Investing in cryptocurrencies for beginners
Many businessmen invest their funds in cryptocurrency. They achieve a sharp increase in income in a short time. The potential of the cryptocurrency market is huge. Thus, investing in cryptocurrencies is a very profitable business. Especially if you have studied this issue. And you know what risks you might face.
How to make money on cryptocurrency: trading
Trading is the implementation of many transactions. Of course, trading is trading. But, among other things, this includes intellectual speculation. Exchange transactions and more. It is noteworthy that it is through the exchange that you can quickly buy and sell cryptocurrency.
There is also margin trading with leverage. This way of dealing is definitely a good one. But risky. Therefore, it can only be trusted by specialists. And experts in their field.
How to start earning for a beginner: blockchain technology
How to understand the principle of operation of cryptocurrencies? First, identify the technology behind them.
Blockchain technology is the simplest. It was created for the convenience of using bitcoins. And in principle it resembles a digital book. With the fixation of all transactions.
Example. Sasha bought music speakers from Lesha. The settlement was made in bitcoins. His request was sent through the blockchain. After that, he received confirmation of the number of his bitcoins.
Ultimately, he translated them to Lesha. And at the end of the audit, the ledger was updated. Consequently, the amount left in Sasha’s account was withdrawn. Then the number of coins at Lesha’s address was added.
Before us is the use of blockchain to transfer cryptocurrency for commercial purposes. In addition, there are many other use cases for the blockchain.
It is noteworthy that any information with storage capacity can be based on blockchain technology. However, the cryptocurrency itself, in isolation from the blockchain technology, cannot work. But the blockchain works fine even without cryptocurrencies.
Cryptocurrency Investing 2020: Real Opportunities for Beginners
The first thing novice cryptocurrency investors pay attention to is bitcoin. However, for some reason, very often people are mistaken. And they replace the concepts of “cryptocurrency" and “bitcoin”. Of course, it’s not the same thing.
Try to figure it out. And you will understand that bitcoin is a kind of cryptocurrency. First of all, this is the first cryptocurrency that has earned the most popularity among entrepreneurs on the market. The remaining 6 types of cryptocurrencies. These are Ripple, Bitcoin Cash, Ethereum, Litecoin, EOS. And finally, Cardano is not well known to the common man.
Bitcoin: information for a beginner
Bitcoin is arguably the most expensive cryptocurrency in terms of price. It is not for nothing that it occupies 45% of the cryptocurrency market. It is noteworthy that the price of bitcoin began to rise from $70 in 2013. And grew to 20 thousand dollars in 2017. Later, bitcoin lost ground. However, according to analysts, the curve will constantly change. And he will return to his top positions again.
Investments in cryptocurrencies: Ethereum
Ether is the second most important cryptocurrency. A noticeable increase in ether was observed back in 2017. And according to the general estimates of experts, it amounted to 280%. The main advantage of this cryptocurrency is the ability to implement your own blockchain projects. First of all, for many, this is a chance to play to their advantage as quickly as possible. On increasing its price.
Ripple is the third largest currency in the market. The end of 2017 was indicative for Ripple. From a zero balance, it rose to $2.40. Of course, then there was a drop in prices. But compared to other currencies, Ripple is considered one of the most advanced. And it allows you to quickly make international transfers. By the way, Ripple is connected by major global banks. Moreover, as a team, they develop innovative solutions for the financial sector.
How to start earning on Litecoin cryptocurrency
Litecoin is a cryptocurrency whose price has risen from $4 to $360. The purpose of Litecoin is to improve the bitcoin technology. Litecoin is 5 times faster than Bitcoin. Therefore, she has no equal in the matter of transaction processing.
What are bitcoin blocks made of? So, they are structures for making transactions. It is noteworthy that in order to form transactions, cyclic hashing is used. Note that the block stores 2 types of data. Title and list of operations. The header includes such hash functions as the previous block, block, completed operations. It also includes service information.
How to start making money with Bitcoin Cash
Bitcoin Cash became an independent cryptocurrency in 2017. Since then, Bitcoin Cash has been one of the most popular cryptocurrencies on the market. The number of processed transactions is 116 t/sec. For clarity, compare with Bitcoin. Here, this figure is 4.4 t/s. Of course, Bitcoin Cash is on top. And ultimately, it processes data more efficiently.
How to make money on cryptocurrency for a beginner: EOS
EOS is built on an advanced platform. Thanks to this, the exchange allows you to create a variety of applications. Due to the improved technology, the system throughput is 100 thousand transactions per second. Compared to Ethereum, EOS is more versatile. In addition, it makes it possible to use several coding languages. The affordable price also makes EOS popular among buyers.
Investing in cryptocurrencies: Cardano
Cryptocurrency Cardano is a competitor to Ethereum. It allows specialists to create applications based on their own platform. Note that the cost of Cardano has increased significantly over the past few months. Namely, from 0.2 dollars it rose to 1.00 dollars. Then the price went down again. Consequently, all cryptocurrencies have undergone similar processes at the same time.
How to start earning on cryptocurrency right now? Everything is simple. First, when choosing an exchange, you should clarify some points. This includes its functions, features, usefulness. Secondly, you need to understand the meaning of the words spread, liquidity, interest, platform convenience.
Here is a list of the most reliable cryptocurrency exchanges:
- Coinbase . One of the most popular digital currency trading platforms. Coinbase has a good reputation. It is noteworthy that it ensures the safety of the cryptocurrency even in difficult conditions.
- Kraken . The exchange is based on margin accounts. It is designed for experienced traders and investors. In addition, there are several options for digital currency. It does not matter what you will use, bitcoin, ether, litecoin and so on.
- Poloniex . This cryptocurrency exchange was founded in 2014. Its advantage is the availability of extensive trading tools. Of course, this offer is beneficial for active entrepreneurs and businessmen.
- Bitstamp . Has platform security features. Notably, the exchange supports a cold storage service. The disadvantage is an overestimated initial commission, unlike other exchanges.
- Bitsquare . This development allows customers to quickly sell bitcoins. This can be done with cryptocurrencies or fiat money. The system is good because it has a high level of security. Therefore, it meets the needs of even the most demanding investors.
- Gemini. Cryptocurrency news emphasize that this is one of the exchanges that are regulated and licensed by America. Its foundation is high standards. Therefore, digital currencies are stored in special refrigerators.
- Binance . Low fees and maximum liquidity are the priorities of this exchange. This means that the one-time purchase of a large number of coins has become possible. In addition, when buying coins, you can convert them to any unit. Binance has an app. It allows you to invest in cryptocurrencies.
- CoinMama. A major exchange for shopping with a credit card. The card limit is quite high. For example, you can withdraw up to $500 per day. The monthly limit is $20,000.
- LocalBitcoins. Platform – for the exchange of cryptocurrency on a global level.
A newcomer to the cryptocurrency exchange: risks and features
Cryptocurrency investment is an opportunity to receive large incomes in a short time. This is what attracts new investors to this asset class.
For most investors, the average distribution percentage between cryptocurrencies is the most reasonable solution. It is noteworthy that it can help increase the efficiency of the existing portfolio.
Let’s talk about liquidity problems
Liquidity is the ability to buy or sell an asset at its market value. Notably, slippage can occur. This is the difference between the price you offered. And the market price. Nevertheless, cryptocurrencies are still a profitable investment. The main risk is their high liquidity.
Under normal circumstances, you can buy and sell cryptocurrencies without risk of slippage. But in more volatile times, the risks inevitably rise. Therefore, there may be problems with the sale or purchase of cryptocurrency. Thus, for novice investors, it is necessary to constantly monitor the news in the cryptocurrency market.
Uncertainty with regulation
Investing in cryptocurrencies creates regulated risks. How to avoid fraud or market manipulation? To do this, the government plans to introduce restrictions. This will provide security for this asset class. Is it good or not? The question is, of course, rhetorical.
Investing in Cryptocurrencies: Valuation Issues
Before buying shares to evaluate from a reasonable price, pay attention to a number of factors. Note that the price of a cryptocurrency is almost never transparent. Therefore, for a beginner, it is noticeably more complicated to understand its normal cost.
There are cases when, due to mass hysteria, the price of a cryptocurrency rises. There is also a reverse process. When the price of an asset goes down due to panic. Hence, the cryptocurrency has an unstable position. Much of this is due to emotions. Or, more simply, the human factor.
Correlation – relationship. This is an important point for investing in different working tools. For example, there is a stock market. You have invested in Facebook, Vk or Apple. By investing in different companies, your portfolio has become more diverse. However, the catch is that all these tools are subject to the same sector. Therefore, the correlation here manifests itself to the maximum.
The same thing happens with cryptocurrencies. Most cryptocurrencies interact strongly with each other. Thus, you need to carefully control the situation with the separation of investments in different coins.
Collecting a portfolio of cryptocurrencies for investment
When investing funds, it is important to track the rate of cryptocurrencies. And also be in the trend of current events. What to do if you are going to invest in cryptocurrencies? A detailed analysis is needed first. Then the contribution is made. And at the same time, you should decide how much you can afford to invest.
We stipulate that here it is necessary to calculate not only the amount of investment. It is also important to consider your age. Consider all possible risks. And, of course, your financial situation.
Aggressive investors invest up to 20% of their portfolio in cryptocurrencies. It is noteworthy that the rest remains in traditional assets. Conservative investors operate in a different way. They invest no more than 5-10%. And very well calculate their current needs.
Always remember that investing in cryptocurrencies entails risks. Therefore, it is better to allocate so much money that in the future it will not hit your budget too hard.
Cryptocurrency Investing 2020: Note for Beginners
Investing in cryptocurrency is the conclusion of long-term transactions. In this process, experts and beginners can participate. Investing in cryptocurrency involves mastering technical analysis. Abilities related to trade and other skills.
Let’s point out one important thing. Investing, unlike trading, has little potential. The price of a cryptocurrency can change several times a day. Of course, the entrepreneur runs the risk of missing out on the opportunity to earn money. Thus, one must learn to choose the right moment to buy an asset. Namely, to wait for the maximum decline in the rate of cryptocurrencies.
Let’s take a simple example. Users invested in bitcoin in 2017-2018. Then it cost more than 14 thousand dollars. Ultimately, they weren’t able to close the deal for a long time to make a profit. Therefore, they chose the wrong time. And business became unprofitable. Don’t make such mistakes.
That’s all. Good luck in your endeavors.