Cryptocurrency is one of the hottest trends of the 21st century, and it isn’t dying out anytime soon. With Bitcoin, the original stalwart of the cryptocurrency gang, other rivals like Ripple and Ethereum have popped up and many more are on their way. With the hype surrounding cryptocurrency, it is no surprise that people are keen to invest in it. As with any other investment, it is essential to keep certain things in mind before putting your money into cryptocurrency. If you’ve been wondering how to invest safely in cryptocurrency, here is a quick guide that explains step by step on how to invest in cryptocurrency.
Bear in mind that cryptocurrency is volatile
Cryptocurrency is as volatile as any company stock and even more. A cryptocurrency that is worth $1000 at 12:00 PM may crash to $500 by 3:00 PM, and vice versa. Bitcoin was the king of cryptocurrency a few years back, but it’s not nearly as valuable now. You should thus have a considerable risk appetite and full awareness that what you invest today may double or halve any time.
Never put all your money into one cryptocurrency
A cryptocurrency that rules the market today may crash out tomorrow. And the more money you have invested in it, the more you stand to lose. It is thus crucial that you work out on a strategic plan on how to invest in multiple cryptocurrencies and thus spread out your risk. So even if one fails, your overall losses will be minimized.
Research every cryptocurrency you consider
It is of paramount importance to research on every single cryptocurrency you want to add to your portfolio. There are multiple whitepapers and research documents available, and while it may not be the most exciting of tasks, it’s worthwhile to invest your time now to avoid losing money on dubious or fraudulent cryptocurrency later. Read the whitepaper, determine for yourself the value that the cryptocurrency is bringing in and make an informed choice.
Look up the team behind a cryptocurrency
One of the most reliable ways to weed out cryptocurrency scams is by looking up the team of people behind it. You should thoroughly research each of the names mentioned and their professional background, particularly their prior experience in cryptocurrency. And if there are any obvious red flags, like fake profile photos or no evidence of work records online, you should immediately forget about investing in that cryptocurrency.