Ever since Bitcoin was created in 2008, the world of cryptocurrency has been through a roller coaster ride. Eleven years after the first cryptocurrency was introduced, we now have several competitors and rival currencies, with thousands of investors.
Are you planning on investing in cryptocurrency? Here’s what you need to know beforehand.
First Things First!
Before you dive into the world of cryptocurrency and the prospects it holds, you need to determine whether or not it is the right thing for you. Start with answering the simple question, “why am I investing in cryptocurrency?” If your answer depends on what you heard a friend say the other day during a lunch gathering or because you’ve heard people talk about it making them richer, then that’s the first sign that you’ve got a lot of homework to do. Worse still, if you don’t have a concrete answer to this question at all, you’ve got to stop and reflect before you can proceed.
Like many other financial investments, cryptocurrency, too, is a gamble. While it does indeed have several benefits and can help your wealth grow exponentially, there’re risks attached to it as well. Make sure you’re aware of the ups and downs that come with investing in cryptocurrency and have done thorough research on the subject. Being prepared is the first step!
Once you’ve done your research and have established a reason for investing in cryptocurrency, it’s time to learn how to go about it. Your digital currency will require you to have an account where you can then buy coins. This can be done through several exchange platforms such as Binance and Kraken.
Having set up your account, you now get to choose from a variety of cryptocurrencies. Some of the most popular ones include Bitcoin, Litecoin, and Ethereum. You don’t necessarily have to stick to just one type of cryptocurrency. For diversifying your portfolio, you can either purchase more coins through fiat currencies, or set up another account for trading your current cryptocurrency with another type on a different exchange platform.
Storing Your Cryptocurrency
Just like you need a wallet for your paper currency, your cryptocurrency needs something to be stored in as well. Here’s the confusing bit though; a crypto wallet doesn’t exactly store any coins or actual currency. Instead, it stores the private keys, addresses, and codes specific to your cryptocurrency that are needed for making a transaction. A crypto wallet is, in fact, software that keeps track of your funds and allows for active trading.
Typically, you’ll be able to activate a crypto wallet for your specific cryptocurrency. However, you can also opt for another wallet to store your keys and codes.
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