Cryptocurrency is shaking up the world of traditional investment. This decentralized form of finance rests on the blockchain instead of on traditional financial gatekeepers such as stockbrokers and banks, creating an investment opportunity that is more volatile but also potentially more lucrative.
Many regular people and casual investors are looking into cryptocurrencies as a way to diversify their investment portfolios, but entering the world of crypto involves a learning curve, even for people who are experienced in other forms of investing. Here are a few things you should know before investing in cryptocurrency, including how to check the Bitcoin price in Canada.
1. Cryptocurrency Comes with Higher Risks but Also Higher Rewards
Since cryptocurrency is a new technology and investment opportunity, and also one that is completely decentralized from any regulatory bodies, it is more volatile than other forms of investment opportunities such as stocks and bonds. The market is prone to soar highs and then crashing.
That means cryptocurrency is inherently riskier than other forms of investment that grow at slower rates, but if you time your purchases right, you also have a better chance of cashing out with a lot of money. Make sure that you are patient and willing to take a few losses when you enter the cryptocurrency market.
2. Prices Change Rapidly
The high-reward nature of cryptocurrencies such as Bitcoin is possible because the prices change much faster than they do for traditional forms of investment. However, that also means as an investor, you need to stay on top of changing prices and trends with a bit more attention and care than you would if you’re sticking to traditional investments.
Resources such as cryptocurrency exchange platforms and finance news websites can give you daily and even hourly updates on the Bitcoin price in Canada, as well as information about other cryptocurrencies.
3. You Will Need to Create a Digital Wallet
Investing in cryptocurrency requires a few additional steps compared to investing in other financial assets such as stocks. The infrastructure is different, and you need to create a separate digital wallet, which you will use to convert Canadian dollars to cryptocurrency and enter into the exchange. You will also need an account on a cryptocurrency exchange.
Look into different wallets and exchanges to see which offers the best terms for you. Also, check the terms and conditions with your existing bank, as some charge fees for transferring money to digital wallets.
4. Do Your Research Before Investing
The deregulated nature of the cryptocurrency market means that there are a lot more opportunities for people to make it big but also more opportunities for people to make it big by scamming others out of their money. The onus is on the investors to check every potential cryptocurrency project before parting with their money.
Do your research on projects before investing in them. Make sure that what they are promising is not too good to be true. One tip is to look at developer activity on GitHub to see if they are as close to launching as they say they are.
5. The Community Is Your Asset
Even more so than with other forms of investing, cryptocurrency relies on a dedicated community to fuel the investment and show newcomers the ropes. Before investing, join online forums, Discord servers, and other communities dedicated to cryptocurrency. These places will usually have resources put together to help you get started in investing as well as information about different projects.
Once you follow these tips, you will be ready to start investing in cryptocurrency.