Things To Remember Before Investing In Cryptocurrency

Investing and Cryptocurrencies are hot topics, as these are ways to increase our sources of income. I, personally, am interested in investing because I want to have other streams as well. But before we put our hard-earned money on investing into cryptocurrencies, we must first get a clear idea and overview about how it works.

What is Investing?

• It is the act of allocating resources, usually money, with the expectation of generating an income or profit. You can invest in endeavors, such as using money to start a business, or in assets, such as purchasing real estate in hopes of reselling it later at a higher price.

What are Cryptocurrencies?

• These are digital currencies not backed by real assets or tangible securities. They are traded between consenting parties with no broker and tracked on digital ledgers.

Investing In Cryptocurrencies

• Simply put, investing in a cryptocurrency is allocating a portion of our hard-earned money on digital assets hoping that it will provide a high return of investment.

Before Investing, you need to know that:

• There are more than 5,000 cryptocurrencies existing in the market today, and more coins are being launched everyday which makes it a bit challenging for Investors to decide on which cryptocurrency to invest in.

• Cryptocurrency is already popular in the digital world with almost everyone wanting to join. However, almost all individuals, even those people not familiar with how it works, are investing in them.

• Cryptocurrency may be known all over, but it does not mean everyone should try it. This digital investment can earn you millions of dollars or it can also drive you into poverty with all your money gone in just a snap.

Thus, these are the things to remember before investing your wealth in a cryptocurrency:

1. Ask "Why?"

• Perhaps the most important question you must ask yourself before investing in a cryptocurrency is why you are doing it. There are a lot of different investment available today, many of which offer a great deal more stability and less risk than digital currencies. Are you interested because of the trendiness of the crypto craze? Or is there a more compelling reason for an investment in one or more specific digital token?

2. How does cryptocurrency work?

• Cryptocurrencies are exchanged from person to person on the web without a middleman, like a bank or government.

• Cryptocurrency is becoming more than just an investment platform. Some online retailers are accepting cryptocurrency as their mode of payment. This means that you can invest or purchase goods and services online through crypto coins.

3. Invest only what you can afford to lose

• You will keep hearing this the moment you start investing in the Cryptocurrency market. Almost everyone who are into investing already knows this advice. However, most people still fails to follow it.

• There are a lot of cases where people lost all of their savings, some had taken loans for investing & lost most of it. Always remember that when you have not much to loose you can be much more confident about the projects that you have invested on. Investing a large amount doesn’t guarantee high returns.

• The question should be, can you afford to lose the amount you want to invest? If not, go with a lower amount. Still, a cryptocurrency needs patience. Sometimes it will take time, years to be exact, before your investment gives you satisfying results.

4. Always Divide or Diversify your investments

• There are thousands of cryptocurrencies available in the world, and Bitcoin Cash only one of the thousands. Diversification is an amazing option when you already invest in Bitcoin Cash. It diminishes the risks in Bitcoin Cash when you diversify the crypto investments.

• What I am trying to say here is, you should not put all of your resources into one basket. Rather, it is a wise thing to invest in other cryptocurrencies instead of investing in one particular cryptocurrency only.

4. Do Your Own Proper Research (D.Y.O.R.)

• If you are planning to invest in cryptocurrencies make sure to spend at-least 24 hours of effective reading time understanding what is blockchain, what are cryptocurrencies, security measures you should take before investing in cryptocurrencies and so on.

• Always remember that no research is enough and you need to constantly update yourself. What could have been true a couple of months ago might be completely wrong now. Technology, Finance, Investment strategies, Regulation and every other thing about cryptos is changing at such a fast pace that you need to update yourself on a daily basis.

5. Cryptocurrencies Are Volatile: It is totally Unpredictable and Unstable

• Cryptocurrencies such as Bitcoin Cash are highly unpredictable. This means that the price valuations may vary from time to time, as a result, investment in Bitcoin Cash can become bumpy at times. In the event that you need to consider this digital currency’s investment chance as a productive one, you have to acknowledge that Bitcoin Cash's unpredictability accompanies investment risks.

• Furthermore, you should just put resources into the measure of cash you can stand to lose to limit your loses in the future.

Should You Invest Your Money In a Cryptocurrency?

• If you are out of debt, already built your emergency fund that will cover three to six months of your expenses, and you are already investing 10-15% of your income in growth stock mutual funds, which are hundreds of times more secure than crypto, then you may make the choice to play around and invest a portion of your money with cryptocurrencies.

The Bottom Line

• Trading cryptocurrency is a trend that continues to hit for investors.

• Investing your money is a serious step that needs intellectual insights before deciding to jump into it.

• I already mentioned everything you need to know about cryptocurrency, so the next question is, "are you ready to take the risk?".

• All investments come with risk. But only you can tell if the opportunity is worth the risk.

• Don’t go into it while you are desperate. Take your time to measure all the involvements and then make a clear decision.

Just a Little Warning

When you invest your wealth in a cryptocurrency, be prepared to say goodbye to your hard-earned money.

Sources:

https://www.investopedia.com/terms/i/investing.asp

https://www.investopedia.com/cryptocurrency-4427699

https://www.investopedia.com/tech/what-you-must-know-investing-crypto/

https://www.chrishogan360.com/investing/investing-in-cryptocurrency

https://www.fintechnews.org/what-you-should-know-before-investing-in-cryptocurrency/

https://hackernoon.com/10-things-to-know-do-before-investing-in-cryptocurrencies-a6c72367d854

https://businesspartnermagazine.com/top-10-things-to-know-before-investing-in-bitcoin/