The cryptocurrency market has experienced exponential growth in recent years. Presently, there are over 6,000 cryptocurrencies in the market and counting. Moreover, unlike other traditional markets, it became even more popular during the pandemic, along with NFTs.
Getting into cryptocurrency will give you a lot of potential and room for growth. Many traditional investment firms and personalities have already integrated it into their investment strategies to bring their portfolios more growth.
However, just like any uncharted territory, it is best to have a steady and reliable guide to better navigate through the seemingly complex market of cryptocurrency.
Let us go through the basics of cryptocurrency before you make any major financial and investment decisions.
Table of Contents
- 1 What is cryptocurrency?
- 2 Pros and Cons of cryptocurrency
- 3 Cons Entering the Cryptocurrency Market
- 4 6 Tips and Tools to Help You Win in Cryptocurrency
- 5 Cryptocurrency in the future
What is cryptocurrency?
Cryptocurrency is a digital currency 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, but not all of them skyrocket in valuation like Bitcoin and Ethereum do (these are the two biggest cryptocurrencies).
If you look at Bitcoin’s price, it’s easy to see its potential. Back in 2009, one Bitcoin was worth $0.0008. One coin unit can go for around $19,000 as of this writing. At one point, it reached $65,000 and could still go back up.
All cryptocurrencies are digital and have no tangible representation but have a certain value that allows you to use it for real-world utilities. A cryptocurrency is a form of investment, and just like any investment, it has its pros and cons. Therefore, anyone who wants to venture into investing in any cryptocurrency must have sound knowledge about its characteristics.
Pros and Cons of cryptocurrency
Before we look into how to invest and trade cryptocurrency, it’s crucial to understand the pros and cons of the decentralized finance vehicle so you can make a more informed decision on your own on whether you want to pursue it or not. So here are the advantages and disadvantages of entering into crypto.
Pros of Entering the Cryptocurrency Market
The value of cryptocurrencies can quickly grow in a matter of days, even sometimes overnight. Crypto investors and enthusiasts can attest to its potential to grow exponentially. This is also one of the reasons why there are people who choose to become full-time investors in cryptocurrency.
Cryptocurrency was invented back in 2009 by an unknown person or group of people using the name Satoshi Nakamoto and ever since its conception, it has become famous to more and more people. Statistics show that over 59 million Americans owned some form of cryptocurrency in 2021.
Since cryptocurrency exists in the digital world, it possesses a highly innovative technology. One of its innovations is its ability to shift financial concepts such as ownership and value. In the blockchain, data cannot be altered or forged which means that a person can have a truly original claim on a digital asset.
Cons Entering the Cryptocurrency Market
Amongst all investments, cryptocurrencies fall under high yield and high risk. Valuation could go up fast, but it could also drop at any point. The crypto market, for the time being, depends on a lot of opinion and speculation. So the prices will remain extremely volatile. But cryptocurrency holds a promise of rapid and exponential growth but along with it is the risk of also losing its value overnight.
Many hearsays and fake news
With the kind of attention it has been receiving in the online community, it is without surprise that there are people who are using it as an opportunity to deceive and take advantage of people through hearsay and fake news.
Not all coins become big
While thousands of cryptocurrencies are available in the digital world, not all cryptocurrencies rise to the top. This is the reason why any aspiring crypto investor must closely study which cryptocurrency has the highest potential to give the highest yield.
Now that we have considered the pros and cons of entering the cryptocurrency market, it is time to look into some highly effective tips and tools to help you transition into the digital market.
6 Tips and Tools to Help You Win in Cryptocurrency
So now, let’s look at some ways for you to prepare to enter the world of crypto if you ever decide to do so. Here are six tips and tools to help you learn how to trade cryptocurrency and make a profit.
1. Learn the technology before you start
Never invest in something you don’t understand. When you invest in cryptocurrency without learning the basics, that is gambling. The risk of losing your investment is much higher. The cryptocurrency market has various terms that you need to understand, and some concepts are too overwhelming because of their complexity.
There are resources on the Internet that offer cryptocurrency trading tips for beginners. Once you have adequate knowledge about cryptocurrency technology, you can jump to the next step.
2. Study what cryptocurrencies you want to trade or invest in
Since thousands of cryptocurrencies are available in the digital world and knowing that not all crypto make it big, it is essential to do your research. You can begin with the most famous ones because they have the most available information on the Internet. Then you can begin to discover other cryptocurrencies that offer unique real-world utilities.
3. Choose a good trading platform
A trading platform is a place to buy and sell your cryptocurrency. A good trading platform allows you to see the movement of the cryptocurrency market in real-time. Another characteristic of a good trading platform is that it is first-time user-friendly. Many trading platforms also serve as a cryptocurrency analysis tool that helps give insights into trends and news that might affect crypto prices.
Since you are a newbie in the cryptocurrency market, it is essential that you do not feel overwhelmed with what you see on the platform. Some other characteristics of a good training platform are security and efficiency.
4. Use a portfolio management system
A portfolio management system helps you manage your assets by shielding you from unnecessary risks brought by trading and investing. Using an investment portfolio management allows you to calculate profit and loss when you exit or enter and come up with other strategies that will help you grow your cryptocurrencies.
5. Log your investments on an accounting or finance platform
A simple trick in managing your cryptocurrency is making sure that you track your coins or your digital assets. Using an accounting platform helps you monitor the movement and growth of your digital investments. Logging your investments allows you to see which cryptocurrencies you need to let go of and which ones you can retain. There are various examples of accounting systems found on the Internet that you can check out. Try looking for an accounting software that you can operate on the cloud.
6. Don’t give in to fear or greed
Like any investment, fear and greed are the top two enemies of any investor. Remember not to let the fear of taking a risk. Losing an investment should not stop you from entering and exploring the promising opportunities that cryptocurrencies offer. In the same way, don’t let greed get over you as well. Set your goals, use sound cryptocurrency market analysis for your decisions, and execute buys 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 dubbed as the currency of the future though ironically, this currency has already been successfully used for real-world utilities and privileges. Even if cryptocurrency is known to be a volatile investment, more and more people are getting into it because of its innovative properties. So, you should not be surprised if someday in the future, you will be able to buy your groceries or gas up using cryptocurrency. It may take some time, but the day we sync it with our daily lives will surely come.
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