Investing your hard-earned money in cryptocurrencies like Bitcoin may seem like a daunting prospect. Yet, with the right advice and a bit of research, it can be a completely worthwhile experience.
Wait, isn’t Bitcoin over?
If you’re yet to get started investing in Bitcoin, chances are the only time you’ve ever really come across the idea of cryptocurrencies is when they’ve hit the headlines. It’s true that although Bitcoin rallied hard early last year, it subsequently crashed in November.
However, despite the recent drops in the price of Bitcoin and other cryptocurrencies, they’re far from being finished. In fact, many profitable Bitcoin investors have hung onto their coins and many are planning on investing more very soon.
The fact is, cryptocurrencies are becoming more mainstream. Of course, this means that there are plenty more interested parties but it also means that they are becoming more accepted throughout the internet.
As such, cryptocurrencies are becoming a very legitimate alternative to traditional investments.
So, what do I need to know before investing?
As we’ve just mentioned, investing in cryptocurrencies can be a very lucrative experience – if you know what you’re doing. Below we’ve listed four of the main things you need to consider before you start your crypto journey.
1. Ignore the headlines
First things first, in order to invest in cryptocurrency successfully, you’ll need to start ignoring the headlines. Many financial companies and media personas have a vested interest in telling you about all the problems and flaws of cryptocurrencies.
Moreover, many people fear what they do not understand. This leads to sensationalist headlines, which will tell you that an investment in crypto is a bad idea or that it’s about to crash at any moment.
To be a savvy cryptocurrency investor, you simply need to stick to your guns and ignore all of the naysayers. If you don’t, you’ll end up doubting yourself and your investments at every turn.
2. Prepare for the unexpected
While we’ve just stressed how important it is to ignore the headlines surrounding cryptocurrency, you also need to be prepared for how volatile the cryptocurrency markets are.
Successful cryptocurrency investors need to become accustomed to huge price swings, which aren’t generally seen in more traditional markets. Understanding that your investment may not always perform in the way you want will help you to make rational decisions, instead of becoming emotional when you experience a loss.
3. Make sure you invest in more than one cryptocurrency
As the old saying goes, don’t put all your eggs in one basket. One of the best decisions a budding cryptocurrency investor can make is to diversify their portfolio. This means choosing a selection of ‘altcoins’ as well as the more well-known currencies such as Bitcoin and Ethereum.
Different cryptocurrencies are used for different purposes and in different industries. A diverse collection of crypto investments, therefore, means that you aren’t dependent on one certain industry and aren’t at risk if that industry decides to shun cryptocurrencies.
4. Invest in the correct storage for your new cryptocurrencies
Another huge factor to consider before investing in cryptocurrency is where you will store your coins once you’ve purchased them.
Cryptocurrency can be stored in:
- Cold storage – an offline wallet
- Hot storage – linked to the internet
Hot storage may seem convenient for trading, yet it can be a very risky option. Online and mobile payment wallets are susceptible to being hacked and this is why we recommend all new crypto investors purchase a cold storage option.
Keep the majority of your investments in cold storage and a little which you may want to move regularly in an online wallet.