Investing In Bitcoins And Other Cryptocurrencies
Bitcoins and other cryptocurrencies are all over banner ads on websites and blogs. Well, the same ads are occasionally displayed on the pages of this blog. Got my AdSense account reinstated! So, I did a little reading about these digital currencies.
To tell you in advance, I havent found bitcoins and other cryptocurrencies a good investment yet because of the potential problems I came across while doing my research:
- Cryptocurrencies are not fiat currencies, hence not yet regulated by the government.
- Cryptocurrencies are not yet widely accepted in the Philippines and in other countries.
- Electronic wallets can be corrupted and lost, so the bitcoins .
- Bitcoin decentralization poses an extremely high level of risk.
- and many others
Notwithstanding this early assessment, Ill still detail out here what I learned about cryptocurrencies and bitcoins, so to help you in making informed decisions about your investments. After all, there are even opportunities to make a fortune out of high-risk ventures.
Understanding Cryptocurrencies and Bitcoins. Generally, cryptocurrency pertains to a digital asset used as a medium of exchange by means of cryptography a secure computer technique that controls the creation and transaction of currency units. Compared to debit or credit card payments, cryptocurrency payments seem easier because they do not require merchant accounts.
What Are Some Other Important Cryptocurrencies
Many cryptocurrencies have gained importance or hold the promise to do so. Dogecoin, for example, was a meme-based joke coin that reached fame when Tesla CEO Elon Musk promoted the token on social media. Aside from Dogecoin and the others listed above, several other bitcoin forks also exist, such as Bitcoin Gold and Bitcoin SV. Other important coins include Ripple , Solana, USD Coin, and Tezos.
What Is Cryptocurrency Heres What You Should Know
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Risks Of Investing In Cardano
Even with a better network, Cardano may not be able to compete with larger cryptocurrencies. Fewer adopters mean fewer developers. This isnt appealing to most investors who want to see a high adoption rate. The platform has big plans, but there are doubts about whether it can live up to that potential.
Paper Wallets For Safety
Without a doubt, the safest way to store any cryptocurrency is by using a paper wallet. By following a few pointers below, you can set one up entirely for free. This truly makes you the master of your investment, and if precautions are followed, theres no possibility of your private keys being known by anyone else. Of course, this means that keeping a record of them is even more important. Losing private keys means youll forfeit the entire contents of your paper wallet
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Crypto Is Not Regulated
Many crypto-assets and other digital assets are commonly not considered to be financial products. Because of this, the platforms where you buy and sell crypto may not be regulated by ASIC. This means you may not be protected if the platform fails or is hacked.
When a cryptocurrency fails, investors will most likely lose all the money they put in. In most countries, cryptocurrencies are not recognised as legal tender. You’re only protected to the extent that they fit within existing laws.
Cryptocurrency Meaning And Definition
Cryptocurrency, sometimes called crypto-currency or crypto, is any form of currency that exists digitally or virtually and uses cryptography to secure transactions. Cryptocurrencies don’t have a central issuing or regulating authority, instead using a decentralized system to record transactions and issue new units.
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Things To Consider Before Investing In Bitcoin
Like any investment, cryptocurrency comes with risks and potential rewards. Compared to traditional types of investments, cryptocurrency is particularly risky.
Here are some things to think about before you invest:
- We dont recommend investing all your life savings on cryptocurrency markets
- Its best to see it a bit like gambling so only invest small amount of your disposable income and be prepared to lose the lot
- Never invest more than you can afford to lose dont just think about the short run
- If you havent got much money left at the end of each month, its best to steer clear of crypto and focus on saving your money instead
Weigh up the pros and cons first:
Pro: Cryptocurrencies are global, meaning they have the same value in every country and no exchange rates.
Con:Cryptocurrencies are extremely volatile, subject to bull runs and market crashes,and so are a very risky investment. People have also reported having to wait to get their cash out because of technical snarl-ups.
Crypto Scams Are Increasing
There are two main types of crypto scams.
Scammers try to trick people into investing in fake opportunities to buy crypto. Watch out for these tactics:
- false promises of very high returns
- fake endorsement from celebrities or government agencies
- people who contact you through social media or text messages
- using dating apps to establish a romantic connection and gain trust
- multiple or constantly changing bank accounts used for transfers
Read more about the tactics used by investment scammers.
Rhett is scammed $97,000 by a fake endorsement
Rhett saw an article on a news website about The biggest deal in Shark Tank history, that can make YOU rich in just 7 days!
Rhett was interested in trading Bitcoin, so he provided his contact details. Soon, an Account Manager named Max began calling Rhett. Max called often, pressuring Rhett to open a trading account and make a deposit. By depositing between $40,000 and $50,000 upfront, Max promised Rhett he could earn at least $15,000 per month.
Max promised Rhett that the money he deposited would be safe because he would have total control of the account. Its more or less moving your money in your left pocket from your right pocket, Max said. Max promised Rhett that he could withdraw his money whenever he wanted to.
Rhett deposited more money in the hope he could recoup his losses. Rhett ended up depositing and losing a total of $97,000.
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How To Invest In Cryptocurrencies: The Ultimate Beginners Guide
Cryptocurrencies are seeing a massive surge in popularity. While they used to attract a very niche audience just a few years ago, today, everyone and their grandmother wants to learn how to invest. You probably cant avoid seeing a news article about the latest Bitcoin price or stumbling upon investment advice on social media.
And the growth is not even close to being over. The global cryptocurrency market was valued at 332 million US dollars in 2017, has risen to 3.67 billion in 2020, and is projected to reach 394.60 billion by 2028 .
So what does this all mean? Should you get involved? How do you get started investing in cryptocurrencies?
If youre looking to get a better understanding of what cryptocurrencies are, how they work, and how to invest in cryptocurrency, then this guide to trading cryptocurrency is for you. Read on to find out how it works, what your options are, and the best and safest way to invest in digital currency.
While the decision to invest in cryptocurrency is ultimately up to you, it is our hope that youll walk away from this guide feeling more educated, empowered, and confident that you have everything you need to start investing.
Contents
Risks Of Investing In Ethereum
While Ethereum utilizes blockchain technology, it only has one lane for conducting transactions. This can lead to transactions taking longer to process when the network is overloaded. Transaction fees are also high, reaching a peak of $71.72 in May, according to CoinMarketCap.
In 2016, a hack that took advantage of a security flaw led to the loss of more than $50 million worth of Ether.
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Add Value To Your Account
Depending on how you choose to pay, you may have to fund your account before purchasing any crypto. If you’re using fiat currency, most exchanges allow debit and bank transfers. Some also allow you to fund a purchase with your credit card, though this can be a risky move with a volatile asset like cryptocurrency because interest costs can deepen your losses if your investments decline in value.
If you already own cryptocurrency, you can transfer it into your account from a digital wallet or another platform, then use it to trade. Just be sure to verify that your crypto exchange allows trading between the assets you’re looking at. Not all cryptocurrencies can be directly traded for one another, and some platforms have more trading pairs than others.
Another thing to note is that exchanges fees vary depending on what you’re buying and how you’re buying it, so review these details carefully.
Top 8 Cryptocurrencies To Invest In 2021
Looking to invest in crypto? These are the 8 cryptocurrencies in which you can invest in 2021
In reality, the crypto-market continuously moves pretty fast and almost most of us have to worry about life inconveniences, such as the time-consuming deliverables of working or being a college student and specifically steering clear of an odd pandemic. All these leave a bit of a conundrum when it comes to dedicating time and effort for the crypto research necessary regarding your decision on smart market moves and investments. Therefore, we have provided a breakdown of the top 8 cryptocurrencies to invest in in 2021, to help you figure out where to begin with your investment.
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What Is Harvest Finance
Launched a year ago, Harvest Finance automatically moves money around the decentralised finance system to try to generate high yields from cryptocurrencies.
It was set up to try to save investors time so they dont have to manage their positions themselves.
At the end of July, Harvest Finance listed its own crypto token called Farm on crypto exchange Coinbase. Farm is an ethereum-based token.
Why Are Cryptocurrencies Important
As decentralized platforms, blockchain-based cryptocurrencies allow individuals to engage in peer-to-peer financial transactions or enter into contracts. In either case, there is no need for some trusted third-party intermediary such as a bank, monetary authority, court, or judge. This has the potential to disrupt the existing financial order and democratize finance. The size of the cryptocurrency space has grown exponentially in the past decade, with new innovations and a collective market capitalization of more than $2.5 trillion.
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Is Bitcoin A Good Investment
Bitcoin is highly volatile. The bitcoin price hit a new record high of more than $56,000 in November 2021, but the price dropped to around $34,000 in February 2022.
Only consider buying bitcoin if you are willing to take a risk, and you are investing money you are prepared to lose. e explain more here about whether you should invest in bitcoin.
For more tips on crypto investing, watch our video on the 5 dos and dont of investing in cryptocurrency.
Pancakeswap Best Decentralized Exchange On Bsc Blockchain
With 2.8million users and over 30million trades in just one month, Pancakeswap is arguably the most used decentralized platform worldwide. It is hosted on the Binance smart chain and accepts any token for trading. It is evident from the $18billion total value locked on the platform.
Pancakeswap also provides the opportunity to earn passively when you trade crypto. Cake is the core token of the ecosystem, and you can exchange it with other cryptocurrencies. Additionally, you can farm it, win it, stake it, spend it, and even vote with it. The market cap for Cake is $4billion, and it trades at about $16 per token.
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How To Invest In Cryptocurrency Safely
As volatile and unreliable as cryptocurrency is, there are ways to invest in it safely. People are making huge profits from trading in coins and tokens, so it is possible to join the profit-making wagon. Try not to get carried away with all the stories of success. There are also losses that could have been avoided if there had been proper research.
Here are a few tips to help you invest in cryptocurrency safely.
Buying Bitcoinwithout Owning Btc
While some years ago it was a very challenging process to buy cryptocurrencies, today there are a range of options, some easier, some more difficult each with different degrees of exposure to Bitcoin as an asset.
Buying Bitcoin on any CeFi exchanges discussed above is obviously the most direct way, but if the risk is beyond your tolerance, there are other ways to get exposure to cryptoassets with less direct exposure.
Today you can now get indirect exposure to bitcoin by investing in publicly traded cryptoassets like Greyscale Investments, a large digital currency asset manager with approximately $46B assets under management .
The first crypto ETFs are also starting to become available with Galaxy Bitcoin and Ethereum ETFs and Purpose Bitcoin ETFs in the Canadian market.
You can buy shares of stock of publicly traded companies that have significant exposure to bitcoin on their balance sheet like Tesla , Square , and notably Microstrategy , which as of June 2021 has 91,326 bitcoins on its balance sheet, which it bought for $2.21 billion, or an average $24,214 per bitcoin.
Finally, you can choose to invest in publicly traded bitcoin mining companies like Riot and Hive. These companies generate profit by mining and issuing new Bitcoin to the blockchain.
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How To Segment Cryptocurrencies
Its important to understand how to segment your data so that you can make informed decisions about where to invest. You need to identify your customer segment and use that data to make decisions about where to place your effort. For example, you might be interested in investing in cryptocurrencies that are used for online sales, such as Bitcoin and Ethereum. When examining these investments, it is important to keep in mind the risk and reward characteristics.
Why Are Regulators Concerned
The FCA has also warned investors to be wary about companies that promise high returns from cryptocurrency. The nature of investment means that there is never a guarantee of making money.
From January 6 this year the FCA banned the sale of complex derivatives that speculate on cryptocurrency movements.
This means that financial services cant offer retail customers contracts for difference, spreadbet options, futures and exchange traded notes that focus on digital currencies.
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Should I Invest In Bitcoin
Bitcoin is extremely volatile, but if you are willing to take the risk, first make sure you understand what you are investing in and have a crypto investment strategy.
Also make sure you arent investing simply because you have a fear of missing out. There are a number of questions you should ask yourself before getting involved:
If you dont have answers to these questions, its probably not a good idea to invest. If you do buy bitcoin, make sure you arent putting money you need on the line. Read more about cryptocurrency tips here.
If you are new to investing and want to know more about the general principles and how to get started, check out our guide here.
Alternative Ways To Invest In Cryptocurrency
There are other ways to invest in cryptocurrencies instead of just buying coins.
Option 1: Invest in cryptocurrency companies
You can invest partially or entirely in it by choosing from companies with mining hardware makers and traders. A few examples are Robinhood Markets Incorporated and PayPal Holdings Corporation PYPL.
Option 2: Invest in cryptocurrency-focused funds
You can decide to invest in a cryptocurrency fund focused on the crypto market, such as ETFs and trusts. Perfect for those who want direct exposure without making management decisions or oversight. You can invest in direct investments and derivative investment funds.
Option 3: Invest in a cryptocurrency IRA
You can invest in cryptocurrency with a self-directed IRA. When you do so, your profits go directly towards the tax-free contribution of this retirement account. They will not be taxed when it’s withdrawn or at any future date if left intact long enough for them to accrue more interest.
The IRS considers digital currencies such as Bitcoin property rather than cash
Option 4: Become a crypto miner or validator
When the price of Bitcoin was rising, it became more expensive and difficult to mine digital currencies. A new way people can participate in mining with less money is called a Mining Pool. It is a group that pools together their computing power. They share profits proportionally according to how much each device contributed.
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