This article will give you complete details on cryptocurrency, tips on getting started with cryptocurrency the best crypto for beginners, and how to invest in cryptocurrency.
What is Cryptocurrency?
Cryptocurrency is a type of digital currency maintained by a decentralized system that uses cryptography to record and verify transactions.
Cryptocurrency is built on a blockchain network, and it has no physical form. It is designed to work as a medium of exchange through a network that does not rely on a central authority, such as a bank or government, to maintain or uphold it.
Cryptos can be used to sell and buy things, and their potential to grow and store value has also caught the eye of investors.
10 Tips to Getting Started with Cryptocurrency
Below are ten tips on how to get started with cryptocurrency.
Don’t invest in what you cannot afford to lose.
Cryptocurrency is a risky investment, and nothing is guaranteed other than volatility. There is no regulating FDIC insurance, nor is there a buyer of last resort. The prices of cryptocurrency swing wildly from minute to minute. Always invest what you can afford to lose because the outcome is unpredictable.
Research thoroughly any digital coin you plan on investing in.
Before investing any amount on any digital coin:
- Make sure to do research on the coin or currency you plan on investing in.
- Take time to read blogs about them.
- Look on community forums, developers’ mailing lists, and their competitors in the crypto market.
Resist the fear of missing out.
Fear of missing out on something can be a great way to destroy your money, don’t invest in a coin cause of the fear of missing out on it; invest only when you feel you have done enough research on the currency.
Set your profit targets and make use of stop loss.
Stop loss is not an arbitrary activity, and the most important thing to note here is that you shouldn’t let your emotion take the better of you; a perfect point to set your stop loss is at the cost of your coin. Establishing a stop loss level can help you cut your losses, and it is a skill that most traders possess and is rare.
Invest little of your portfolio in a market that is less liquid. High trades require more tolerance and discipline, while the stop loss and profit target points will be allocated further from the buying level.
Underlying Assets Can Create Volatile Market Conditions
The prices of some altcoins depend on the current market price of BTC. It is vital to understand that BTC is relative to fiat currencies and is quite volatile, and when the value of BTC goes up, the value of altcoins goes down and vice versa.
The market is foggy when the Bitcoin price is volatile, and, as you would imagine, this prevents most traders from gaining a clear understanding of what goes on in the market. It is advisable to either have close targets for our trades or not trade at all.
Don’t Buy a Coin Simply Because the Price is Low
Most traders make one common mistake: buying a coin because its price seems relatively low or what they consider cheap. The decision to invest in crypto should have a lot to do with its market cap and very little to do with the affordability. The higher a coin’s market capitalization, the more reliable it is for investment.
Understanding the tax consequences
The IRS (Internal Revenue Service) considers cryptocurrency as property, not currency, mainly for tax purposes. The upshot is that if you buy a coin for $2 and it doubles in value, and you spend that extra dollar to buy something like snacks, you must report that capital gain and pay tax on it. Cryptocurrencies are not as regulated as banks or stocks.
Just because a coin is trading around $2 does not mean it’s “cheaper” than the coin at $58,000; not all currencies are created equal.
There are thousands of cryptos, some of which seek to emulate other coins, and some try to solve other issues. They all have varying levels of decentralization and developer support. Determining the coin value is the same as asking how and why was the coin created and its supposed utility? And so on.
A lot of Scammers abound in this market. Before investing in any crypto, do good research about that particular currency.
How to Invest in Cryptocurrency
To invest in cryptocurrency, you need a place to purchase it and a place to put it. There are different exchanges to choose from, with the most popular being Coinbase; there are several other exchanges to choose from, the most popular being GDAx, Coinbase and Bitfinex. These exchanges allow you to buy currencies like Ethereum and Bitcoin with a debit card.
10 Best Crypto for Beginners to Invest in 2022
- Ethereum (ETH) with a Market Cap of $333 billion
- Bitcoin (BTC) with a Market Cap of $723 billion3
- Tether (USDT), with a Market Cap of $83 billion
- Binance Coin (BNB) with a Market Cap of $62 billion
- U.S. Dollar Coin (USDC) with a Market Cap of $49 billion
- Solana (SOL), with a Market Cap of $29 billion
- XRP (XRP) with a Market Cap of $29 billion
- Decentraland with a Market Cap of $2.6 billion
- Cardano (ADA) with a Market Cap of $26 billion
- Dogecoin with a Market Cap of $12 billion
Cryptocurrency is one of the best investments maintained by a decentralized system with the use of cryptography.
As a potential investor, you need to have a clear idea of the risks you’re taking, and you should not put yourself in a position where your life is dependent on the success of cryptos. Please share this article with your loved ones and friends.
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