Investing in crypto has been a hot topic for a few years now. As prices skyrocket, more and more investors learn on how to invest to make money and are viewing this decentralized currency as a powerful way to generate revenue. If you are a first-time investor in crypto via a crypto exchange, what do you need to know? Let’s take a look, starting with some basics.
What is crypto, exactly?
Think of crypto as a digital currency. Unlike IRL currency, crypto is not backed by real-world assets, a large bank, or a government. While you use dollars and other currencies to buy into crypto, it works using a decentralized technology called blockchain that is noted for its security. Crypto is purchased via crypto exchanges and used to ‘purchase’ goods and services online.
Just a few years ago, cryptocurrencies were few and far between. Today, there are over 10,000 cryptocurrencies that are publicly traded online. These cryptocurrencies raise money through events known as ICOs, or initial coin offerings. Think of IPOs for publicly traded companies in the real world. As of August 2021, the global value of the crypto market was estimated at just under 2 trillion dollars.
Bitcoin is the most popular and widely known cryptocurrency, having been on the scene the longest. Bitcoin currently enjoys a market capitalization of about 850 billion dollars. It’s followed by Ethereum in second place, and Binance, Tether, and Cardao round out the top 5.
Why Bitcoin?
Many consider bitcoin and other cryptos to be the currency of the digital future. Since these currencies rely on a decentralized economy, they are also viewed by many as a natural counterbalance to the centralized banking system, which has defined so much of finance and the global economy over the 100+ years. While banks have provided security for deposits and investments, historically, they have also ruled markets with an iron fist and over-managed the money supply. Still others view crypto as a safer alternative to IRL investments, as a decentralized system. Finally, the intrepid investor adores investing in crypto for the simple fact that it is volatile and offers serious, fast growth potential.
Should I Invest in Cryptocurrencies?
There is no denying that cryptocurrency is one of the most dynamic investment opportunities out there today. Of course, like all currencies, the ‘value’ of crypto depends on what others are willing to pay for the same currency that you purchased. For this reason, many view it as pure speculation.
While it might qualify under that category in some ways, it has delivered some serious returns for investors. As an example, Bitcoin, which was selling for mere cents over a decade ago, was trading at $20,000 by the end of 2017. Or course, the volatility that led to that dramatic uptick can lead to downturns. The next year, Bitcoin went down to around $3000 before surging back up once again.
So, is crypto a good investment? If there are resources in your coffers, yes, and provided you have a buffer against losses. It can also be a very effective way to transmitting money and diversifying cashflow.
How do I buy cryptocurrency?
As a starting point, you need to create an account on an exchange. Within this account, you will have a crypto ‘wallet’ that will hold your currency. Once you have created your account and wallet, you can use IRL currency to purchase cryptocurrencies. Keep in mind, some exchanges will only allow you to purchase their crypto once you already have crypto with which to make the purchase. Crypto exchanges such as Coinbase will allow you to set up a wallet and buy and trade multiple crypto currencies. More and more online brokers are also offering crypto currencies for trade.
The opportunities are out there for the intrepid. If you’re ready to take the leap, there is money to be made, if virtual.
About The Author
Ashley Rosa
Ashley Rosa is a freelance writer and blogger. As writing is her passion that why she loves to write blogs related to the latest trends in technology and sometimes on health-tech as well. She is crazy about food.
