From seasoned pros to novices looking to dip their toe in the investment world, cryptocurrency has now become a popular area for asset trading.
While some people still have their doubts, successful entrepreneurs like Phillip Nunn have long been advocates of the cryptocurrency market and the opportunities it offers investors who have the knowledge to make the most of it.
However, if you are still in the dark about this area of investment, here are some of the key basic points that you should know so that you are well-informed when making any investment decisions.
What is Cryptocurrency?
The term cryptocurrency is used to refer to a range of different digital currencies, the most popular being Bitcoin. Unlike traditional types of currency, cryptocurrencies aren’t controlled by specific countries or regulated by governments. Instead, they are a digital asset created and traded using blockchain technology. Bitcoin has become synonymous with cryptocurrency, however, it is simply one of the many different tokens issued by companies and can be exchanged for goods and services online, in the same way as traditional currency.
One common theme shared by cryptocurrency and traditional currency is that both are subject to fluctuations in their value based on external factors.
How Can You Start Investing in Cryptocurrency?
Whichever cryptocurrency you decide to invest in, be it Bitcoin or one of the altcoins (alternative Bitcoins), the first thing you’ll have to do is to set up a digital wallet. Simply put, a digital wallet is a system which allows you to store your payment details for easy digital access to your assets.
In the case of cryptocurrency, you will need a digital wallet to store your public and private keys which will allow you to trade, invest, and spend cryptocurrency.
Because it uses a decentralised system, you can’t actually store your coins, or tokens, in your wallet, instead, you store the authentification needed to sign off on the transaction.
You will also need to decide if you want to invest in bitcoin, another altcoin, or multiple currencies, as not all cryptocurrency wallets support the use of multiple cryptocurrencies and you will need to choose the right wallet to meet your investment needs.
Once you have your wallet set up, you can then begin the process of trading and investing. In the same way that there are multiple exchanges the world over for trading stocks and shares, there is no single centralised cryptocurrency exchange.
Instead, there are several online platforms you can choose to use in order to invest in cryptocurrency, so make sure that you do plenty of research into which one will offer the most advantageous rates for your, along with the level of expertise you will need to use their trading system.
Focus on Long-Term Investment
Before you start investing in cryptocurrency, you need to understand that despite the sensational headline, this isn’t an avenue to pursue for anyone looking to get rich quick. Instead, you should see it as a long-term investment, especially if you are new to cryptocurrency trading as your profits will grow in line with your technical skills and knowledge.
Like most areas of investment, the crypto market is prone to frequent fluctuation, and you will find that the highest ROI is yielded in the long run.
You’ll quickly come to find that cryptocurrency investor practice a method called “hodling”. Originating from a typo of “hold” on a message board, the term is now commonly used to describe the act of holding on to your altcoins or tokens for the long term, rather than trading them each time the market fluctuates.
