As per financial experts, cryptocurrency is the future of money, and many investors have become rich pretty quickly by investing in them. It has become an attractive option for investors; however, like in all forms of investment, crypto has its fair share of ups and lows. Hence it is always better to know what you are getting into and protect yourself from the extreme volatility of this market. Here are some important things to know before investing in cryptocurrency.
Is It Legal in India to Trade in Cryptocurrencies?
Buying and selling cryptocurrencies through platforms like Coinswitch is not illegal in India, although the government is still working to set proper regulations. Many investors have already invested in cryptocurrencies and reaping the profits as it is not illegal.
Clearly, Understand What Cryptocurrency Is?
No savvy investor would put their money on something they don’t know about or into a company before researching it. The same rule and logic apply to cryptocurrencies too. Cryptos may look unique, but in essence, it is a way to make payments. You can think of crypto as a casino chip in the real world. Like how you exchange cash with casino chips, you do the same, but the casino chips are tokens. Every company has its token and launches it through ICOs (Initial Coin Offerings), which seem attractive as the price tends to be at the lowest.
Those who are new to the world of digital currencies should get a feel of how it works before putting in their money. Spend time learning about different currencies, coins, tokens and explore how blockchain technology works. Once you understand the concepts, identify the cryptocurrency to invest in and what innovations they provide compared to the rest. By understanding blockchain and cryptocurrencies better, you become more equipped to make better choices.
Timing your Investment is Important
The digital currency world is dynamic and volatile. Many hot new currencies hit the market and make investors take chances. But you are more likely to succeed if you are cautious and monitor the market before investing. There is a particular pattern in the industry, with Bitcoin leading the way. Watch out for any shockwaves like price manipulation, hacks, etc., as that is when prices become volatile. Remember that cryptocurrencies are highly speculative, and many become rich or paupers overnight. Do your homework and give yourself a good chance of making a profit.
Don’t Leave Common Sense Behind
Don’t fall for tricks like 100x gains, as it is not guaranteed. There have been many instances of early adapters making merry as the prices rise sky-high and give mind-boggling profits. On the other hand, many investors have lost their money, hoping for good returns. When you see potential in a coin, invest, and when there are good returns, take out your initial investment and set it aside. Since not every coin will be a winner, you can reinvest during losses. Use crypto fear and greed index to guide you while trading.
Say NO to FOMO
Most new cryptos launch with great hype as there will be celebrity endorsement and aggressive PR. This makes many investors go and put their money blindly and become victims of FOMO. Many of these campaigns are paid and not Organic, so don’t go by the hype but use your research and common sense to make decisions.
Guard your Private Keys
Lastly, keep your cryptocurrency private keys safe. Use a hardware wallet so that your assets are secure and away from online connections.
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