Things To Know Before Investing In Cryptocurrency
Although millions of people have already heard about cryptocurrency, half of them don't know how to invest in cryptocurrency. Investing in cryptocurrency isn't an easy task, but if you become an expert in cryptocurrency investments, then you will be able to generate huge profits in the long run. Mentioned below are a few points which you must know before investing in cryptocurrency: Motive To Invest In Cryptocurrency You have to find and understand your motive for investing in cryptocurrency. Fear Of Missing Out (FOMO) FOMO is defined as anxiety which means an exciting or interesting event. A person can suffer from anxiety by seeing posts on social media. He has to control his emotions. He has to make decisions logically. Jealousy Jealousy is defined as a combined emotion of unhappy and angry. A person can be jealous of someone who is doing better. Once again he has to control his emotions and make decisions logically. Do Some Research A person has to research profoundly before investing in cryptocurrency. Choose a cryptocurrency Know about the cryptocurrency specifically Know the difference between Cryptocurrency, Utility Token and Tokenized Security. Cryptocurrency: A digital currency is known as cryptocurrency Utility Token: It is defined as a digital token of cryptocurrency. It is issued for funding the development of a new cryptocurrency. The issuer of the utility token offers a good or service. The good or service can be purchased with the utility token. Tokenization of securities or shares of a company: It means using blockchain technology to register, issue, and transfer securities. According to the Howey test, if a token doesn't qualify as a security, then the token will be a utility token. 5. Search Exchange Search for a reputable exchange Create an account on the exchange Verify the account 6. Buy Cryptocurrency Make your first purchase from a reputable exchange 7. Buy Crypto Wallet You can buy a crypto wallet from an exchange. You can also purchase a crypto wallet from other platforms. You have to store your purchased cryptocurrency into a crypto wallet. 8. 2 Factor Authentication You have to do 2 Factor Authentication (2FA) on your account and wallet. 2FA is a security process used to authenticate two factors of users. a. First factor: Something that a user knows (Password) b. Second factor: Something that a user has or something that a user actually is The main purpose of 2FA is to stop unauthorized users from accessing other accounts with stolen passwords. 9. Phone Lock You must use pins/fingerprint/face recognition to lock your phone 10. Spreadsheet You must keep a spreadsheet of cryptocurrency transactions 11. Track You must track your transactions 12. Buy More Cryptocurrency You can buy more than one cryptocurrency. 14. Diversify your crypto portfolio Crypto portfolio diversification means investing in different cryptocurrencies in order to manage investment risks. You invest in four cryptocurrencies A, B, C, and D. Cryptocurrencies B and D don't perform well in the cryptocurrency market, but cryptocurrencies A and D perform well in the cryptocurrency market. You can make profits with cryptocurrencies A and D by selling them. 15. Make Your Strategy You can either do trading or hodling. a. Trading: You can buy and sell cryptocurrency hourly or daily with the objective to take advantage of swings in the cryptocurrency market. b. Hodling: You can hold a particular cryptocurrency for a longer time with the objective to sell the cryptocurrency when it will increase in use and value. Note: This article has not been written for the promotion of cryptocurrency investments. But it is written as a knowledge purpose only. Individuals can go ahead with the cryptocurrency investments on their own risk. Read the full article