Interest in the digital coins has been on the rise since 2017. There was an impressive Bitcoin rally that rose by a margin of 300% from February 2019 to June 26, 2019. The increase from $3,130 to $13,800 can be attributed to the interest growth on the part of consumers.
Several studies have proved that younger investors and millennials are increasingly becoming skeptical of the traditional financial institutions and banks due to the 2008 financial crisis. This is actually one of the reasons why we launch our own cryptocurrency and blockchain info site Cryptofic. Around 40% of this demographic says that they look forward to investing in cryptocurrency soon.
However, in as much as you would be excited about investing in crypto, there are few crucial things that you must know firsthand. These are the vital issues that might help you decide what coin to buy, when to buy, how much you should purchase even if you want to start a cryptocurrency company in the UK.
Cryptocurrencies are volatile
One thing that should be at the back of your mind before getting your feet wet in cryptocurrency is the coins are quite volatile. No one has total control over the digital currencies, and therefore the market price will depend on how much people are willing to buy.
Cryptos are not like the dollar or euro, where the government has control. Their prices go through extreme ups and downs over time. You should be ready for this rollercoaster of price fluctuation. Back in 2017, Bitcoin swung between $20,000 and $900, which is quite a significant distinction in just one year.
So before investing in cryptocurrency, expect highs and lows, meaning investing in cryptocurrency is risky. However, as you may already be aware, the riskier the business, the more profitable it could be. Well, all investments carry a certain degree of risk, but you could always avoid the unnecessary risks by first learning everything about cryptocurrency.
Knowing that the prices are quite volatile, you should not put all your eggs in one basket. Diversify as there are several types of cryptocurrencies. When the price of one goes down, the other coin could be projecting an upward trend hence covering the loss.
Bitcoin is not the only cryptocurrency
Bitcoin has been the highest cryptocurrency in value since the crypto economy emerged. It was also the first digital coin with no physical properties or influence from a particular economy or country. As a result of the first interaction with the world, many people think it is the de facto leader.
Investors, however, should not shy off from looking into other opportunities. There are tons of other cryptocurrencies in the blockchain world that you can venture into. Even though the coins may not be well known or valuable as Bitcoin, they offer almost the same investment opportunities.
Some of the prominent cryptocurrencies include bitcoin cash, dash, Ethereum, IOTA, Ripple, among many others. Investing in multiple digital coins is advantageous since you are not aware of the next course of action in a certain coin. You can only speculate whether prices will plunge or take a rise, so it is better to spread the risk.
None of the cryptocurrencies is better or worse. As a meticulous investor, you should consider looking at all the options before investing in digital coins.
Cryptocurrencies may be used for fraudulent endeavors
People looking to avoid government and bank regulations and want to remain anonymous will most likely use cryptocurrencies. Many people have lost a considerable chunk of money in the crypto world, so you must be careful. Shady deals are made mostly using cryptocurrency on the black market, as it is not easily traceable.
Money laundering is a prevalent issue in the crypto world. It does not mean that anyone who engages in cryptocurrency investment is a depraved person. This means that if someone is looking to launder money or engage the black market for some illegal business, the cryptocurrencies are ideal for them. They cannot be easily traced to the buyer or seller.
Be safe with cryptocurrency
The crypto world is not for the faint-hearted and the “careless.” Cryptocurrency can still be considered a new blockchain platform which has attracted all kinds of people. Some are genuine investors, while some are there to swindle your hard-earned cash.
Beware that the crypto world is full of hacks, phishing attacks, scams, fraudsters, and impostors. Be extra vigilant when keying in your private keys and passwords or even when transferring money. Hackers are always looking for “careless” investors and transfer all their coins to their accounts.
Ensure you use a Mac OS/Linux and double-check the URLs. You should also disable any extensions that are not in use and do not click on Google search links when opening an exchange website.
Make sure you use two-factor authentication for the wallets you use to hold your crypto. That means if anyone gets your password, they will still need the authentication code sent to your phone to access the account. Public Wi-Fis are dangerous. When transacting or logging into your account, avoid public Wi-Fi.
Hackers can quickly get to you if connected to the same public Wi-Fi via Wi-Fi sniffing or malware.
Unproven rate of return
Trading in digital coins resembles gambling. It is an exchanged peer-to-peer with no tie to any regulatory standards. What that means is there is no historical pattern in the fall or rise of its value.
With cryptocurrency, you cannot predict the price changes. Likewise, you cannot calculate returns as you would with stock mutual funds. The crypto world is not predictable, and things might turn out good or bad for you as it is not like investing in a physical company like say in Hong Kong.
That is why you are advised to invest what you can afford to lose, just like gambling. There is no sufficient credibility or data to create an investing plan for cryptocurrency. However, diversifying on the blockchain platform can be quite resourceful. Consider purchasing several different digital coins, and you will have spread the risk evenly.
Cryptocurrency is a broad field that can be overwhelming if you dive in without the requisite knowledge. Conduct intense research on the platform before investing and keep in mind all these ideas. They will be useful as you delve into the digital currency world.