Thanks to blockchain technology, cryptocurrencies have become a growing trend. Bitcoin, the first cryptocurrency to hit the market, emerges as an alternative to fiat money and is currently the digital currency with the largest market capitalization.
If you have considered investing in cryptocurrencies but do not know how to do it, we present a complete guide for you to learn how to safely invest in bitcoins and other cryptocurrencies.
Why Invest In Cryptocurrencies?
The blockchain technology underlying Bitcoin and other cryptocurrencies has several characteristics that make it attractive for investment:
#1 They Help Increase Net Worth
It has been shown that cryptocurrencies are a good alternative to protect our money, as a result of the loss of value of most currencies.
#2 Greater Security Thanks To Blockchain Technology
The technological system used by cryptocurrencies is much more secure, since it is a fully encrypted procedure, and the information can only be deciphered by the sender and receiver with a code that only they have. In addition, it is a type of universal currency, and unless its use has been restricted, we can use it to carry out transactions anywhere in the world.
#3 Positive Background
Bitcoin was the first cryptocurrency to appear in 2008 and since its inception, early investors to invest in digital currencies have greatly benefited from rising prices over time. Therefore, it shows us that investing in cryptocurrencies is a great opportunity to obtain benefits, even if it is in the long term.
Risks Of Investing In Bitcoins
The debate has long been raised as to whether cryptocurrencies will be a fad or a bubble that will eventually burst.
The current problem arises from the fact that many traditional financial entities do not dare to introduce the Blockchain system into their transactions, since they claim that they do not have any type of support and that they are not governed by any law.
In addition, it is a currency with great volatility, that is, it can make us earn a lot of money quickly or lose it just as quickly. Therefore, it does not offer guarantees of benefits, nor do they have official worldwide recognition.
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Best Cryptocurrency To Invest
As we have mentioned, we currently find many cryptocurrencies to invest in, beyond the pioneer Bitcoin. This is why, before starting to review how to invest in bitcoins, we are going to mention some of the most important questions that we should ask ourselves to decide which is the best cryptocurrency for us.
- How many countries recognize and accept it as a method of exchange?
- What portability does it have?
- What level of security do you have?
- How long has it been on the market?
- Analyze the positive and negative background
Most Popular Cryptocurrencies To Invest In
BITCOIN (BTC)
Without a doubt, this cryptocurrency, which appeared in 2008 at the hands of Satoshi Nakamoto, has positioned itself as a leader in the digital market. It was a pioneer in the cryptocurrency sector.
RIPPLE (XRP)
For many, this is the successor to Bitcoin, since it was created by the same Bitcoin developers with the idea of improving its features. This is a completely secure and encrypted system.
LITECOIN (LTC)
Litecoin was created in 2011 by former Google employee Charlie Lee as an alternative to Bitcoin. There are currently about 55 million Litecoin in circulation.
ETHEREUM (ETHER)
It was one of the most profitable cryptocurrencies in 2017. In addition, it is the second digital currency in terms of capitalization, which is why it is considered a great alternative to Bitcoin.
THETER (USDT)
Theter is classified as a stablecoin, that is, it is backed by an amount equivalent to the common currency. (1 theter = 1 Dollar). The fact that your change is equal to the value of the dollar does not imply that it can be redeemed for it. I encourage you to read more about this blog here: How To Create Agile Organizations?
How To Invest In Bitcoins And Cryptocurrencies?
Decide What Type Of Cryptocurrency We Want To Invest With
The first step of all when discovering how to invest in bitcoins is to decide, based on the questions mentioned in the previous point, which cryptocurrency is most interesting to invest in. As of March 8th, 2002, the number of existing cryptocurrencies exceeds 18,000, with a combined value of around $1.7 trillion.
1. Choose The Value To Invest
Like any procedure, it is essential to plan and set objectives, as well as determine how much money you want to invest. Once this is decided, it is important to observe what is the best time to invest.
2. Get A Cryptocurrency Wallet
An address must be obtained with which to request and receive the coins to be purchased. There are different types of wallets and each one works for a type of cryptocurrency.
3. Join An Exchange
Once you have a wallet, it is time to join an exchange because this is where the transactions will take place. Currently, there are many exchanges such as Coinbase, HitBTC, and Bittrex, among many others.
4. Buy Cryptocurrencies
If you already have a wallet and an exchange account, it is time to buy the cryptocurrencies. These can be purchased on the website of each cryptocurrency.
5. Take Security Measures
Remember that cryptocurrencies are not regulated by any institution, which makes you solely responsible for what happens to your money. To avoid possible fraud, you can resort to some measures such as activating the double authentication factor (2FA) and the creation of secure passwords — that are long and that you do not use for other applications.
6. Do Not Invest In The Hot
If you see that the value of the cryptocurrency is starting to rise, do not rush to invest more. Analyze what has happened on previous occasions and review whether or not it is feasible to make an additional investment.
The Best Bitcoin Apps For Android And iOS In 2023
Investing in cryptocurrencies requires keeping track of the value of each one of them, to know what has been won or yielded in each one of them. For this, there are different mobile applications so that you can manage your investment in cryptocurrencies from your smartphone in a very easy way. Here are the most interesting:
eToro
It is a broker or investment platform that in a short time has been placed among the best in the world. From it, you can obtain cryptocurrencies and other financial instruments, using contracts for difference (CFD). In this way, it is allowed to invest in any asset without buying it as such.
24Option
It is another broker, regulated and that operates practically all over the world, which offers a list of financial instruments through CFD contracts. From the App, you can invest in Bitcoin and other digital assets easily and quickly, and most importantly, safely.
Coinbase
This is one of the most downloaded applications, which differs by being one of the few exchanges that allow you to buy cryptocurrencies directly using fiat currencies, which offers Bitcoin, Bitcoin Cash, Litecoin, and Ethereum.
Delta
It is a free application that allows you to track Bitcoin and Cryptocurrency portfolios. This app tracks all crypto assets, including Ethereum, Bitcoin, Litecoin, and over 3000 altcoins, with the ability to get the latest crypto asset prices.
Bitscreener
It is one of the most complete applications, which allows you to see all the available cryptocurrencies, find out their value in real-time, and their evolution graph, with the option to filter by volume, rises and falls in recent days, and see which exchanges you can trade on. buy each coin.
Now you are ready to invest. If you are interested in the crypto world, investments, and blockchain technology, we recommend you participate in the Master in Blockchain that our IEBS school has. With it, you will learn the basics of these new payment and financing methods, to apply them within any business.
3 Things You Should Know Before Investing In Cryptocurrencies
Recent months have demonstrated the high volatility of digital currencies such as Bitcoin and Ethereum. Morningstar crypto expert Madeline Hume advises investors to be aware of the following three things before investing.
1. Cryptos Are A Relatively New Asset Class
Cryptocurrencies still have a very limited range of uses and blockchain technology also has unexplored fields of application. “We’re still trying to understand how blockchain will impact our daily lives, and it’s an evolving process,” said Madeline Hume, senior research analyst at Morningstar could and where these types of technologies will take off – in 2020 no one was talking about NFTs or decentralized finance (DeFi) – so the market is evolving very quickly on a lot of those fronts.”
This also applies to cryptocurrencies. At this point, investing in cryptos is more like a kind of ‘entry fee’ to experiment with this technology, Hume points out. Don’t equate this type of investment with stocks or bonds, as they have fundamental, measurable value.
2. High Market Concentration
Alone accounts for more than 50% of the market for this asset class. “When an asset class is so heavily dependent on one or two individual assets, it creates high volatility. We see this in tech stocks as well. When Netflix ( NFC ) does poorly, the rest of the market suffers as well. Investors should just keep that in mind,” Hume said.
3. Volatility
And there we come to the third point, volatility. The past few months have shown how volatile cryptocurrencies are. But who needs to worry about this volatility? “With long-term investments, such as in the area of retirement planning, there is a step in which the capital is built up and a phase in which the accumulated money is withdrawn,” says Hume.
In the first part, volatility doesn’t matter too much. But if you want to access the savings, then this is important. The experience: Investors often react with fear in phases of high volatility and liquidate the investment at the wrong time.
“The risk is that with extremely volatile assets like cryptocurrencies, if you sell during a market downturn, you can permanently put your capital at risk. For these reasons, cryptocurrencies are the enemy of retirement portfolios,” adds Hume.
Frequently Asked Questions (FAQ)
Is Cryptocurrency A Good Investment?
It is generally not recommended to make a significant and substantial investment in cryptocurrencies at present. The reason is that the entire concept is akin to gambling rather than a legitimate investment opportunity. The rise of digitalization has also resulted in the emergence of alternative investment options beyond cryptocurrencies.
How Can I Invest In Bitcoin?
One way to invest in bitcoins is by purchasing them directly or through exchange-traded notes (ETNs). Bitcoin performance can be tracked via an ETN, or certificate, which contains debt securities that track the performance of the cryptocurrency.
Investing in parts of a bitcoin is also possible – and a significantly cheaper investment option than buying a whole bitcoin. This is how the bitcoin units are made up: 1 bitcoin has eight decimal places. So you can invest in 0.5 or 0.00000005 BTC. 1 BTC corresponds to 1,000 mBTC (Milli-Bitcoin), 1 mBTC corresponds to 1,000 bits and 1 bit corresponds to 100 satoshi (smallest unit).
How Much Money Do I Need To Buy Cryptocurrency?
Typically, it is recommended to invest up to 10% of your wealth in cryptocurrencies such as Bitcoin. For instance, if you have assets worth 100,000 euros, this translates to 10,000 euros, whereas if you have assets worth 1,000 euros, it amounts to 100 euros. Novice investors usually invest between 50 euros and 500 euros.
How Much Should A Beginner Invest In Bitcoins?
When it comes to investing in cryptocurrency, your risk tolerance and long-term strategy are crucial factors. It is advisable to follow the advice of experts who suggest limiting your investment to below 5% of your net worth. However, it is important to keep in mind that due to the newness and volatility of this asset, you should not invest more than you can afford to lose.
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