Key Takeaways: Guide on Cryptocurrencies
- A standard crypto primer with a sneak peek into the sentimental drivers influencing investments and trades
- Quick perspective regarding Crypto buying and selling
- Cryptocurrency: Concept and Tech
- How Supply and Demand influence the value of crypto coins
- Tools and resources to make trading simple and wholesome
- How crypto-mining differs from trading and which one is preferable as per your requirements?
Cryptocurrencies are queer financial products. You can hate them all you want but somewhere inside, the trading itch continues to breed. Now that is us, being honest to the fault! And that is why this guide on cryptocurrencies can be handy.
Even without this dose of transparency, you could very well make out that crypto-space is a lot more than just a bubble in 2021. It is the future that keeps growing, evolving, and surprising investors at every turn.
While the seasoned, crypto-savvy investors have more or less found a way to survive and even thrive in this Blockchain-powered space, things can get trickier for beginners. Triggered by sentimental drives like FOMO and greed, the young, crypto-curious amateurs, could end up making flawed decisions.
As a part of this discussion, we aim at simplifying crypto transactions for the greenhorns. Subsequently, we shall touch upon trading, investing, and mining space with credible viewpoints to justify our inferences.
Crypto Buy & Sell: How to Proceed?
Buying and selling Bitcoin or any other cryptocurrency for that matter requires a thorough understanding of the crypto-space. But will that be enough to make new investors and traders feel at ease? Well, not by a long shot!
To seamlessly buy and sell crypto coins, you, as a beginner, must understand the risks, rewards, resources, repercussions, and relative growth of the concerned crypto players. All these R’s work in cohesion to make your crypto trading and investing experience, a more fulfilling one.
Introductory Guide on Cryptocurrencies
Pardon us for not going with the textbook definition for now. Cryptocurrency, from a layman’s perspective, is more like a secure digital asset that isn’t controlled by a single regulatory body. The value of a crypto coin is, therefore, consensus and popularity-driven.
The unregulated approach clearly explains the unpredictability in pricing, making crypto trades a good way to keep the adrenaline rush intact. While some might still fancy this as a form of digital currency that can be exchanged for services and goods, the instability still qualifies the cryptocurrency as an investment-specific financial instrument.
Still interested in going a bit techy with this guide on cryptocurrencies! Well, let’s quickly wrap up the difficult bits by addressing this as a ledger-driven financial resource that uses Blockchain for a decentralized outlook, anonymity of transactions, and cryptographic security standards to avoid leaks, duplication, and other pressing privacy issues. You can now convert INR to Bitcoin at the best rate.
Enough of geeky explanations! Let’s jump right into the fun bits— money-making via Cryptocurrencies!
Supply, Demand, and Value: All that Drives Cryptocurrencies
“Price is what you pay. Value is what you get”— This legendary Warren Buffet quote makes even more sense in 2021, with the globe swarming with disparate crypto coins. Cryptocurrency, as an unregulated financial instrument, doesn’t have a set value. While this is what makes the crypto-space significantly attractive, it even influences the buying price of the coins, making them nimble investment tools.
What ensues is a closed loop with buying prices and demand determining the value and eventually, the current value and coin supply influencing the buying prices. Interesting isn’t it!
How do I Buy/Sell Cryptocurrency- Trading and Investing Perspectives, covered!
Investing in the crypto-space, regardless of the coin you plan on exploring, requires insights, guidance, and constant monitoring, especially if you are a beginner. And, you must cover every aspect, starting from the coin type, investment platform, wallets, and security safeguards before moving ahead with crypto transactions.
Type of Cryptocurrency
Spoilt for choices, aren’t you! Well, it isn’t surprising to find yourself out of sorts while selecting the right cryptocurrency. If you aren’t willing to delve deeper into the choices, Bitcoin comes forth as an obvious choice. Something you most definitely have heard of!
To summarise, you should take the following considerations into account while choosing a cryptocurrency:
- Market spread
- Support for additional use cases like NFTs, if any
- Minimal volatility and follow-up resilience
Platform of Preference
Let’s clear out something right at the onset! Cryptocurrencies are anything but standard financial products that you can purchase over the usual platforms. Transactions concerning crypto coins aren’t supported by banks, which then makes the role of dedicated exchanges and platforms, even more important.
Still, there are quite a few crypto exchanges around and as a beginner; you must find one that offers:
- Comprehensive portfolio management
- Virtual portfolio support to understand the marking volatility better
- Access to a broader coin base
- Multi-payment support
- Zero lock-in restrictions
- Platform access with minimal deposits
Crypto exchanges are extremely resourceful but what if a beginner is way too finicky about security. In come, crypto wallets! Unlike exchanges that are meant for trading, buying, and selling cryptocurrencies, wallets are way more secure, offer easier access to the funds via cryptographic keys, and are meant for long-term storage.
But the fun part doesn’t end here! These easy-to-use wallets can be integrated into the concerned exchanges to make trading and investing easier for beginners.
Despite using an exchange for transactions and a wallet for storing crypto coins, you still need to secure your device to thwart online threats while accessing the crypto-space online. This is where a VPN comes in handy as it offers an additional layer of security and anonymity.
How much to Invest in Cryptocurrencies?
Sorted with the inception and ready to start trading in Bitcoins, or any other cryptocurrency of choice! Wait up as there is still the investment angle that needs to be discussed at length.
Exchanges and wallets are nifty little tools but they hardly make up for the volatility that you are planning to subject your funds to. As a beginner, investing in the crypto-space is all about restraint. If you are planning to trade, you must make it a point to invest no more than 2% of your liquid assets to make money.
Cryptocurrencies move at an alarming rate, irrespective of the direction, at any emotional trigger, and therefore, trading in a volatile space is always prone to risks. Investments, however, are less risky as you are then allowing the coins to acquire a steady value in time, which might be a good option considering the resilience of certain cryptocurrencies, like Bitcoins.
Even as an investor, nothing more than 5% of your net worth should find its way into an exchange or a crypto wallet.
Investing vs. Mining: How to Choose?
Seeking short-term financial perks with maximum risk exposure— settle for crypto trading by rolling 1% of your net worth!
But, what happens if you are in the digital currency space for say, the next 10 to 15 years. This is where crypto mining comes across as a better strategy, allowing you to actively participate in product creation, value building, network activity, and eventual algorithm refinement. What transpires is a better future for the concerning cryptocurrency and a massive surge in the value of individual tokens.
Sounds more like a safer investment, right! Well, you would still need to invest in relevant mining equipment, considering the resource intensiveness of the approach.
FAQs: Important Crypto Queries Addressed
Q1. What separates cryptocurrencies from fiats?
A1. Fiat currencies are government issues, and hence, regulated. And, the values are pre-defined. Cryptocurrencies are strictly decentralized and have the buyer-seller network determine value, prices, demand, and supply.
Q2. What are the best reasons to consider Cryptocurrencies for investment?
A2. Investing in cryptocurrency is a way to ultimate financial growth, provided you are willing to let the prices stabilize, by waiting for at least a decade from now. Plus, with Blockchain as the conceptual technology behind cryptocurrencies, certain coins also have the potential to work as non-fungible tokens to make digital art and creative pieces transferable and transactional.
Q3. Which cryptocurrency should I invest in?
A3. Amid the plethora of options that vary in fees, transaction speeds, demand, price, and availability, Bitcoin continues to rule the roost with an insanely high market capitalization of $674 billion. The reputation makes Bitcoins obvious investment choices.
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Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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