchange the USD he owns for Euros of equal value in Dollars.
The way this process exists with fiat currencies is the same way it exists with Cryptocurrency. Not only can you exchange one altcoin for another, but the process of owning any cryptocurrencies at all also involves exchanging fiat money for the cryptocurrencies. The amount of cryptocurrencies you get depends on the value of the Cryptocurrency in fiat currency.
How Cryptocurrency works
Just like fiat money can be handed over from person to person, cryptocurrency can too. The main difference is cryptocurrency is decentralized, meaning it never has to include regulating bodies like government and banks. Rather, it’s regulated by the state of the market. That is, the availability and value of cryptocurrencies depend on how many people want it and how much they’re willing to pay for them.
If they’re no banks and other regulatory bodies, how do you determine just how much cryptocurrencies you have in your name? Well, that’s the best part of technology. If it creates one thing, there’ll eventually be other things supposed to help you make the most of the first thing. In this case, digital crypto wallets have been created to help people store cryptocurrency, and these wallets are usually apps, websites, or vendors of cryptocurrency. With these crypto wallets come private keys which are unique codes that serve as proof of your willingness to make a transaction. They’re kind of like the pins to your ATM card or your signature on a receipt.
All cryptocurrency transactions happen on the blockchain. The blockchain is basically the technological record of all transactions done with cryptocurrency. Think of it as a receipt, but one that everybody all over the world shares as long as they use cryptocurrency.
The first decentralized cryptocurrency is Bitcoin, so there’s no surprise that it’s practically the most popular altcoin. It was created in 2009 by Satoshi Nakamoto. There are presumptions that this name is only a pseudonym, but Satoshi is the name everyone credits for the creation of Bitcoin. Although created in 2009, nobody knew much about Bitcoin till 2013, but since 2013, the growth in cryptocurrency has been massive.
Back when Bitcoin started out, it wasn’t even close to a dollar, and it remained that way for a while. The first notable hike in its value wasn’t recorded until about a year after it was created, and even then it still wasn’t worth a dollar. However, Bitcoin is now worth more than $13,000 with its value constantly fluctuating. This proves that cryptocurrency investments might be risky, but if you wait it out, it definitely will be worth your while.
Because of the decentralized nature of Bitcoin, some countries have placed restrictions on trading and using cryptocurrency. There are 8 known countries with absolute bans on cryptocurrency and they’re:
- The United Arab Emirates
Even if there are no absolute bans or restrictions on them, the legal status of cryptocurrency still varies depending on the country. So you should be careful of that if you want to jump on the trend of cryptocurrency investments.
What are cryptocurrency investments?
Because cryptocurrency isn’t very popular yet, there are only a few places you can spend cryptocurrency at. As a result, owning cryptocurrency is still mostly seen as an investment because of the currency’s tendency to rise as more people join in to use it. That is, most people exchange fiat money at first for cryptocurrency only to keep it in crypto wallets with the hopes the value of the cryptocurrency will rise over time. And then they make a profit over this increase in value.
For cryptocurrency investment, some people make the initial purchase of cryptocurrency, but rather than keep it stored as the value rises, these people engage in crypto trading. Essentially, they buy the cryptocurrency when the prices are low and sell when prices rise to make a profit off the difference between the selling price and buying price. This type of cryptocurrency investment is the most popular one right now. And there are a lot of innovations to help anyone join in even if they aren’t crypto experts.
How to invest in cryptocurrency
Buying, storing, and waiting used to be the only way to invest in cryptocurrency, and for a while, it used to be very profitable. It still is, but with more people coming into the crypto market, trading the cryptocurrency instead is more profitable. If you invest in Bitcoin for example, you can sell when Bitcoin is worth so much more. And the extra is your profit.
If you’re not one of those who stashed up on Bitcoin when it was basically worth nothing, you don’t have to worry. If you have the funds, you can start now because experts can see that cryptocurrency’s value is constantly rising and you can make the most of that. Even if you don’t have the funds, you can start by buying any of the new and least popular altcoins and waiting for them to also rise in value. You could even exchange the least popular altcoins for the popular one with a steady rise to their value.
The best part about the latest technological advancements in the crypto market is you don’t have to know much to join in cryptocurrency investments. There are tons of Bitcoin trading sites and other cryptocurrencies to help you make the most of trading cryptocurrency and they’ll be discussed in the subsequent paragraphs.
Cryptocurrency trading bots are software programs designed to make a profit out of buying and selling cryptocurrency. They have algorithms designed based on the current nature of the crypto market. They gather data from the market activities and use this to determine what the best profit-making actions are. The bots are designed such that they don’t need much human monitoring, so you can make profit while you sleep.
trading bots are useful to inexperienced crypto traders because they need little human intervention. As long as you don’t change any of the defaults. The bots should work fine on their own. However, they can be more useful to experienced traders because these people know what parameters to change and at what time to make the most profit. Some of the most popular cryptocurrency trading bots are CryptoTrader, BTC Robot and Zenbot.
Bitcoin trading sites
Bitcoin trading sites are websites that bring buyers and sellers of cryptocurrency together. It’s quite similar to the markets for physical goods and services, but since they’re online, you can think of them as online shopping sites like Amazon or eBay. Some of the most popular bitcoin and crypto trading sites are Coinbase, Binance, eToro, and more.
Crypto trading apps
These are practically the same as crypto trading sites but in the mobile version. They’re the crypto trading platforms you can carry around on your mobile device. The popular crypto trading apps are simply the mobile version of crypto trading sites. That is, Coinbase, Binance, etc.
Best cryptocurrencies to invest in
According to reports at the beginning of this year, there are about 2000 cryptocurrencies and the numbers are increasing. This happens because of how much people are subscribing to the use of cryptocurrencies and platforms wanting to meet this demand. A lot of altcoins are created by brands who want a method of payment to themselves. Therefore, not every cryptocurrency is great for you to invest in. Because their value isn’t determined by the general crypto market, rather those who patronize the brands who created them give them value and brands can lose customers.
The best cryptocurrencies to invest in are the most popular ones and the ones gaining popularity fast. They include:
- Bitcoin (BTC)
- Litecoin (LTC)
- Ethereum (LTH)
- Tron (TRX)
- Ripple (XRP)
- EOS (EOS)
- Bitcoin Cash (BCH)
Tips for investing in cryptocurrency
Before you try your hand out at cryptocurrency investments, here are a few things to keep in mind:
Understanding is just as good as experience
Yes, there are platforms now to help inexperienced users enjoy cryptocurrency investments. But that doesn’t mean you should skip understanding.
Set a time frame
Cryptocurrency investments could be long term or short term depending on the investor, so know how much time you want to put in. Long term investments take nothing less than 6 months, but in that time, you don’t need to judiciously monitor prices. Short term investments could take 30minutes if you’re lucky enough to see a price hike in that amount of time. The thing with short term investments is you need to watch closely for the times prices drop to buy and the times prices drop to sell. This distinction between long term and short term investments requires that you set a time frame and work with it.
With economical issues like unemployment constantly lurking around, people can now have passive sources of income earning them enough to take care of their needs. Whether you’re hopping aboard the cruise to secure your future or just like the idea of the extra money, start on cryptocurrency investments now!