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Guide For Crypto Beginners

Looking to enter the crypto market with Polkadot, BTC, or ETH? You’re not the only one. In the past decade, investors, both institutional and retail, have been putting in more money towards cryptocurrencies. This increase in crypto-asset portfolios highlights the steadily growing interest in the relatively nascent asset and technology. Right now, the global market cap for all cryptocurrencies combined has already surpassed the $2 trillion mark.

But as with any other asset, cryptocurrency investing involves some degree of risk that must be respected lest incurring heavy financial losses. To help you safely navigate the world of cryptocurrencies, below are easy-to-understand answers to some common questions:

The Benefits of Cryptocurrency as an Investment

One of the key benefits of cryptocurrency as an investment is the notion of a direct transaction between buyer and seller without the need for costly middlemen. This is made possible through the underlying blockchain technology that makes cryptocurrencies, like BTC and ETH, possible.

Put simply, blockchain is a peer-to-peer network that stores encrypted data that are connected to one another thus making them virtually impossible to modify. Blockchain is thought of as a virtual ledger that records all transactions that have happened within the ecosystem.

Another benefit of cryptocurrency is the significant profit potential. Cryptocurrencies, particularly alt or meme tokens, have repeatedly captured headlines because of astronomic price swings overnight. These price movements rarely had any sound technical or fundamental reasons for the big waves. And while some investors have made banks trade cryptocurrencies, not every story is a rags-to-riches one. Some have lost money betting it big on cryptos.

The Startup Capital to Invest in Cryptos

The answer depends on a number of factors, particularly what coins you are targeting, what your risk profile is, and what investment goals you are trying to accomplish. For example, to make money in more established cryptos like Bitcoin or Ethereum, you’ll need to put in more than just $1,000 if you want to make hefty returns in no time. Buying a meme coin, like DOGELON Mars, however, means you can get away with putting in a few hundred dollars.

Every investor also has their own risk profile. Some are comfortable blowing their account out while others practice a more conservative approach to investing. Determine where you are within the risk tolerance spectrum. For complete crypto novices, consider investing only a small amount of money until you feel more comfortable with the behavioral patterns and overall market volatility of cryptocurrencies.

The Specific Cryptocurrency to Invest In

There is no one-size-fits-all cryptocurrency that you should invest in when you first enter the market. That being said, when transacting with cryptos, gaining a better understanding of individual cryptocurrencies is key to maximizing growth and minimizing risk. To better understand the value of a specific cryptocurrency, ask yourself the following questions:

  • What is this asset’s value proposition?
  • How big is the market for this asset?
  • How strong is the team behind the development of the asset?

This is but a fraction of the things you should address before putting your first dollar on cryptocurrency. Other things to study up on include where the safest places are to buy the asset, what not to do, and what risk management principles you can apply to your investing.

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Kanisha is an all-around geek who loves learning new stuff every day. With a background in computer science and a passion for web-based technologies and Gadgets, she focuses on writing about Web Trends, Smartphones and Tablets. You can contact her at kanisha@pc-tablet.com.