Top 5 Tips for Beginners in Cryptocurrencies

Share on facebook
Share on twitter
Share on linkedin
Share on print
Share on email

You may be wondering is it still worth entering the cryptocurrencies or should you spend your money somewhere else, like placing bets at NetBet Sport. At the turn of the year 2017/2018, cryptocurrencies received tremendous media attention. Not without reason, because the prices of most of the around 2,000 cryptocurrencies have multiplied within a few weeks.

The best-known cryptocurrency Bitcoin rose from around USD 4,000 at the beginning of October 2017 to almost USD 20,000 at the end of 2017. Since then, the prices of cryptocurrencies have consolidated. The “bubble” has burst, as one reads it a lot. There were hardly any fundamentals to support this rapid development. So is it still worth investing in cryptocurrencies?

Today, two years later, we see tangible, fundamental developments that are driving the cryptocurrency ecosystem forward. The ICOs (Initial Coin Offerings) in particular have accumulated millions in investments from numerous projects. As a result, the smartest talents and minds in the world are now committed to the crypto world.

TECHNOLOGY HAS COME TO STAY

On the other hand, it is not surprising that some crypto projects have disappeared from the scene again with such a young ecosystem. It is similar to the early days of the New Economy: there were companies such as shopping.com, amazon.com, or other highly rated e-commerce companies. There were also search engines like Altavista, Google, or Yahoo. Not all companies survive, but basic technology is here to stay. Numerous industries and global players have the topic of cryptocurrencies and the underlying technology “blockchain” on their agenda. It is a matter of time when the first blockchain solutions will be used on a large scale. Most likely, the end-user will not even notice whether the executing technology is based on the blockchain. What you will notice, however, are the economic benefits such as cost savings, increased speed, and security. There are also financial advantages for the resourceful investor. Cryptocurrencies do not correlate with any other asset class. This makes them particularly interesting for inclusion in your own portfolio. It can be assumed that cryptocurrencies are currently asymmetrical bet. The risk is limited to the loss of the investment. The so-called “upside” is hardly limited to the top, a multiplication of the investment is possible at any time, especially if you bet on the right crypto horse. To answer our initial questions: It is just the beginning. One should not lose cryptocurrencies from the radar or be put off by ignorant people. Due to the positive financial aspects, an investment in cryptocurrencies can make sense. Nonetheless, every crypto newbie should keep our top 5 pearls of wisdom in mind.

TIP 1: THE MINDSET

Cryptocurrencies are subject to high volatility. The more volatile they are, the smaller and less well-known cryptocurrencies you invest in. A comparison with traditional asset classes is sufficient. Daily fluctuations of around 10-30% are not uncommon. There is no need to panic to buy or sell here. As with investing in general, you should greatly reduce your amazement and emotionality and at the same time increase your rationality. It is important to stay true to your own master plan, which should ideally be a medium to the long-term investment horizon. In the crypto area, one would speak of a horizon of 1-5 years.

TIP 2: INVESTMENT AMOUNT

With cryptocurrencies you can run a total loss, every investor should be aware of this. Extremely high exchange rate fluctuations and uncertain project prospects are omnipresent. You should only invest that amount that you could lose without batting an eyelid. It is advisable not to immediately invest your entire investment budget in cryptocurrencies, but to use a “cost-average” strategy. This means that as soon as you are interested in a cryptocurrency, you prefer to buy it on different days or weekends. So, you have an average price. Likewise, the foundation for any investment should be followed, diversify your portfolio. Buy multiple cryptocurrencies. There are now also companies that provide crypto indices that you can use to orientate your allocation.

TIP 3: BUY SECURELY CRYPTOCURRENCIES

You buy cryptocurrencies either from crypto brokers or crypto exchanges. Crypto brokers have the great advantage that they are strictly regulated in the EU and offer a pleasant trading surface. Crypto exchanges, on the other hand, are often unregulated or in jurisdictions that often do not enjoy the very best reputation.

On the other hand, on crypto exchanges, you really get the right of ownership to the cryptocurrencies. The cryptocurrencies can be transferred to your own “wallet” if you buy your “coins” on an exchange. You can get an overview of the best-known crypto brokers and crypto exchanges online. The crypto brokers and exchanges offer various deposit and withdrawal options. The most common are payments via the house bank or PayPal. You can also use a credit card. It is important that you can also prove later, based on a transaction history, how you paid in and out with crypto brokers or stock exchanges.

TIP 4: KEEP CRYPTOCURRENCIES SECURELY

If you have purchased your cryptocurrencies on a crypto exchange, you should immediately take care of safe custody. Safe custody does not mean parking the Bitcoins, Ethereums, IOTAs & Co. on the exchange. On the contrary, the cryptocurrencies must be withdrawn as soon as possible after the purchase, as the mostly unregulated stock exchange involves too many uncertainties.

The classic variant for securing cryptocurrencies is a cold wallet in the form of a paper wallet. This means, quite simply, you write the password for e.g. your Bitcoins on a piece of paper. This password is called the “private key” and consists of a 27-34 sequence of alphanumeric numbers. Retrieving a 27-34 digit password every time is impractical. That’s why Bitcoin hardware wallets are used nowadays. These take over the function of the paper wallet and make cryptocurrencies flexible and usable anywhere in the world. They look like small USB sticks, are similar to the well-known banking security tokens, and can be connected to a mobile phone, tablet, or PC. They are considered to be the safest way to safely store Bitcoins & Co. The leading providers in this area are Ledger, Trezor, and KeepKey. 

TIP 5: REMEMBER THE TAXES

Note that trading in cryptocurrencies can be taxable! In many countries, there is a big question mark regarding the taxation of cryptocurrencies. Legal security on the one hand is the basis for making rational and far-sighted investment decisions. On the other hand, taxation also reduces profits.

CONCLUSION

We can recommend that you actually take the top 5 tips to heart and implement them. This guarantees that you will not make the usual mistakes as unfortunately many other crypto enthusiasts have done before you.

Via: https://themerkle.com

Leave a Replay