Cryptocurrency is not only well-known Bitcoin, but also tens and even hundreds of types of electronic money, which appeared on the market almost 15 years ago and are actively entering into normal circulation. It is still difficult to get used to them, though, partly due to the fact that not everyone understands how electronic money works, what its structure is like and what can be done with it.
But as you study this topic, it becomes clear that cryptocurrency can be used like ordinary money: namely, it can be stored, multiplied, spent and invested.
What we know about cryptocurrencies
It is impossible to hold a crypt in your hands, because it does not physically exist in the form of coins or banknotes – it is a computer code. Digital money has only a virtual form and circulates only in cyberspace. While in the ordinary world, exchange rates are regulated by states, there is no unified control center.in the cryptocurrency sphere. Therefore, the rate of the crypt is quite volatile and may depend on various factors – both from the joke about bitcoin in the morning TV show, and from the international agreements signed that day.
The most popular cryptocurrency is Bitcoin (Bitcoin), which occupies a large part of the market. The second most popular is ethereum, aka ether They are followed by such cryptocurrencies as Cardano, Ripple, Solana, Tether, Litecoin, etc. In total, there were 13 thousand cryptocurrencies in the world at the end of last year and their number is constantly increasing.
Why is interest in digital finance growing?
- There are a lot of Cryptocurrency in the world , states are already developing and introducing rules for digital money in accordance with their laws. People’s trust in cryptocurrency is gradually growing.
- As a result, it is already possible to buy cryptocurrency in a street vending machine. For example, there are bitcoin ATMs in the USA, Canada, Great Britain, Austria, Switzerland and other countries.
- Unlike traditional currencies, „Digit” is less affected by events in the political market and inflation – in the financial one. At the same time, the volatility of digital money depends on completely different factors and can even change several times a day. However, even if the cryptocurrency rate collapses, it quickly recovers.
- Demand for cryptocurrency exceeds supply, so its value will be quite high for a very long time, and the electronic money market is potentially the most profitable and it is developing very quickly.
- Cryptocurrency is quite difficult to steal, blockchain technology actively protects digital money.
- Investing in cryptocurrencies can take place in different ways: in the form of a direct purchase or as an investment in crypto-currency funds or companies.
Buying and Selling Cryptocurrency
So, there is a full-fledged means of payment tha can be disposed of. For example, to buy. First you need to choose a place to store it – a crypto wallet. Usually this is a mobile application, a special program or a separate standalone device.
You can buy digital currency on your own in a cryptocurrency exchange or by contacting industry specialists – brokers. Since there are a lot of digital currencies and they are all different, the commission on purchase may be different depending on the type of currency.
How many to buy: one or more cryptocurrencies? As many as you like, as long as it is a quality investment. If you buy digital currency only for storage and possible future use, it is better to keep it in a cryptocurrency wallet
If there are plans to sell and buy crypto again, then it is better to keep this money in an exchange account. Of course, it has to be a well – known, large crypto trading platform with an untainted reputation.
Otherwise, there is a great risk of running into fraudsters. That’s why popular exchanges require proof of identity to open an account there. Then the cryptocurrency balance is deposited directly from the card or through a payment system.
The further the easier. If crypto is getting cheaper, it is better to buy it, if it is getting more expensive – to sell it. The only problem is to catch the right moment, analyzing in advance all possible reasons for the decline and rise of the rate. To do this, you will have to immerse yourself in the topic of cryptocurrency.
It is worth it: for example, bitcoin shows constant growth against the ruble and has a high capitalization. And the potential of other cryptocurrencies has not yet been fully explored, but market experts say that their value will only grow.
Investments in cryptocurrency companies and funds
You can’t do without a thorough study of the market and planning the financial goals of using cryptocurrency – this is a long-term investment with not always predictable consequences.
Now the most attractive are companies that are fully or partially focused on cryptocurrencies, for example, for the production of cryptocurrencies or for the production of equipment for its extraction (mining), as well as companies that actively support cryptocurrencies in their calculations.
If you do not want to choose between companies, then you can invest in funds focused on cryptocurrency. This is the best solution for inexperienced cryptocurrency holders at the moment. Such funds are tied to the digital money sector, whose quotes rise or fall. As soon as the crypto assets bought in the fund rise in price, the funds sell them, and investors receive their share of the profits.
Investing in crypto is not available to everyone – partly because of the high quotes, partly because of conservative fears of a new monetary system. However, investors have already gained sufficient experience, which allows them to minimize the risks associated with the high volatility of the crypto, thanks to the diversification of the currency portfolio. Young businessmen master new technology cautiously, but already with an understanding of its successful future.
There are risks and challenges
Not a single trade transaction can do without it since the advent of trade in the history of mankind. At the moment, while cryptocurrencies have not gained a foothold as a standard means of payment, ignorance of all the nuances or excessive gullibility can hit a crypto investor in the pocket.
Therefore, experts recommend paying attention to the following nuances:
- The cryptocurrency market is not yet sufficiently regulated, so investors do not have global state protection. Therefore, you need to be very careful when investing in cryptocurrencies, carefully study each investment. The best way is to trust specialists who will explain every step of the investor in detail.
- The way the time-tested Bitcoin or Etherium cryptocurrencies behave in the market is more or less predicted. The situation with other types of digital money needs to be analyzed very carefully. In any case, you need to invest in different cryptocurrencies, for example, 50% in bitcoin, 30% in ethereum, and the rest in other money in order to reduce the level of risk in the event of a possible fall in the exchange rate of one or another cryptocurrency.
- Payment transactions with small amounts may not be profitable due to the commission charged for the transfer.
- Potential losses will have to be taken into account and be prepared for them. Therefore, it is better to invest such amounts that you can afford to lose.
The decision to invest in cryptocurrencies has a certain amount of risk, but at the same time it is highly profitable. To do this, you need to clearly understand your capabilities, have an action plan for different scenarios for the development of events in the cryptocurrency market and monitor the dynamics of not only this market, but also legislation in the field of virtual money and be aware of all innovations.