June 7, 2022 8:51 am in Crypto

Is Investing in Crypto Right for You?

Investing in Cryptocurrency has the potential for gains, but equally losses.

Due diligence and understanding of the crypto market is recommended before you start your crypto investing journey.

Before you Start Investing in Crypto:

1. It’s not going to be an overnight success

You’ll make a lot of mistakes along the way, and it’ll take time to find the right kind of crypto and buy in at the right time.

2. You need to learn about how cryptocurrencies work first

You can’t just start pouring money into this market without understanding how everything works. It’s also important to understand all the risks that can come with it.

What is Cryptocurrency?

The idea behind cryptocurrency is essentially peer-to-peer digital cash. A few different types of cryptocurrencies have been made available, which we’ll cover later on in this article. But essentially, it’s digital cash with no banks or central authorities involved.

Cryptocurrency is the payments system of the future, the internet-accessible version of fiat currencies like the US dollar and the British pound. A government or bank does not back it, so it’s inherently volatile because there is no guarantee that it will be accepted as legal tender in any particular country. It can also be extremely hard to track and get your hands on some of these currencies.

Crypto as an Investment

So, why invest in cryptocurrency? The main reason is that it’s very profitable and can make you a lot of money. It’s also an incredibly exciting and interesting market to invest in. Better still, it’s accessible to just about anyone with the internet, smartphone or crypto ATM.

You don’t have to be a finance expert, as long as you know how to use a computer and follow the trends, it can be a financially lucrative investment. However, there are still a lot of risks involved, and new investors should be careful about throwing all of their money into this market.

So, what are the risks?

Unfortunately, as with any investment opportunities out there (whether or not they’re considered “high-risk”), there are many risks involved here.

The biggest risks include:

1. Problems getting money out

Crypto is decentralized and unlike a bank, financial transactions are not backed. If you do have a problem with a transaction, there is not an easy to contact institution. Always deal with reputable crypto exchanges.

2. Volatility

Crypto is volatile and one of the most volatile investments out there. A single tweet could see value rise or fall. However as larger financial institutions and companies acquire stakes in crypto, exaggerated volatility is expected to become healthier.

3. Hacks

This is the biggest issue with investing in cryptocurrencies because they are held in digital wallets. Criminals use a variety of methods to access wallets. Keeping up to date with latest threats is a must to protecting your digital assets.

4. Fraud & Scams

Nearly half the people who reported losing crypto to a scam since 2021 said it started with an ad, post, or message on a social media platform. Keep up to date on latest scams and be aware of them.

5. Will it Succeed

This is the biggest issue with investing in cryptocurrencies like bitcoin and Ethereum. These currencies aren’t backed by anything, so while they’re sure to be valuable in their own right, you can’t guarantee that they will succeed or become widely accepted as a medium of exchange and an investment option.

With all of those things taken into consideration, the risks of crypto investing are clear. However, if you’re aware that these risks exist and are careful about investing your money, it can be a very profitable.

The Current State of Crypto Investing

To truly understand where cryptocurrency is today, it’s important to look at the market as a whole. This will help you know what the future could be like and which coins could be worth investing in.

As of 2022, over a thousand cryptocurrencies are out there, and more are being made available every day. Many of these currencies were created for a specific purpose or have specific aims. Some currencies have no real goals other than to make their creators rich, yet others intend to solve serious issues with banking or technology.

Litecoin, for example, is a cryptocurrency that aims to make transactions quicker and more efficient than bitcoin. On the other hand, Dash has a focus on anonymity and privacy. There are many different types of cryptocurrencies out there, and each one has its particular use case.

Cryptocurrencies to Consider

1. Bitcoin

Bitcoin is currently considered one of the most successful cryptocurrencies around. Created by someone going by the pseudonym “Satoshi,” Bitcoin was launched back in 2009, and its value has since skyrocketed over that period. When Bitcoin was first launched, it was worth $0.008 a coin. As of this writing, a single Bitcoin is worth $16,730.

But why are bitcoins so valuable? Well, the truth is that there isn’t any particular reason for this other than the belief that they will continue to be useful long-term. Several factors contribute to the rise in the price of bitcoin, including the fact that bitcoin has become more and more mainstream and accepted as a medium of exchange.

2. Ethereum

Ethereum is another very popular cryptocurrency, and it could be worth looking at in 2022. Launched in 2015, Ethereum was created by Vitalik Buterin, and it currently has a market cap of over $29 billion. Ethereum is unique in that it has its built-in programming language. This means that developers can have more flexibility when creating applications on the platform than they would with other cryptocurrencies.

Although Ethereum is still considered a fairly young cryptocurrency, the market has shown plenty of potentials.

3. Ripple

Ripple is the second most valuable cryptocurrency around, and it aims to solve three major issues with current banking systems. First of all, the Ripple network is much faster than Bitcoin and Ethereum when making transactions. Ripple is also claimed to be much cheaper than traditional banking and quicker and more efficient.

Ripple aims to solve these issues by providing a real-time financial settlement system that will utilize its native XRP currency. XRP is ideal for the settlement of cross-border payments and making micro-payments.

4. Litecoin

Litecoin, like Dash and Ethereum, was also created to be a quicker, more efficient and less expensive alternative to bitcoin. Currently ranked 4th on the cryptocurrency market cap charts with a market cap of $3.2 billion, Litecoin is the world’s second most valuable alternative cryptocurrency after Bitcoin.

5. Dash

Dash is a cryptocurrency that was created to become a cash-like currency. Dash has its built-in wallet and decentralized blockchain network, which means that it has the same level of anonymity and privacy as Bitcoin.

Dash aims to achieve this by utilizing a feature called “Private Send,” which allows you to send money from one wallet to another without making it public. This is great for sending relatively small amounts of money anonymously, although Dash does have some serious issues with its scaling issues.

Last Word

Whether you want to buy the currency itself and make money by trading it or invest in the companies that are developing blockchain technology, there are plenty of options available to you. So, where do you start? The first thing you have to do is understand exactly what cryptocurrency is. Once you have that knowledge under your belt, then it’s time to start looking around for different options for investing.