Investing in cryptocurrencies is exciting and new for a lot of people. However, before you jump on an exchange or platform and add your money, here are 10 tips to help you get started and invest wisely:
1. Invest Only What You Can Safely Lose
The rule for any investment is to put in what you can lose. Cryptocurrency is highly volatile, so there are many ups and downs. Though it’s a little less with the stock market, you still shouldn’t invest money that you need for bills and other purposes.
While it is exciting, you shouldn’t take out loans or put in your life savings. Start off small if you have to, but don’t go overboard and risk losing everything. People have lost their cars, homes, and entire retirement savings from investing in crypto.
2. Study/Research Beforehand
It’s a good idea to learn more about cryptocurrency before you invest. As with any new thing, you should study it and know what you can. Don’t blindly trust what others have done; research your preferred cryptocurrency or asset before you jump into the fray.
3. Diversify Investments
You’ve probably heard that you shouldn’t put all the eggs in a single basket, and that holds true for a cryptocurrency (and any investment). You should diversify your portfolio and invest in many things. Put some money in crypto, but also invest in real estate or stocks.
4. Consider the Platform (Regulations)
Stock exchanges don’t deal with cryptocurrency, so you need to find an appropriate trading platform for stuff like digital assets. That way, you can buy security tokens, Bitcoin, and other crypto-assets. You can effectively exchange Bitcoins and other altcoins for money or other cryptocurrencies.
Cryptocurrency is not regulated by the government, though it is working hard to do that. Many people worry about that, and so do financial institutions and brokerage firms. That’s why you have to use a dedicated platform to buy/sell.
However, what if you could find a trading platform that was fully regulated by the EU, FINRA, and the SEC? Right now, that’s not possible, but INX is going to make it happen. It’s already looking into obtaining regulations from those agencies. That means your money is safer, and people follow specific rules when buying and selling.
While the market is still highly volatile, your funds (capital) are protected. That means hackers can’t steal your information. On top of that, the brokers must be regulated to prove that they are legitimate.
This dream is set to become a reality in the next six months or so, and you can be part of it. Buying security tokens now means that there is more in circulation when it goes live. That way, you are at the forefront when things take off with this new asset class and can see returns.
Initial coin offerings (ICO) are a great way to invest in something for cheap with the goal of seeing higher prices. These coins or tokens are sold to the general public before the crypto becomes a full-blown asset.
They’re a great investment, but you have to do a background check on the company offering the coin or token. Analyze the project, creators, and the promises they claim.
6. Be Wary of Scams
There are Bitcoin/crypto scams out there, so it’s important to stay vigilant. Read a lot about the market to learn of these concerns and steer clear of them whenever possible.
7. Find Trusted People to Follow
It’s important to choose reliable people to help with your investments. For most things, you can use a financial advisor, but most of them don’t deal with cryptocurrencies.
There are people out there who can give you advice on crypto. That means you’re not sitting there analyzing the markets for hours a day. However, you’ve got to be vigilant about who you choose. This environment is full of scammers and people who want to manipulate you to their advantage.
To find a trustworthy advocate, you should only deal with someone who explains all the risks, is passionate, and modest. Typically, you can find that through the platform you trade on. For example, INX is a pioneer in the crypto world that focuses on a tokenized economy. Here, you know that your crypto assets are safe and a qualified custodian is handling them. On top of that, you’re going to get helpful information about the markets and analysis tools to get you going.
You’re never going to see promises of huge returns with no effort from INX!
8. Consider Market Caps
Every cryptocurrency has a market cap. That is the total amount that can be invested. Most beginners rely on the unit value of a crypto (its price) to figure growth potential. However, that’s not the right indicator.
Instead, you have to think about two factors:
- Total capitalization – The market cap is figured by multiplying the unit’s value by the total number in circulation. If there’s a high market cap, that means there’s more growth potential.
- Increase in Capitalization – Every crypto has an ICO (initial coin offering). If it’s already gained value since the ICO, it might not progress as much. In contrast, cryptocurrencies that have fallen since the ICO could be a scam.
Therefore, you have to be cautious about capitalizations and research the market cap for each. That way, you know that you’re dealing with legitimate crypto.
9. Track Results
Once you invest, you should consider whether the investment remains stable. You should be earning and losing money. It’s often hard to track your results, but many platforms offer systems to help with that.
10. Secure the Crypto
If you choose the right trading platform, you shouldn’t have to do anything else to secure the cryptocurrency. It sits in a protected and encrypted decentralized location (server). Those who choose INX are going to safeguard their capital and keep it safe until they want to use it or withdraw it.
Now that you have a few tips up your sleeve, it’s time to pick your cryptocurrencies or security tokens. Consider a reputable trading platform like INX to ensure that your crypto is protected and the brokers are regulated.