Cryptocurrency has only been around for a few years. Yet, its effect can be felt around the globe. Bitcoin is the gold standard for cryptocurrency. Its wild price fluctuations, coupled with endorsements from famous entrepreneurs, has turned Bitcoin in to a major investment opportunity.
Digital platforms have made it easy for people to invest in cryptocurrency. Still, the process is slightly more difficult than investing in traditional currency via Forex markets. If you are interested in investing in cryptocurrency, there are a few things you should keep in mind.
What Is Cryptocurrency?
There are thousands of cryptocurrencies on the market today. Using a single definition to cover them all is impossible. Simply put, cryptocurrency is a digital currency that is encrypted and typically decentralized.
Bitcoin is the king of cryptocurrency. It is backed by blockchain technology. This is a ledger system that is permanent and decentralized.
While Bitcoin’s value is in the tens of thousands of dollars a coin, there are many alternative coins that can be purchased for a few pennies. There are other alternative coins at every price range in between. Regardless of the cryptocurrency you are interested in, investing in cryptocurrency means profiting from volatility.
With cryptocurrency, like every other currency on the market, the currency has value as long as people say it has value. Unlike other currencies, cryptocurrency is not backed by anything, so the investment is more risky.
How to Invest in Cryptocurrency
Investing in cryptocurrency means finding a place to purchase it and finding a place to store it. Most people purchase cryptocurrency using a cryptocurrency exchange. The goal is to find the best cryptocurrency to meet your current financial situation, goals, and risk tolerance.
Because of its high price, Bitcoin may be out of the reach of some investors. You can own a fraction of a Bitcoin. However, according to Money Morning, “If you want to own whole coins, look at coins like Polkadot, Cardano, and Chainlink.” You can purchase each of these coins for under $50. This makes them a phenomenal investment opportunity for someone who can stomach volatility.
If you use an exchange to purchase cryptocurrency, you will be charged a fee for the transaction. There are also ways to interact with local cryptocurrency sellers and buy directly from them. While you may not have the transaction fee, there is the uncertainty of dealing with currency you cannot verify.
Where Do You Store Your Cryptocurrency?
You store your cryptocurrency in a wallet. A wallet can be physical or digital. A physical wallet is a USB style device that is encrypted. A software wallet is stored online. It allows you to engage in active trading.
Determining whether investing in Bitcoin or other cryptocurrency is right for you is a personal matter based on your tolerance for volatility and potential loss. If you are willing to take the risk and you feel that a particular currency is at a low point before an upswing, try it. Bitcoin has been around for more than a decade and will probably keep its value for the foreseeable future.
