What You Must Know Before Investing in Crypto
Cryptocurrencies have been a buzz for almost ten years, and are still a great investment tool. However, many crypto enthusiasts make typical mistakes – digital currencies require a special approach. Even despite their high volatility, blockchain-based coins are being traded by millions of people. Want to jump in the bandwagon? Here’s what you should know about crypto investments.
Please, make sure to perform your own research before you decide to play with your money. Explore the market properly.
Do you really need it?
Perhaps, this is the primary question to ask yourself before you plunge into the crypto market. There are many investment instruments available – many of them are more stable and predictable, they put traders in less risk.
Are you truly interested in the crypto sphere? Or you have some particular reason to trade crypto. Base your investment interests on the goals.
Explore the market
Cryptocurrencies work by laws other than in traditional financial markets. Research the crypto market, develop a sense of it – you should understand the correlation between events and crypto price changes. Besides, there are many currencies with more perspectives than BTC, ETH, and LTC – for example, you can buy Enjin coin or experiment with such interesting projects as QTUM coin.
If you don’t have coding knowledge or any computer science, it will be more difficult for you to comprehend how blockchains and cryptocurrencies work. Yet, you can get a lot of valuable data in the Net to develop a general understanding of the sphere. Once you pick the best cryptocurrencies for investment, you should check whether they can be easily bought and sold, and what makes them different from others. Being fully armed with knowledge, you become a better investor.
Research White Papers
The cryptocurrency market is all about tendencies and trends – leaders change pretty often. There’s a lot of movement, the community is vibrant and devoted. Join this party to be among the first to discover new trends. Reddit is the main source of fresh info, the place where all cryptocurrency enthusiasts gather and discuss hot issues. Active discussions are going here and there.
However, the white paper should be your primary source of information when you want to learn about a particular cryptocurrency project. This is a sort of promise, the philosophy, and the roadmap presented together. Please, note that each crypto project should have a white paper published on its website.
Read this document carefully and check which goals and timeframes were set. You should understand the idea of the project and how developers plan to develop it and spend their capital. If a white paper does not have specific data, goals, and details about the project – it might be a scam or simply doomed to failure. If some things seemed to be misleading for you, feel free to contact the team.
Now when you have all the research done, you need to think over the time frames of your investment. The Crypto market is changing very quickly; coin prices are volatile. There are two evident strategies:
- Invest in a new cryptocurrency that has not become popular and expensive enough but can move pretty quickly.
- Monitor industry prices and buy a well-established cryptocurrency. All cryptos tend to follow the same patterns with some becoming more or less predictable. Bitcoin is the main indicator – a lot of digital currencies repeat its moves.
Keep in mind that crypto trading is always about speculation – it’s risky. Do your research and never invest what you cannot afford to lose.
Featured image: Coinkolik.com