Cryptocurrencies are the rage of the moment in the online world. While the skeptics were trying to make up their minds on investing in cryptocurrencies, the early adopters have seen some of the most unprecedented market movements in cryptoland. The year 2017 saw Bitcoin and Ethereum, the two leading cryptocurrencies in the world, exploding in market cap, and as we enter 2018, the cryptocurrency market promises to deliver a phenomenal performance. If you haven’t made up your mind yet, now is the time to jump on the crypto train.
Investing In Cryptocurrencies
Cryptocurrencies can be extremely rewarding, but they can also cause you a lot of distress if you have a low tolerance for volatility. This is because the cryptocurrency market experiences extreme shocks that could fritter away all your gains tonight and also double in value by the next morning. So, cryptocurrency is rewarding, but you must have a thick skin to reap the rewards.
But Why Cryptocurrencies?
Cryptocurrencies were developed to free the individual of the vagaries of centralized institutions. In the conventional world, a percentage of every dollar you make is taken from you in the form of tax, levies, and different kinds of charges. Nothing you do escapes the eyes or hands of the government and centralized financial institutions. The financial crises of 2008 and 2009 were precipitated by the recklessness of centralized organizations controlling vast amounts of resources, and this led to the failure of companies such as the Lehman Brothers, while taxpayers money had to be used to bail out other ailing institutions to protect them from also going under.
With cryptocurrencies, individuals can conduct a diverse range of transactions under a secure platform that is free of governmental control.
Cryptocurrencies aim to remove the middleman from every transaction involving money. It aims to foster a decentralized ecosystem where governments and large corporations won’t be able to control our finances. Whether, cryptocurrencies can win this war over centralization is still a question without a definitive answer. For now, most traditional institutions are not comfortable with the rise of digital money because it doesn’t yield interest and difficult to tax, two fundamental elements that are the lifeblood of governments and financial institutions. But we are still in the early days of the cryptocurrency revolution.
Should You Invest In Cryptocurrencies?
This question depends solely on you because you are in the driver’s seat of your life and can do as you please. Do your homework before deciding if putting your money in cryptocurrencies is a wise move.
You should note that there are over 1000 different cryptocurrencies as we speak, and more are being released every day. Many are viable, but some are carefully crafted scams aimed at fleecing you of your hard-earned money. What is certain is that cryptocurrencies have a promising future despite the many doomsday forecasts that have followed it.
How Much Should You Invest In Cryptocurrencies?
According to Mike Novogratz, a former manager at Fortress Hedge Fund, a rule of thumb to follow if you want to have a feel of cryptocurrencies is to invest about 1-3 percent of your net worth. That way, you are not going all in, and your financial status won’t take a hard beating in case things go south.
Also, it helps to invest only what you can easily afford to lose in cryptocurrencies. This will protect you from scams and unexpected events such as the recent crypto exchange ban in China.
While the likes of Bitcoin and Ethereum have gained solid ground since their release, there are hundreds of scams camouflaged as the next big thing in the cryptocurrency space. Thousands of investors have lost fortunes in these scams, and more will continue to lose money to them. So, it’s better and safer to invest a small amount that won’t hurt your purse if you lost it, and make sure to do your research before putting your money in any cryptocurrency project. Coins that have been around for some time and whose track records promise a better investment choices than new releases without any history.
Cryptocurrencies That Show Promise
While every cryptocurrency out there has its pros and cons, the following ten cryptocurrencies show a lot of hope.
- Bitcoin Cash
You can also check the top 100 cryptocurrency coins, but these ten are the some of the best performing coins in the digital currency landscape.
How To Buy Cryptocurrencies
Before you can start investing in cryptocurrencies, you need to buy them. To buy cryptocurrencies, you need to sign up for an exchange. The best exchange you can sign up for is Coinbase. Cryptocurrencies are not regulated, so you need all the insurance you can get to safeguard your investments, and no other exchange offers the level of insurance provided by Coinbase. From your exchange or coin wallet, you can buy cryptocurrencies with your fiat money and then use the digital currencies in your wallet to buy other types of cryptocurrencies. After getting your hands on the cryptocurrency of choice, you can invest by holding or day trading. The two strategies operate under the principle of buy low, sell high.
If you are a newcomer to investing in cryptocurrencies, holding (or hodling as it is commonly known) is the ideal investing strategy for you. Holding simply means accumulating as much of a particular coin as possible in hopes of creating a stash over an extended period of price appreciation. The ideal way of trading with this strategy is to buy as many coins as possible when prices plummet. In fact, it’s best to buy when the prices are lowest.
Day trading involves routinely buying coins hoping to grow your investments as the market moves. This strategy is fraught with risks and not recommended for newcomers because even seasoned investors lose thousands of dollars every day on the cryptocurrency markets using this strategy. Before trying out your hands in the day trading strategy, you should take your time to learn more about the behavior of the market. But, always remember to buy low and sell high.
How To Secure Your Investments?
With the rate at which Bitcoin and other top cryptocurrencies are adding value, it becomes imperative to safeguard your investments for the longer term. To the dismay of many investors, exchanges and software wallets don’t offer full protection from the sticky e-fingers of hackers and scammers. Hardware wallets, on the other hand, offer almost hacker-proof safety of users’ funds.
Hardware wallets store your coins offline, making it extremely hard for hackers to gain access to your funds. Additionally, these devices can be used securely with infected computers without any problem.
Remember The Taxman
While cryptocurrencies are formed on the principle of decentralization, the proceeds from cryptocurrency investments are taxable because the IRS classifies digital currencies as property, so you are expected to pay property tax on your earnings. This is why it’s important for you to track your dealings in the crypto landscape to avoid any unpleasant experience with the taxman.
Information determines much of what goes on in the crypto ecosystem. By keeping abreast of information about things that can impact the markets, you can avoid sudden crashes resulting from Black Swan events such as China’s ban on cryptocurrencies. Also, be sure to fact check your stories before acting on them to avoid false alarms raised for malicious intents.
Remember It’s A Gamble
Moderation should be your guiding principle when investing in cryptocurrencies. Regardless of how your wallet is doing, learn to tolerate the volatility of the cryptocurrency markets, for the sake of your sanity. A balanced outlook and calm disposition is necessary to make big wins in the highly unpredictable world of cryptocurrencies.
As cryptocurrencies are currently like the “wild-west” again I would say only invest what you can comfortably afford to lose!
I hope you enjoyed this post and if you have any questions about how to start investing in cryptocurrencies or you just want to leave your own personal experience with Cryptocurrency, leave a comment below. I would love to hear from you.
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