Crypto is going mainstream – artists sell NFTs, small businesses accept payments in crypto, and in some countries, it’s even possible to pay bills with cryptocurrency. Individual investors are interested in buying cryptocurrency to profit from it, though it may be confusing for newcomers.
So, in this article, we will go through 5 questions any investor should find an answer to before throwing money at any crypto project. More importantly, we will explore how the answers need to look like.
1. What Cryptocurrency to Invest in?
Be careful and thoughtful when deciding on what cryptocurrency you want to buy. There are many options available these days, including the popular Bitcoin and Ethereum, as well as many other unpredictable altcoins. Before buying any coin, consider studying them extensively.
Amongst all the projects on the market, we chose 6 altcoins that, in our opinion, are considerably promising:
Solana (SOL)
Solana is often compared to Ethereum. Despite the similarities, Solana is easier to code and way cheaper. Besides, Solana has relatively lower fees than Ethereum, even after September 15, 2022, when Ethereum switched from PoW to PoS. So, Solana seems a relatively strong competitor.
Solana works on a unique hybrid of PoS and PoH (Proof of History) mechanisms. It makes transactions as quick and secure as possible.
The project was launched in 2020, and back then, SOL’s price started at $0.77. At the time of writing, its price was around $11.73.
Monero (XMR)
Monero is positioned as a blockchain designed to maximize user privacy. It provides enhanced anonymity by hiding user data and other transaction details.
The network provides transaction privacy on many levels by using specialized features. One of the most valuable features is using stealth addresses, which are deleted after each transaction.
XMR may be one of the most reliable coins and is an option worth considering if you prefer time-tested coins. With an open price of almost $1.6, XMR’s value at the time of writing was $129.59.
NEAR Protocol (NEAR)
NEAR Protocol was designed as a community-run cloud computing platform that provides a suitable environment to host the creation of other decentralized applications (dApps) like non-fungible tokens (NFTs). The network launched its mainnet on April 22, 2020. NEAR has been used for processing transactions, storing data, running validator nodes, and providing governance for the network.
NEAR is a promising network with the capacity to host other applications. In the future, influential projects may be built on the network. With an open price of $1.7, NEAR’s price now stands around $1.64 (at the time of writing).
TRON (TRX)
TRON is a blockchain-based project designed to build a platform for digital entertainment. It is supposed to enable a fast and secure decentralized data distribution platform free from censorship. The project seeks to provide its participants with a fair and reasonable distribution of the income generated by the platform’s content.
Network users can block their tokens for a while to gain the “power of TRON.” Although users cannot use tokens if they are blocked, this ensures that they will not be used by anyone else.
TRON proved to provide remarkably high scalability, thus being a great option for those aiming to invest in crypto. At the time of writing, TRX’s price was $0.05055.
Litecoin (LTC)
Litecoin is often a leading indicator of the rest of the cryptocurrency world. Traders will watch the price of LTC, even if they choose not to invest in it. When Litecoin starts to take off, risk appetite spreads, and many smaller markets are about to have explosive gains.
The computer code behind Litecoin is almost identical to the code for Bitcoin. Litecoin has a fixed supply and a halving system like Bitcoin does. This means that the reward for mining blocks will be smaller as time goes by. Litecoin works based on the PoW consensus mechanism, just like Bitcoin.
LTC max supply is 4 times bigger than Bitcoin’s, with over 3 quarters already in circulation. Litecoin also lowered the block generation time to just 2 ½ minutes versus 10 minutes on the Bitcoin network, making it a faster solution for sending and receiving.
Litecoin may have a substantial risk-to-reward ratio compared to other financial assets, that’s why it may be a relatively safe choice for newcomers. At the time of writing, LTC’s price was $69.65.
XRP (XRP)
XRP is the native cryptocurrency of Ripple, a blockchain-based payment network and protocol. While Ripple focused on its payment settlement asset exchange and remittance system, XRP has reached a surprising market capitalization, which stands around $19 billion.
The main purpose of XRP is to be an intermediate mechanism of exchange between currencies or networks, and has seen a great increase since its launch, in 2012. With an open price of $0.0059, XRP’s highest value reached $3.093 in 2018 and is now approximately $0.4.
2. Are You Able to Purchase Cryptocurrency?
Investing in crypto may not be suitable for everyone as you should invest a considerable budget to get a hefty profit. Investing in Bitcoin is not recommended before achieving other short and long-term financial goals. Crypto enthusiasts should pay off any consumer debt and ensure they’re investing enough to take advantage of their companies’ matching contributions to retirement plans without putting any strains on their finances.
3. Can You Afford to Lose All the Money?
Cryptocurrencies are still much like a gamble. That’s why there’s always a chance of you losing all of your money. Be thoughtful and invest only the amount you can afford to lose without affecting your overall estate.
4. What Sales Strategy Will You Adopt for Your Cryptocurrencies?
One of the first things you should do is decide what type of investor you want to be. This will help you find the strategy that works best for you. Look for underappreciated gems of crypto or invest in reliable, popular coins – this is entirely up to you.
There are three main strategies: buy & hold, swing, and day trading.
The buy & hold strategy suits those who:
- Are new to crypto but want to get involved fast;
- Don’t want to stress much about the crypto investment process;
- Want to check how their crypto portfolio is doing as rarely as possible;
- Believe in the long-term potential of crypto & prefer a passive approach;
- Do not want to keep up with crypto news all the time;
- Are okay with volatility;
- Are interested in projects with solid fundamentals that will still be around in 5-10 years.
Swing trading suits those who:
- Notice a bull market or a particularly volatile period and want to make the most of it;
- Have some understanding of the market already;
- Are interested in investing in solid long-term projects but are also willing to buy/sell for short-term profit.
Day trading is for those who:
- Have a deep understanding of the crypto market;
- Have a high-risk tolerance;
- Are willing to put themselves in high-stress situations;
- Care more about profit than general concepts.
5. Where to Buy Cryptocurrency?
So, how to start buying cryptocurrency? It’s not possible to just regularly buy crypto at a bank. Firstly, research buying and selling crypto and learn cryptocurrency buying tips. The responsibility is on you, as crypto exchanges are mostly unregulated, and there’s always some kind of risk. So, take your time to compare and examine different services.
Talking about services that help people to buy cryptocurrency, there are several options:
Financial Apps
Many financial apps do not allow you to trade cryptocurrency though you can still buy coins. Apps do charge you a commission, so keep that in mind.
Crypto Exchanges
Crypto exchanges offer the lowest costs possible for trading cryptocurrency. If the cost is a key factor, that is a great option for you. What makes them better is that they don’t charge mark-ups (hidden fees built into trading prices) either. Ordinary fees differ on various exchanges.
The following platforms are considered to be the best sites for buying cryptocurrency:
- eToro;
- Pionex;
- Bitstamp;
- Crypto.com;
- Binance.
Trading Apps
Usually, trading apps charge no fees but spread mark-ups are charged. Here you can also buy stocks, options, and ETFs.
Traditional Brokers
It is quite unusual for traditional brokers to sell crypto, but some services allow users to do it. With traditional brokers, you can buy crypto futures or purchase crypto directly.
ATMs
You can buy crypto directly through ATMs. However, the commission for this may be the highest amongst other ways to buy crypto. Sometimes ATMs also allow you to sell crypto using cash or a credit card.
In Conclusion
Perhaps, the five questions to answer before buying any cryptocurrency are something that any investor should keep in mind before acting. But more important than simply knowing the questions is identifying the correct answers.
Also, remember to choose a cryptocurrency wallet to keep your money there. Choosing a good crypto payment processor is a great decision as well. The main principle is always to compare and analyze all the services you want to use before using them.
