When it first surfaced in 2009, Bitcoin was not considered to be an exciting prospect for the future. Futurists could see its boundless potential. However, it only drew interest from a few people as many only knew the concept and not its potential.
Fast-forward to 2021 and the cryptocurrency has become a great investment option for investors after it saw two explosive rises and falls in a period of 5 years; between 2017 and 2021.
Many now see it as a better alternative that will eventually replace fiat currencies like dollars or euros.
If you know little to nothing about cryptocurrency but are willing to invest in digital money, this article will guide you on how to do so. To invest in cryptocurrency, you must know the following:
What Is Cryptocurrency?
Cryptocurrency is a Blockchain technology that operates as a record of digital transactions and is not controlled by any single institution. Unlike fiat currencies, it is solely influenced by market trends, not the central banks
Essentially, cryptocurrency eliminates the middlemen such as banks or brokerages or transactions fees incurred by them. Therefore, allowing buyers and sellers to transact directly.
There are hundreds of cryptocurrencies that have been created. Some have bloomed, some went flat and some are dead. The most popular cryptocurrency now is Bitcoin. Ethereum comes a distant second while others include Ripple, Zcash, Dash and Dogecoin, amongst many others
What Are Meme Coins?
The internet and social media platforms are flooded with various memes. These memes are converted to cryptocurrencies and people are now buying into them. These coins are known as meme coins. Hilarious right?
Meme coins are inspired by jokes on the internet. The first Meme token was created in 2013. It is a parody known as DogeCoin. Other well-known Meme coins include Hoge Coin, Loser cash, Safe Moon, Mona Coin, Shiba Inu and Forge Finance.
Meme coins have gained popularity in 2021 from the influence of Elon Musk; a well-known supporter of DogeCoin.
This tweet raised the value of Dogecoin which had previously slumped by 10% the previous day.
What makes it different from coins like Bitcoin, is that while Meme coins have no purpose or use, other Cryptos are used to solve real-life problems.
How Much Should You Invest In Cryptocurrency?
You should only invest a small amount of your portfolio in cryptocurrency; 10% or 5% would be sufficient. This is due to many factors.
Cryptocurrency is not like stocks or other types of investment that pay in dividends and interests. Its reward lies in whether their prices increase or not. This is because they are mainly designed as a means of exchange, not investment. However, they are not universally accepted.
Even though many forecast it to eventually hoist traditional currencies from power, its future is not wholly certain. It is also often a very long-term investment which is another reason to only invest a small amount of your portfolio.
Which Crypto Should You Invest In?
The most dominant cryptocurrencies, Bitcoin and Ethereum are the best options to invest in. Others that come close include Ripple and Dash. Specifically, Bitcoin is the most popular cryptocurrency which makes it very reliable. Although, some other coins have recently outperformed it.
But it’s definitely not a bad idea to invest in other lesser-known cryptocurrencies; you should try to invest a small proportion of your cryptocurrency portfolio in them. This is because cryptocurrencies have price volatility and lesser-known Cryptos can easily flatline or die which may give you a zero return on your investment.
Which Platform Should You Buy Cryptocurrency From?
As banks, investment brokerages and other financial institutions don’t offer cryptocurrency services, you can only hold, buy and sell cryptocurrencies on established cryptocurrency exchanges.
Some of these include; eToro, Unifi Money, Coinbase, Robinhood, Germini, Binance and Wealthfront, amongst many others. These cryptocurrency platforms offer a set of options that are mostly similar to one another. On these exchanges, you can buy, retain and sell cryptocurrencies.
Where Do You Store Crypto?
Crypto assets are stored in crypto wallets. It could be a hot or cold wallet. But, what actually is a crypto wallet?
Cryptocurrency wallets are software programs where keys that will unlock your crypto assets on the blockchain are stored. These wallets don’t store cryptocurrency, they only store the keys. Crypto keys include private and public keys.
The private key is known only to the crypto holder while the public key is your cryptocurrency address, visible to your transaction partner. Without the two, transactions cannot be completed.
A digital wallet allows you to send and receive cryptocurrency. It also keeps track of your current balance and the history of transactions you made as stored on the blockchain. There are various types of wallets. They include:
● Online wallets: These wallets store information on the cloud and can be accessed on any computer. Online wallets can be accessed from anywhere which makes them convenient. However, your private key is less secure as it is stored online by a third party.
● Desktop Wallets: These are digital wallets installed on a personal computer. Since they are on a PC, they are much safer than online wallets.
● Hardware wallets: These wallets store information on a hardware device like hard drives or any other USB device. Its private keys are safer as it is not controlled by a third party. It can also be accessed from multiple devices
● Mobile wallets: Mobile wallets are software on smartphones. They can be used anywhere that the phone is available. It can also be used to make transactions where numerous cryptocurrencies are accepted.
Making Your Crypto Assets Secure
It is very important to keep your cryptocurrency investment secure. Especially, if you have a hot wallet or you want to use it to buy products and services. Therefore, before you trade crypto online, use a VPN (Virtual Private Network). Windscribe, ExpressVPN, or NordVPN are all good options.
Cryptocurrency has lots of rises and pitfalls. If you are trading crypto, get ready for a wild ride. With its great potential and many pitfalls, it will be those that are ready, patient, and consistent that will gain the most from cryptocurrency.