Cryptocurrency (or simply crypto for short) has been a hot topic of conversation over the past few years. Many people have dived in uneducated and been burned by the volatility associated with digital currencies, while others have made huge successes of their virtual investments.
The difference between the two routes comes down mainly to knowledge and understanding of how these things work and the risks in front of you.
Having a bit of background knowledge and at least understanding the basics of how crypto works is important for any beginner. This will allow you to do a risk assessment and decide whether or not this is the type of investment for you.
While much more extensive research is required, here’s a basic guide answering some simple questions about crypto.
8 Prime Factors About Crypto You Need To Know Definitely-
1. What is Cryptocurrency?
First of all, let’s first dive into what exactly cryptocurrency is. Often referred to as simply “crypto”, a cryptocurrency (and there are many) is a digital or virtual currency instead of physical cash or your money in your bank account, that doesn’t rely on banks to verify transactions.
Owning cryptocurrency doesn’t mean that you own anything tangible (since it’s all based online) and therefore isn’t an asset in the traditional sense of the word. Despite this, many people use crypto as a form of long-term (or short-term) investment, because many of these currencies have proven to grow at exponential rates.
2. Is it Easy to Purchase?
Purchasing crypto is an incredibly simple process, which is often what draws people in. You can simply read online about how to buy Shiba Inu coins in Canada – the simple steps make it easy to understand how many people jump on the bandwagon and why.
You’ll first need to choose a platform – either an online broker who will assist you in buying and selling cryptocurrency, usually at somewhat lower trading costs.
If you don’t want to use a broker, you can get started yourself by using a cryptocurrency exchange. There are many to choose from, each offering different currencies, features, and options. Take a look at fees, security, and withdrawal options before committing.
Once you’re linked up to a broker or an exchange platform, you’ll be able to fund your account with your real-life cash and begin your trading journey. The steps are simple and you’ll find easy-to-follow instructions within any platform you choose.
3. Is it a Good Investment?
Sure, it’s simple enough, but is that a good enough reason to take your investment money to the crypto world? Let’s take a deeper look.
First of all, you need to be aware of the volatility of cryptocurrency in general. Most analysts warn investors against the unpredictability of trading in digital currencies, but many are willing to take the risk for the potentially high rewards.
It’s also important to note that all cryptocurrencies are a bit different. They work in different ways, have different values and different levels of volatility. Certain types of coins, like stablecoins, attach themselves to external forces (such as the value of the US dollar) to counter this volatility.
If you’re willing to take risks, crypto could be a great investment opportunity – but it’s usually a long-term game.
4. How Do I Learn More?
We’ve made it clear that doing your research is critical. But how exactly do you go about that? Reading online articles like this one is a good starting point. You’ll be able to get a good bit of background knowledge and a basic understanding of what crypto is and how it works.
What becomes important next, is talking to real-life people who have experience in the crypto game. Talk to trusted friends and family who have invested, join online communities of enthusiasts, or better yet, pay to speak to professionals – experts in the field who will be able to inform you and guide you in the right direction for you and your financial goals in accordance with your preferences.
5. What Role Does Timing Play?
Timing is a huge factor when it comes to investing with cryptocurrencies – but there are also various ways of thinking about timing.
Some like the risk of investing big into a new currency before it explodes, while others prefer to follow trends and purchase slowly but steadily growing coins as a lower-risk alternative.
All in all though, crypto is highly speculative and volatile. They can dip to worthlessness and then soar beyond expectations within weeks, so while doing your research is crucial, keep in mind that following trends and stats isn’t going to be fool-proof.
6. How Do I Get Involved?
In terms of a step-by-step basis, the most important first point to check off is to understand exactly what you’re doing. Before you invest, make sure you’ve read and understand everything there is to know and get in touch with a broker or other expert to guide you.
Your next step is to monitor your chosen currency (or currencies) for a while before you decide to really commit. Finally, once you’ve done your waiting and you’re burning to jump in, you can take the steps to choose your platform and start trading.
Keeping a close eye on what’s happening with your money is another important ongoing step to include in your journey.
7. What Are Some Pros?
First of all, the high risk of crypto also generally leads to a high reward. If you have money that you’re willing to lose, a high-risk investment could potentially yield major financial rewards after some time.
Another advantage of crypto is the security of the blockchain technology used. Blockchains will differ from currency to currency, but the infrastructure generally implies that your data is inherently safe.
8. What Are Some Cons?
Naturally, high-risk remains just that – high-risk. This means that you have to be okay with potentially using whatever you put in, which is something some investors simply cannot get behind.
Working with crypto is also a long game, it takes time and effort and the volatility can make this a highly stressful environment.