A Beginner's Guide to Investing in Cryptocurrency

A Beginner’s Guide to Investing In Cryptocurrency

*Disclaimer: This article does NOT provide financial advice. Please practice due diligence before getting started with trading crypto and always manage risk sensibly.

Key Points

  • There are plenty of great reason to start investing in cryptocurrency
  • Learn how to properly start investing in crypto
  • How to prepare before making any decisions
  • Getting started with crypto trading bots

There are various reasons why you might be interested in crypto-money, you’ve heard about it on the news, one of your friends advised you, and so on.

Nevertheless, first of all, we will review the different ways of operating in the cryptos market: Mining, Trading, Investing.

Mining

Mining is the keystone of blockchain technology because it allows securing transactions in exchange for a reward. It is similar to a mathematical puzzle and the first person to solve it will receive crypto, depending on which one you mine. This can be Bitcoin, Ethereum, and many others.

Trading

Trading is generally what attracts newcomers the most, with an idea of quick wealth in mind. Nothing is further from reality unfortunately, there are no shortcuts. More technically, Trading consists of buying crypto at a low price in order to resell it at a higher price.

Holding/Investing

The purpose of investing is the same as that of trading, i.e. to make money by buying crypto at a low price and selling it at a higher price, but with one difference. The timing or investment horizon is not at all the same, holding being a long-term strategy after having done fundamental research on a project.

Tokens and coins

The difference between a coin and a token is actually very simple! A coin is a token that has its own blockchain, such as BTC, ETH, or LINK. A token on the other hand does not have its own blockchain and is created on an existing protocol, ETH most often like most DeFi projects.

Why is investing in cryptocurrency a good idea?

You probably are curious about how investing in cryptocurrency works. Although crypto may seem mysterious in many ways, it’s still a valuable investment.

If you analyze the price history of Bitcoin between 2009 – 2019, you’ll see that in the last decade Bitcoin has grown 8,999,900%. In 2019 alone, BTC gained +96% compared to gold’s growth at +10.8%.

Cryptocurrency is the way of the future, so there are plenty of reasons why investing in crypto is a good idea. Some of the main reasons why crypto is an attractive investment include its encryption and ease of sending transactions.

Crypto is transparent

When conducting transactions with crypto, each transaction is recorded on a ledger known as the “blockchain”. After a transaction is completed, it’s recorded and stored on a “block”, which is then added to the chain. A blockchain is a series of these data blocks, allowing for transparent views into past transactions.

With every transaction being recorded on the blockchain, this allows for greater prevention of malicious activities. Fraud, identity theft, and wrongful transactions are able to be resolved through a search through the recorded data.

Transactions are safe and secure

You won’t be waiting for a long time for a transaction to finish processing when using crypto. The transaction speeds of crypto are incredibly fast when compared to traditional bank transfers. A crypto coin’s transactional speed is measured in TPS (transactions per second).

Today, the three fastest cryptocurrencies in the world are EOS (3,000 TPS), Ripple (1,500 TPS), and Stellar Lumens (1,000+ TPS). Popular cryptocurrencies such as Bitcoin and Ethereum have slower transaction speeds but are still much faster than regular money transfers.

Thanks in particular to mining, the transactions on a blockchain are secured, but this does not prevent being careful.

Firstly, some blockchains are more resistant to hacking than others, because it would require so much computing power to crack them that it is impossible.

Secondly, you are the only master of your mistakes, if you make a typo in the recipient’s address, your transaction will be lost and not returned as it could be with a normal transfer.

Finally, always make sure to use a 2FA method such as google authenticator to add extra security to your account/wallet.

The encryption of a crypto coin and it’s blockchain make it incredibly difficult for hackers to penetrate. Crypto holders can rest assured that reputable trading platforms implement advanced security measures, however, it’s also good to practice due diligence to keep your crypto assets safe.

Crypto is free from any “middlemen”

A major draw of a crypto coin is its freedom from banks, government, and other types of middlemen. This distances the currency from outside forces that may cause it to become devalued. Nigeria and other countries, plagued by corruption, have turned to cryptocurrency as a way to gain economic freedom.

By removing a middleman from the equation, crypto is able to charge smaller fees for transactions. Some cryptos even have no transaction fees.

There is a potential for high returns

With crypto’s popularity growing there is a major possibility for a high return on investment. Investing in several cryptocurrencies can net you a larger reward. Being an early investor in a new coin might be risky, but if the coin skyrockets in value, you’ll earn a massive profit.

How can I invest in cryptocurrency?

If you are ready to get started with investing in cryptocurrency but don’t know where to start, then it’s time to discuss crypto exchanges. In order to properly invest, you’ll need to locate a trustworthy exchange to buy the crypto you want from.

Buying from a crypto exchange

Purchasing crypto from an exchange is the most common method of investment. There are two things you’ll need when buying from an exchange. A wallet for storing your newly obtained crypto and a crypto exchange platform.

Some of the biggest crypto exchanges include:

You can hold your cryptos directly in the exchange if the goal is to trade with them but for holding, It’s recommended to use another wallet.

Once you have decided on the crypto exchange to go with, you will need to make sure you have a crypto wallet – a tool that allows you to send and receive cryptocurrencies. There are basically three groups of wallets: software, hardware, and paper. Alternatively, you may have heard of the terms ‘hot wallet’ and ‘cold wallets’. Essentially, hot wallets are connected to the internet and allow easy set-up and access. Cold wallets. on the other hand, are an external tool and they are not stored on a platform.

Choosing your choice of wallet is very straight forward. Most exchanges provide the option to set up wallets on the platform itself or you can choose from the list below:

Is investing in cryptocurrency risky?

Just like any sort of investment risk is involved with cryptocurrency. With crypto being so new there is a lot of speculation around it being unstable. These worries should not deter you from investing in crypto. Similarly to the stock market, you’ll need to do the needed research before making any moves.

Bitcoin and other cryptocurrencies have become more mainstream over time. This has contributed to boosts in confidence in crypto from the public. As the popularity and confidence in crypto rose, more businesses have begun accepting crypto payment options.

Overall, crypto should never be viewed as a “get rich quick” scheme. Anyone serious about investing in crypto will need to practice sensible risk management and exercise patience when trading in the market.

4C-Trading’s SMART Margin is the perfect way to help manage your risk. With SMART Margin, you’ll be provided with a fixed rate of 2% risk management per trade and 33% for allocations. This feature from 4C-Trading allows you to help maintain a healthy portfolio.

What to look into before investing

Check out crypto communities – You’ll need to make sure that the crypto coins you are interested in are something you believe will have long-term growth. Check out crypto communities on sites like Reddit, Twitter, and Telegram and pay attention to discussions that relate to what you’re looking for. You can also check out the trusty 4C Trading News channel on Telegram for the latest in crypto market updates.

Analyze other coins – Don’t just fall in love with one coin, look to invest in multiple cryptos. Putting all your faith into one type of coin will only spell disaster for you in the long-run. It’s a better strategy to diversify your portfolio.

Always check the crypto market daily– Be prepared to witness the prices of your crypto go up and down. This is normal in the crypto world so try to refrain from making quick decisions. Keep up-to-date on potential forces that may influence the market, such as hacker attacks, infrastructure news, and regulation of currency.

Know the tools you plan to use– Do the proper research on the crypto exchange, wallet, or any other tool you plan to use. There are plenty of scams and other tricks used by criminals to obtain your personal data, so be sure to take proper measures to protect your account such as using a 2FA authenticator.

What is the best way to get started?

Beginners in the crypto world usually become confused early on with so much to take in. Although you must always be learning to make the proper crypto investing decisions, there are tools to help you along the way.

Our automated crypto trading bots allow users to save time while trading and are user-friendly for all crypto knowledge levels.

4C Trading SMART Bots

SMART Bots at 4C Trading work to help build your portfolio while you learn proper crypto investing techniques on your own. These AI-powered bots quickly analyze trading algorithms and make the best decisions to grow your portfolio. They buy and sell at the most optimized times and conduct 24/7 scans of the market.

Each bot is customizable, allowing you to set certain limits on how much you’re willing to trade. It doesn’t matter if you’re a beginner or a crypto trading pro, anyone will benefit from using our SMART Bots.

4C Trading SMART Bots provide users with an unmatched trading experience. We currently have 3 SMART Bots, each one trades a different coin. With 4C-Trading SMART Bots, you have the ability to trade Bitcoin(BTC), Ethereum(ETH), and Link(LINK) on the Binance Spot exchange.

Want to see proof of their performance? Check out their latest performance chart! Learn more about our bots and how you can get started with them today!

Sources

https://money.usnews.com/investing/investing-101/slideshows/things-to-know-before-investing-in-cryptocurrency?slide=2

https://blockgeeks.com/guides/how-to-invest-in-cryptocurrencies/

https://blog.chronobank.io/token-vs-coin-whats-the-difference-5ef7580d1199

https://smartasset.com/investing/how-to-invest-in-cryptocurrency

https://www.entrepreneur.com/article/339935

https://marketrealist.com/2019/10/how-to-invest-in-cryptocurrency-beginners-guide/

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