How to properly invest into crypto
In todays blog I want to provide a blog post I'm sure many new comers to crypto and trading would appreciate. I sometimes get questions asking simple questions that I though everyone who would be investing into crypto would know the answers to. But nonetheless I still get asked so this made me think If people are investing into crypto without knowing the proper info or even terminology then I need to help inform and teach them. So this is why I decided to write todays blog post. Before we get into the article I just want to state that this isn't financial advice and shouldn't be taken as such. With all that out the way now we can now move on to todays topic at hand.
How much should I be Investing?
Now this isn't a easy question to answer because it all depends on the person and their circumstances. Some say 60/40 is a good ratio to do so keep 60% of your work income in cash and 40% in crypto while other say 80/20. I personally believe in crypto so much that I do most of the time when I'm investing 20/80. So I keep 20% of my income in cash and the other 80% in crypto. So far my strategy works and I see gains majority of the time if I sell before bear cycles or dips. Now I know not everyone can do this or doesn't even want to take a risk like that and I completely understand we all have our personal preferences and circumstances so we all can't do the same. I hope however what I've provided helps you decide on how much you should invest.
Where to buy and exchange crypto
Now this is a very important subject to talk about when it comes to this topic. This is because crypto exchanges are where you will be buying your cryptocurrency from. Now exchanges vary from each other because not every exchange has every coin listed so exchanges carry different cryptos from each most of the time. Not just that though they also vary from transaction fees to financial options or the fact they are either centralized or decentralized. Taking into account all of these factors is important when it comes to selecting an exchange to buy and sell on. I'll quickly explain the difference between a decentralized exchange and a centralized one for those who need it.
Basically a decentralized exchange gives you ownership of your private keys and cryptos held on those wallets. A centralized exchange just gives you an address to use and tells you how much is on that wallet but you don't own the key or the cryptos within those wallets. They just tell you how much they own you say if you were to sell those cryptos or send them to another wallet. Another thing that decentralized exchanges has on centralized ones is the fact these sites don't crash compared to centralized ones due to AMM. This makes decentralized exchanges more reliable then their centralized counterparts however decentralized exchanges typically have higher fees then centralized exchanges. Now what I personally use is an exchange called Coinbase which if you want to use you can sign up using my affiliate link i have provided (Coinbase: https://www.coinbase.com/join/orgova_6s ). Another exchange I use is kucoin when there are coins that aren't on coinbase I use kucoin to get them. At the moment I don't use a decentralized exchange although when cardanos ADAX launches I will use it since it will bring cheap fees to DeFi.
BTC VS ETH VS Altcoins
Now one of the most important factors when it comes to making money from trading and investing into crypto is percentage gains. Not all coins are going to have the same percent gains or same risk to reward ratio either. It all comes down to the fundamentals of cryptocurrency and that is What problems is this cryptocurrency trying to solve, What are it's benefits and risk compared to it's competitors, and how much dominance of the market does this coin have or also known as the market cap. Now when it comes to Bitcoin, Ethereum, and altcoins your safest bet is bitcoin. This is because bitcoin has been around the longest has the most market dominance and is the most trusted by the public and has the most adoption out of all cryptos( Just take a look at el Salvador and how it's fairing after adopting BTC). Now that doesn't mean that bitcoin is going to give you the most return percentages instead it's going to be the slowest coin out of all the cryptos to get more percentage gains and even more for huge pumps.
What won't however give you low returns and will still give you security is Ethereum. Ethereum would come in second place because you can still get in on massive pumps and percentage gains on this crypto and still have some of the security of bitcoin but you trade in your privacy to an extent unlike bitcoin where it's mostly anonyms. Then we have altcoins which all vary on privacy and security and percentage returns. However if you find a safe legitimate altcoin that has something going for it then you can see huge gains from that crypto. Some of the best altcoins to get returns from are coins such as fantom, polkadot, or even the meme coin Shibu inu.
Terminology
When new people get into crypto they might hear a lot of new terminology get thrown around. It might confuse some or even scare people off from crypto because they don't know these simple terms. So we will cover some of the most used words in cryptocurrency trading.
AMM- Automated market makers these are the backbones of decentralized exchanges because this allows for peer to peer trading instead of having a third party like a centralized exchange.
HODL-Standing for hold on for dear life it means you are going to hold and save a crypto for a long time. This is typically seen as the rally cry of cryptocurrency users and investors.
FUD- This stands for Fear, uncertainly and, doubt and basically means you or someone is feeling bearish or conditions are set to look like to have a bearish outcome.
FOMO- This stands for fear of missing out and means that an example would be seeing a pump and fomoing and buying the pump instead of being a disciplined trader and waiting for the low or dip to come.
Altcoin- A altcoin is a crypto that isn't bitcoin or Ethereum as these two cryptos are seen as the main big dogs of the crypto market you could say. Altcoins typically have better returns then those two cryptos but are typically now as safe as bitcoin and Ethereum.
Memecoin- These cryptos are typically seen as jokes and on average these coins don't usually have actual value to them besides being a pump and dump coin. Some of these coins though might actually have products or resources behind them like Shiba inu coin which is building up a DeFi community or turtle coin which is trying to be a privacy meme coin.
DeFi- Standing for decentralized finance this term is usually thrown around when a crypto coin or product offers financial services such as loans, liquidly pools, and farming. The word can also be used when talking about a decentralized exchange.
Blockchain- This is the key component behind cryptos and is the reason they exist and work the way they do. To put in simple terms blockchain is basically a network of computers coming to census on what is published on the blockchain which are transactions and if the crypto has smart contracts then a list of other things will be present on the blockchain as well. This allows cryptocurrency technology to be a truth currency as it's hard to hack or commit fraud of any sort on blockchain especially on private secure blockchains like bitcoin or really decentralized blockchains like Ethereum.
My Final Words
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Good article