Cryptocurrency is a relatively new concept in terms of the stock market. However, that has not stopped digital currencies taking off, with more people starting to take it seriously. Crypto’s sharp rise in popularity over the last few years has seen people who have never invested in anything before suddenly decide to start trading. But while the thought of investing in cryptocurrency can certainly seem attractive, it’s essential that you do your homework and plan carefully. So, what should you know about before you start investing in cryptocurrency?
Unfortunately, the increased interest in cryptocurrencies has given rise to cybercriminals trying to cash in on its popularity and taking advantage of potential investors. You might see adverts promising massive returns from crypto investments or making exaggerated claims about predicted price increases. As the old saying goes though, when something sounds too good to be true, it usually is. You should always have your wits about you when investing money, and that applies to cryptocurrency too.
Use an exchange
In order to ensure maximum online safety and security, it’s essential that you trade your cryptocurrency via a designated crypto exchange. Traditional crypto exchanges operate in a similar way to stockbrokers and provide you with the tools and resources to trade cryptocurrencies. Ideally, a reputable crypto exchange should make buying and selling easy and have strong in-built security features. Think about how you use your money online – you wouldn’t make a transaction on an unregulated site, would you? Regardless of whether you’re buying cheap flights, paying for goods and services or spinning the wheel on the Casino 777 roulette platform, you always should go to a credible platform, therefore crypto trading shouldn’t be any different.
Assess the risks
Any money investment comes with a level of risk, but crypto even more so. Even if you’re a well-seasoned stock market trader, you need to be aware that crypto is likely to be completely different from anything you’ve invested in before. Most significantly, it’s unregulated and is not backed-up by any convertible commodity, like gold, for instance. This means that not only does it not qualify as legal tender in most economies, there is no recourse if anything goes wrong with your investment. Furthermore, crypto is still a relatively new market and so doesn’t have the same track record on its performance as other trading items.
Consider the timing
As with any investment, it’s vital that you determine whether now is the right time for you to stake your money. It’s always a good idea to keep track of the market for some time before you part with your cash so that you can try and identify the best time possible to invest. Try to buy your chosen crypto when its price is low, so that you can hopefully sell it back when the value goes back up. While cryptocurrency is extremely volatile and harder to predict in terms of its performance, it’s still wise to familiarise yourself with the market and track any significant trends. You also need to ascertain that you yourself is definitely ready to invest in crypto at this time. Do you have any outstanding debts? Do you have back-up funds in your account in case your investment should go wrong?
As with any investment, you should always use reputable sources, assess the risks, and have your wits about you when trading in crypto. Before you part with your money and invest in a cryptocurrency, make sure you take all our advice into account.