The cryptocurrency market has seen exponential growth in recent years. There are now over 6,000 cryptocurrencies on the market and counting. Furthermore, unlike other traditional markets, it has become even more popular during the pandemic, along with NFTs .
Getting into cryptocurrencies will give you a lot of potential and room for growth. Many traditional investment firms and individuals have already incorporated it into their investment strategies to bring more growth to their portfolios.
However, as with any uncharted territory, it is best to have a steady and reliable guide to better navigate the seemingly complicated cryptocurrency market.
Let’s go over the basics of cryptocurrency before you make any major financial and investment decisions.
What is cryptocurrency?
Cryptocurrency is a digital currency that is managed by a decentralized system rather than a centralized authority. This digital or virtual currency is based on cryptography, or the mathematical and computational process of encoding and decoding data.
There are thousands of cryptocurrencies out there, but not all of them skyrocket in valuation like Bitcoin and Ethereum do (those are the two largest cryptocurrencies).
If you look at the price of Bitcoin , it’s easy to see its potential. Back in 2009, one Bitcoin was worth $0.0008. One unit of the coin can go for about $19,000, as of this writing. At one point, it reached $65,000 and could go back up.
All cryptocurrencies are digital and do not have any material representation, but they have some value that allows it to be used for real purposes. Cryptocurrency is a form of investment and like any investment, it has its pros and cons. Therefore, anyone who wants to dare to invest in any cryptocurrency must have a solid knowledge of its characteristics.
Advantages and disadvantages of cryptocurrencies
Before we look at how to invest and trade cryptocurrencies, it is crucial to understand the pros and cons of this decentralized financial vehicle so that you can make a more informed decision on whether you want to pursue it or not. So here are the pros and cons of getting into cryptocurrencies.
Steps to Enter the Cryptocurrency Market
Rapid growth
The value of cryptocurrencies can skyrocket in a matter of days, sometimes even overnight. Cryptocurrency investors and enthusiasts can attest to their potential for exponential growth. This is also one of the reasons why there are people who decide to become full-time cryptocurrency investors.
High popularity
The cryptocurrency was invented in 2009 by an unknown person or group of people using the name Satoshi Nakamoto and has become known to more and more people since its conception. Statistics show that over 59 million Americans owned some form of cryptocurrency in 2021.
Innovative technology
Since cryptocurrency exists in the digital world, it has highly innovative technology. One of its innovations is the ability to shift financial concepts such as ownership and value. In a blockchain, data cannot be changed or falsified, meaning that a person can have a truly original claim to a digital asset.
Consequences of entering the cryptocurrency market
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High risk
Among all investments, cryptocurrencies fall into the high-reward, high-risk category. The valuation can go up quickly, but it can also go down at any time. The cryptocurrency market, for now, depends on many opinions and speculations. So, the prices will remain extremely volatile. But cryptocurrencies carry the promise of rapid and exponential growth, but with it comes the risk that they will also lose their value overnight.
Lots of rumors and fake news
With the amount of attention it receives in the online community, it is no surprise that there are people who use it as an opportunity to deceive and exploit people through rumors and fake news.
Not all coins become big
While there are thousands of cryptocurrencies available in the digital world, not all cryptocurrencies rise to the top. This is the reason why every aspiring cryptocurrency investor must carefully investigate which cryptocurrency has the highest potential to give the highest profit.
Now that we have considered the pros and cons of entering the cryptocurrency market, it is time to look at some highly effective tips and tools to help you make the transition to the digital market.
6 Tips and Tools to Help You Win in Cryptocurrency
So now let’s look at some ways you can prepare to enter the world of cryptocurrencies if you ever decide to do so. Here are six tips and tools to help you learn how to trade cryptocurrencies and make a profit.
1. Know the technology before you start
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Never invest in something you don’t understand. When you invest in cryptocurrencies without learning the basics, it’s a gamble. The risk of losing your investment is much higher. The cryptocurrency market has different terms that you need to understand, and some concepts are too overwhelming due to their complexity.
There are resources online that offer cryptocurrency trading tips for beginners. Once you have a good understanding of cryptocurrency technology, you can move on to the next step.
2. Research what cryptocurrencies you want to trade or invest in
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With thousands of cryptocurrencies available in the digital world and knowing that not all cryptocurrencies make it big, it is essential to do some research. You can start with the most well-known ones, as they have the most information available on the internet. Then you can start exploring other cryptocurrencies that offer unique real-world benefits.
3. Choose a good trading platform
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A trading platform is where you can buy and sell your cryptocurrencies. A good trading platform allows you to see the movement of the cryptocurrency market in real time. Another feature of a good trading platform is that it is user-friendly for first-time users. Many trading platforms also serve as a cryptocurrency analysis tool, which helps provide insight into trends and news that may affect cryptocurrency prices.
Since you are new to the cryptocurrency market, it is important that you do not feel overwhelmed by what you see on the platform. Some other features of a good training platform are security and efficiency.
4. Use a portfolio management system
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A portfolio management system helps you manage your assets, shielding you from unnecessary risks that come with trading and investing. Using an investment portfolio management system allows you to calculate your profit and loss when entering or exiting, and come up with other strategies that will help you grow your cryptocurrencies.
5. Register your investments on an accounting or financial platform
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A simple trick to managing cryptocurrencies is to make sure you keep track of your coins or digital assets. Using an accounting platform will help you monitor the movement and growth of your digital investments. Keeping a record of your investments allows you to see which cryptocurrencies you need to let go of and which you can keep. There are various examples of accounting systems found online that you can check out. Try looking for accounting software that you can run in the cloud.
6. Don’t give in to fear or greed
As with any investment, fear and greed are the two biggest enemies of any investor. Remember not to let your fear of taking risks get to you. Losing your investment shouldn’t stop you from getting in and exploring the promising opportunities that cryptocurrencies have to offer. In the same way, don’t let greed get to you either. Set your goals, use solid crypto market analysis to make decisions, and execute your purchases and trades accordingly.
With the right tools, useful tips, and well-calculated decisions, you can successfully enter and understand the cryptocurrency market. You can confront your fear with the power of knowledge and correct information.
Cryptocurrency in the future
Cryptocurrency is being called the currency of the future, although ironically, this currency is already being successfully used to enjoy real-world services and privileges. Even though cryptocurrency is known as a volatile investment, more and more people are getting into it due to its innovative properties. So, you shouldn’t be surprised if you can buy your groceries or refuel using cryptocurrency sometime in the future. It may take some time, but the day when we synchronize it with our daily lives will surely come.
