How to Invest in Cryptocurrency: Those who believed in cryptocurrencies a few years ago and invested their free funds in them are now reaping the fruits of their wise decision. Fortunately, opportunities for successful crypto investments in 2023 have not closed and people also have a chance to make good money. The article will tell you how to correctly invest in cryptocurrency.
Cryptocurrencies have gained increasing popularity over the past few years, with many people looking to invest in them as a way to diversify their portfolios and potentially earn high returns. However, investing in cryptocurrency can be a complex and risky endeavor, and it is important to carefully consider your options before making a decision. Here are some tips on how to invest in cryptocurrency:
- Research the market: Before investing in cryptocurrency, it is important to do your homework and research the market thoroughly. This includes learning about different cryptocurrencies and the technology that powers them, as well as understanding the risks and potential rewards of investing in this asset class.
- Choose a reputable exchange: To buy and sell cryptocurrencies, you will need to use an online exchange. There are many exchanges to choose from, and it is important to select a reputable one that has a good track record of security and customer service. Look for an exchange that is regulated by a government agency, and make sure to check for any red flags such as a history of hacks or complaints from users.
- Understand the risks: Cryptocurrencies are highly volatile and their prices can fluctuate significantly over short periods of time. This means that investing in cryptocurrency carries a high level of risk, and you should be prepared to potentially lose all or a portion of your investment. It is also important to be aware of the potential for fraud or scams in the cryptocurrency market.
- Diversify your portfolio: To help mitigate risk, it is generally a good idea to diversify your portfolio by investing in a range of different cryptocurrencies. This can help to spread risk across a number of different assets and potentially reduce the overall volatility of your portfolio.
- Keep your assets safe: It is important to keep your cryptocurrencies secure by storing them in a wallet that is resistant to hacks and other security threats. There are several types of wallets to choose from, including hardware wallets, software wallets, and paper wallets. Make sure to choose a wallet that is suitable for your needs and follow best practices for securing it.
Overall, investing in cryptocurrency can be a rewarding but risky endeavor. By doing your research, choosing a reputable exchange, and taking steps to diversify your portfolio and keep your assets safe, you can increase your chances of success in the cryptocurrency market.
Investing in Cryptocurrency: The Best Ways
Here are the most suitable exchanges for investing in crypto in 2023:
- Capital.com is a broker where you can buy cryptocurrency CFDs.
- OKX is a large crypto exchange with high liquidity and transaction speed.
- eToro is an international exchange that allows you to automatically copy trades of successful professionals.
- Binance is a platform with a wide range of cryptocurrency trading functionality.
Cryptocurrency Investment Platforms
The safest and most convenient option for investing in digital money is to buy coins through cryptocurrency exchanges. To invest in cryptocurrency on the exchange, you need to take a few simple steps:
- Go through the registration process.
- Deposit money.
- Go to the trade section and select bitcoins or altcoins to buy.
- Specify the transaction amount and confirm the transaction.
It is also important to cooperate with a platform that will provide a first-class service and ensure reliable asset protection. These sites are listed below.
The platform has been providing services to investors since 2016 and submits extensive reports on its work to several well-known global regulators. This approach allows you to implement high-security standards and ensure the complete confidentiality of user data.
Through Capital.com, it is easy to invest not only in cryptocurrencies but also in:
- fiduciary currencies
- commodities – various metals, gas, oil, agricultural products, etc
To increase the profitability of cryptocurrency transactions, Capital.com provides traders with the opportunity to work with CFDs – contracts for differences in prices. The user can make a deal to change the price of the coin. The difference is calculated from the moment the order is opened to the time the contract ends. If a trader correctly predicts the movement of the value, then he will be able to earn not only if the cryptocurrency grows, but also if its price decreases.
Capital.com also has an asset management service. If a person is poorly versed in cryptocurrencies and does not want to spend time studying them, he can transfer his funds to specialists for management.
- Very simple, logical, intuitive terminal interface.
- Zero trading commission, no commission for depositing and withdrawing funds from the deposit.
- Open CFDs with small overnight fees.
- Access to excellent analytics, technical and fundamental analysis tools, and instant price fluctuation alerts.
*any trading involves risk
One of the world’s largest cryptocurrency exchanges has been operating since 2013. The company is now trusted by millions of investors from more than 100 countries.
OKX provides a stable and secure environment for various crypto trading activities. On site you can:
- purchase cryptocurrency for fiat
- exchange coins with each other
- invest in crypto directly without intermediary participation through the P2P service
- conduct spot, and margin trading
- work with futures and options
- engage in mining
- credit other users with digital money
OKX has both desktop and mobile apps that can be installed on Android or iPhone smartphones. All trading terminals have wide functionality, giving investors the opportunity to invest in cryptocurrencies at a convenient time from anywhere.
OKX is issuing its own utility token. OKB holders can significantly reduce trading fees, as well as take part in voting.
- Large trading volume, which helps maintain high liquidity.
- Ensuring security with the help of various passwords for entering and accessing assets, conducting additional checks by phone number and e-mail, and using an anti-phishing code.
- The ability to trade with different types of orders – from basic to advanced.
- Replenishment of the deposit without taking commissions.
*any trading involves risk
Image Source: time.com
The company was founded in 2007. Now over 20 million users from all over the world are investing with the help of eToro.
A distinctive feature of the platform is the availability of a convenient CopyTrader social investment service that allows you to trade crypto based on the actions of other investors. For CopyTrader you need:
- Choose a trader whose trades you want to imitate.
- Click the button that will automatically display all the positions of the selected investor.
- Make deals, optionally setting a stop-loss to minimize losses in case of an incorrectly predicted price reversal.
Up to 100 traders can be copied simultaneously, although the minimum amount for copying trades is $200. However, even without using the CopyTrader feature, an eToro client can view other users’ investment portfolios and their investment statistics to better understand investment strategies.
- A small threshold for starting investments – the minimum deposit amount is the equivalent of 10 dollars.
- The ability to automatically copy cryptocurrency trades from professional traders – users can follow the strategy of the investor whose trading they like best.
- The presence of a demo account, where it is possible to practice with virtual money.
- Free cryptocurrency wallet for iOS and Android platforms.
The company was opened in 2017. There are now 90 million registered users on Binance, who can work in different modes depending on their experience:
- Beginners get access to basic trading, where all operations are carried out as simply and quickly as possible.
- Experienced traders can use the classic trading terminal to be able to analyze indicators and charts.
- Experienced professionals are offered to use the PRO advanced trading mode with sophisticated tools.
Investors also get access to the P2P platform, where it is easy to make a deal directly with the seller of the desired cryptocurrency. And Binance, for its part, makes sure that the operation is carried out without deception and that the interests of counterparties are not affected.
Of the unpleasant moments, it is worth noting that there was a case of hacking Binance. Hackers were able to get to the assets of several hundred users. The exchange administration returned the stolen funds to investors and tightened internal security requirements. So now the crypto exchange provides a high level of protection for client money.
- Huge selection of coins – access to more than 600 cryptocurrencies.
- Several trading modes.
- Providing access to cold crypto storage for holding digital currencies.
- The opportunity to earn on staking – a cryptocurrency deposit that is similar to a regular bank deposit.
Ways to invest in cryptocurrency
As noted above, exchanges are the best option for investing in cryptocurrencies. However, there are other ways to invest in digital currencies:
- Purchase through online exchange offices. In the exchanger, you can quickly buy bitcoins and popular altcoins for rubles. However, the exchange office does not conduct transactions of large volumes, does not sell exotic digital coins, takes a high commission, and requires the user to already have a crypto wallet.
- Purchase through payment services. A number of electronic payment systems, such as QiWi or WebMoney, are ready to make it possible to exchange rubles for cryptocurrency. But, like exchangers, they do not hold large volumes of decentralized coins and charge a commission of 5%. In addition, payment systems often still take an additional fixed fee from each transaction.
- Redemption in a cryptomat. In large US cities, there are cryptocurrency machines similar to bank ones. In a cryptomat, you can conduct an anonymous transaction if you pay in cash rubles. However, the commission turns out to be high, and the choice of crypto is very small. There is also a rather high risk of running into a cryptomat, which is installed by scammers.
In addition to direct investments, there are also indirect ways of investing in cryptocurrency. In this case, you can not buy the coins themselves but invest in assets that are somehow related to the crypto. It can be:
- Units of investment funds that invest part of their funds in cryptocurrency assets.
- Shares of cryptocurrency exchanges.
- Securities related to crypto, for example, shares of enterprises that manufacture equipment for mining.
Digital Money Investment Strategies
Depending on the term, there are 3 ways to invest in cryptocurrency:
- Long-term investment. In this case, the investor acts according to the “buy and hold” rule. A person chooses coins that can show good growth in a year, buys them, and no longer monitors how their value changes. The advantage of this strategy is its simplicity. However, with long-term investments, the investor will receive less profit than if he constantly checks the course and fixes profits on the rise in prices.
- Short-term speculation. A trader buys and sells coins within one working day and tries to constantly earn on them. A lot of time is spent on short-term trading, but the potential earnings often reach huge values, in contrast to the modest income from long-term passive investments.
- medium-term investment. This hybrid strategy is between the first two. The user does not invest daily but also does not forget to periodically monitor the cryptocurrency markets. If the coin sags in price, the investor buys more in anticipation of growth in the future. And if the token reaches the peak value, the trader sells it.
*any trading involves risk
Advantages and disadvantages of cryptocurrency assets
The obvious advantages of investing in cryptocurrency are:
- Potentially high returns. Real estate, securities, commodities, and trading in fiduciary currency pairs do not make it as easy and quick to make a profit as investing in promising crypto-coins.
- Small investment costs. When working with traditional assets, an investor has to deal with a huge army of intermediaries, each of which “pinches off” a little from his capital. But the cryptocurrency market functions without bureaucratic regulations and delays, which eliminates numerous commissions for intermediary services.
- Low entry threshold. The price of altcoins varies significantly among different coins, which opens up wide opportunities for investment. It makes no sense for a novice investor to save a large amount as initial capital since even with 1000 rubles you can find excellent investment options.
- Ability to remain anonymous. Digital decentralized money is not controlled by any power structure, so the user can invest in them without revealing their personal data.
- Good liquidity. Cryptocurrencies, unlike securities or real estate, can be both quickly bought and quickly sold when cash is urgently needed.
But the cryptocurrency market also has disadvantages that an investor should take into account:
- Difficulties with the law. Some countries are tightening regulations in the field of cryptocurrencies. However, this does not happen in the USA Federation, so USA investors now do not have to worry about possible bans.
- The riskiness of investments. It is impossible to give firm guarantees that the crypt will grow all the time.
- The attractiveness of cryptocurrency assets for numerous participants. The more people invest in crypto, the more predictable the market becomes, which can lead to a lack of huge profits over time.
What it is desirable to consider for a beginner before investing in crypto
Those who are just starting to master the world of cryptocurrency investments should learn the following points:
- Cryptocurrencies are characterized by high volatility. High volatility is a sharp price change both up and down in a very short period of time. Therefore, you should invest only free money that will not be needed in the near future. In this case, even with a fall in the value of assets, it will be possible to calmly wait out the black streak and, as a result, still make money on the crypt.
- Chaotic investment usually leads to failure. It is not at all necessary for a beginner to develop a complex strategy, but at least a simple investment plan is necessary. Following the rules, regular reinvestment of profits will allow even a small start-up capital to be turned into a stable source of passive income.
- Studying and self-education help to avoid mistakes. It is advisable for an investor to set aside time to read financial news, comprehend promising trading strategies, study the basics of technical and fundamental analysis, and take free educational courses on reliable sites such as Capital.com, Binance, OKX.
Frequently Asked Questions
What steps do I need to take to invest in cryptocurrencies?
Understand the possible risks of investing in altcoins and develop an investment strategy. 2. Analyze the state of the crypto market and select the most optimal digital coins for investment in the current situation. 3. Choose a platform for investing in cryptocurrency and buy crypto there.
Is it possible to invest digital money at interest?
Yes. A number of exchanges (such as Binance) offer staking services. The investor places the cryptocurrency in the exchange wallet and receives a percentage for its storage. The amount of payments depends on the type of coin, the period of storage, and the invested amount.
Is there a legal ban on investing in cryptocurrencies?
No. In the USA, it is legal to invest in cryptocurrencies.
Is there a risk that my cryptocurrency will be stolen from me?
Of course, anyone who has at least some property can face thieves. And cryptocurrency is no exception. To avoid hacker attacks, you need to: store large amounts of coins in reliable exchange or hardware crypto wallets; generate complex passwords to access vaults; Do not share personal information with strangers.