So you’re interested in investing in cryptocurrencies but are still worried that something might go awry? Don’t fret; this is where you need to be.
You’re probably already in the know of how exciting yet volatile the virtual currency market is capable of being. Continually shaking up the news cycle, cryptocurrencies have single-handedly allowed countless smart investors to hit the jackpot, yet then declare bankruptcy. Is betting on cryptocurrencies a considerable gamble at this point?
The cryptocurrency market’s insanely fast growth attracted stakeholders from all corners of the world who had had high hopes for similar earnings as the first surge of winners, but that is not how an investment in virtual currency pans out every time. So our goal here is different than sources that aim to give you a guide to making bank with cryptocurrencies. As a matter of fact, we want to caution you against the pitfalls of this appealing investment endeavor.
We want you to get filthy rich, but we also want you to establish feasible, attainable goals regarding your investment to avoid disappointment and even worse, a significant loss. Patience is a virtue in many aspects of life, and this also applies to investing. In a day and age where our lives are swarming with fake news and misinformation about practically everything, dealing with and suppressing the fear of missing out is of utmost importance.
Always remember the most fundamental and significant principle of investing: only invest as much as you can stand to lose.
Branch Out to Minimize Risks
Sadly, some “experts” are still clinging to the belief that only purchasing Bitcoin still suffices, and this is false on so many levels.
Bitcoin was the first in the game and is currently the most famous cryptocurrency. It has so much endorsement and backing behind it, yet it isn’t without its flaws; Bitcoin still suffers from delays, which does not bode well with some savvy experts. But they’re not saying Bitcoin is over and you should just forget about it; you need to remember that you have other options available to you. In an effort to lower risks, you could also consider investing in cryptocurrencies that are on par with Bitcoin–if not better–such as Litecoin, Ethereum, Dash, Monero, and Ripple.
The Concept Counts
Blockchain technology has advanced into a form where tokens can do more than just replace traditional currency. Some platforms offer unparalleled contracts like Ethereum and decentralized data storage like Storj, not to mention decentralized trading platforms such as Bitshares. So in lieu of purchasing just one of each, it is a perfectly sound idea to select numerous currencies in a category to minimize risks. In the world of cryptocurrencies, a division among the members of the development team or simply a technical glitch can result in a crash whether or not a platform has immense potential or has an incredible technology up their sleeve, e.g., Tezos.
Playing it Safe
Seasoned investors are highly cognizant of the high-risk nature of the cryptocurrency market. The whole cryptocurrency world can crash and burn following a grave safety concern or a drastic change in government regulations. While the likelihood of such outcomes is slim, it is still possible.
What About Liquidity?
You can invest in a cryptocurrency, hope that it gains value and still find yourself in a position where trying to sell it results in a significant price decline, which is called low liquidity. If the exchange volume is not high at all, you should brace yourself for steep ups and downs in the price of the cryptocurrency. So the best way to lower this risk is to steer clear of Altcoins with low exchange volumes.
Potential for Growth
Low market-cap cryptocurrencies surprisingly hold more potential to improve compared to those with considerably high market values. The belief centers on the fact that a cryptocurrency can gain popularity, which will then increase its market value. Consider your specific expectations when you visualize the cryptocurrency equities you hope to have in your portfolio. Dig deep and do your research; know the goals and specifics of every project that interests you and have a good grasp of their technologies. If you do everything that is in your control, you simply minimize risks.
Proof-of-Stake (PoS)
A lot of investors are interested in cashing in on cryptocurrency mining, but at this point, the only projects that have the potential to yield fruitful results are the ones that run on millions of dollars. Crypto mining has officially turned into a game where only tremendous players with limitless financial resources can play. However, the most preferred alternative is Proof-of-Stake (PoS). PoS enables users to mine cryptocurrencies without the need for extra tools. Using this algorithm, your coin volume becomes a determinant of how well you are recompensed.
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