Cryptocurrency seems to be the hottest rage these days. Every other conversation we are having these days seem to be around cryptocurrency. People want to know more, but they don't know where to start.
While cryptocurrency investing can be intimidating for those just starting out, we’ve laid out five easy tips for people to get started.
1) Do Your Homework and understand blockchain before Investing
First and foremost, investors just getting started with cryptocurrency need to do their homework. There are many active cryptocurrencies (hundreds). Most of these cryptocurrencies are start-ups, and most start-ups fail. Research the business model in detail for any coin or token you are considering and then carry out due diligence – look for current funding, leadership team, technology, marketing plans, product plans and product maturity. We recommend CoinCheckUp – https://coincheckup.com/ – to keep track of all these.
Investing in cryptocurrency is highly speculative and very new. The markets are mostly unregulated, although governments are trying to change this. Whenever we buy crypto, we only invest in what we're prepared to lose.
Another tip would be to find a trusted person or resource that you can engage with to ask questions to understand the ins and outs of investing in a secure environment. We use services like CryptoIQ – https://cryptoiq.co/ – and our network to get insights.
2) Diversify Diversify Diversify
Bitcoin seems to be the buzzword over the past few years. Bitcoin has produced some incredible gains, turning early investors into millionaires, but it’s not the only coin to invest. Diversifying your investments is essential – consider altcoins and more traditional assets such stocks.
The basic idea behind diversification is creating a portfolio where a decline in one component will correspond with an equal gain in another. ( Our rule of thumb right now is 60% in Bitcoin, and BlueChip coins – Ethereum, Litecoin, NEO and Stellar, – 20% in altcoins and 20% cash – This allows us to have money available and be ready to buy when the market is low – when there's a dip.
3) Keep your coins secured
Avoid storing your cryptocurrency on an exchange wallet for a long time. The problem with this is that digital exchanges are often centralized and break the blockchain link between the cryptocurrencies and the digital wallet, exposing your cryptocurrency to attacks.
We use Trezor hardware wallet, and we recommend it. Trezor is one of the first movers in the hardware wallet industry. Trezor is the golden standard for security in the crypto world. It protects your crypto against both virtual and physical theft –
https://www.ledgerwallet.com/products/ledger-nano-s.
4)Prepare for the highs and lows
The digital currency world is extremely volatile. One week you are going to the moon, and the next you have lost almost all of your gains. The two main strategies we use are diversification, which we covered above, and buy and hold. We use a small amount of our portfolio to do day trading – we'll include that in a different post. But, there are many times where we invest in a coin and forget about it. Cryptocurrency, for us, is the way of the future, so we're investing for the long term. Not only holding is inexpensive and straightforward, but it also lowers trading fees.
Gavin Yeung, founder & CEO of digital asset management firm Cryptomover, offered a similar point of view.
"We at Cryptomover believe that a passive investment style will outperform active strategies in the long term," he stated. "Not only is passive investing inexpensive and simple, but it also lowers trading fees leading to much lower operating expenses."
5) Know what exchange to buy through
Many factors go into consideration for what a top digital-exchange is, the two most prominent are reputation and security.
We use Bitstamp.net and Coinbase/GDAX – https://www.coinbase.com / https://www.gdax.com – to convert from fiat to cryptocurrency. These two exchanges only offer what's called Blue Chip coins – Bitcoin, Litecoin, Ethereum. To purchase alt coins we use Binance.com, it's easy to use, and they have a big selection of coins.
Usual disclaimer: none of this should be taken to be trading or investment advice.
