How To Invest In Cryptocurrency: Step-by-step guide and everything about risks
Off late Cryptocurrency made all the buzz like never before. Here's everything you need to know about investing in Cryptocurrency if you are a beginner. Check out the step-by-step guide on how to invest in Crypto coins and also know the pros and cons of trading
A cryptocurrency is a form of payment that can be exchanged online for goods or services. Technological elements such as blockchains are used in trades of Cryptocurrency. It is basically a decentralized technology spread across many computers that manage and record transactions. In layman’s language, Cryptocurrency is a type of digital or virtual money. It serves as ordinary money, such as Dollars, Pounds, Euros, Yen and etc. However, these currencies have no physical counterparts such as banknotes or coins that can be carried around by people. Cryptocurrency has its existence only in electronic forms.
Step-by-step guide on how to invest in Cryptocurrency:
1. Find an exchange platform
The first thing you need to do before investing in Cryptocurrency is an exchange platform. Choose a trustworthy Crypto exchange platform. There are quite a few popular Cryptocurrency exchange platforms available in India, however, these are not regulated by government bodies. Thus an investor needs to go through all the analysis and research before investing their hard-earned money. The Crypto investor should also be aware of government policies in such investments.
2. Create Crypto Exchange Account
After you finalize which Cryptocurrency exchange platform to want to sign up for, go ahead with the account opening process. You might need to submit few documents alongside verifying your identity in order to get a trading account.
3. Deposit Funds
In order to buy Cryptocurrencies, you need to first add funds to your Crypto Exchange account. You would be able to add funds to your account only by linking the bank account. As the Indian regulatory bodies have not officially legalized Cryptocurrencies, few banks alerted their users about withdrawing the services in cases of Crypto investments. Some banks might not help you when it comes to linking accounts to a Crypto exchange account. Do proper research about banks and government policies when it comes to Crypto investment.
4. Make the first purchase
Once you overcome all the obstacles and add funds to your Crypto exchange account, you can make your first purchase. There are hundreds of different types of Cryptocurrencies, however, only a few are popular such as Bitcoin, Ethereum, Dogecoin and few others. Know how these coins work, consider risk and profits before buying Crypto coins.
5. Crypto storage method
Traders who trade on Crypto exchange platforms are prone to losing their money because of a lack of security. There are chances of one’s account getting hacked. You can also lose your investment if you forget your login credentials to the Crypto exchange account. Thus it’s important to store digital currency safely and know everything in detail about the account.
Check out the pros and cons of Cryptocurrency investment:
- Potential for high returns
- Potential diversification
- Limited supply
- Protection from debased currencies and threat of rising inflation
- Growing acceptance and usage
- High volatility and potential for complete or great losses
- Endless potential supply
- Poor store of value and limited acceptance
- Unregulated and unbacked
Different Types Of Cryptocurrencies:
Bitcoin was first created as a way for people to send money through the medium of the internet. This digital currency was intended to provide an alternative payment option that would operate free of central control but otherwise be used just like traditional currencies. As per the estimations, there are more than 18.5 million Bitcoin tokens in circulation currently.
2. Bitcoin Cash
Bitcoin Cash was basically designed in 2017, to be a transactional Cryptocurrency that would be used as an electronic cash payment asset. It is apparently designed to be spent, rather than held as a store of value.
Ethereum is a technology that’s home to digital money, global payments, and applications. It is a blockchain-based software platform that is used to support the world’s second-largest Cryptocurrency by market capitalization after Bitcoin. It can be used for sending and receiving value globally and without a third party watching or stepping in unexpectedly.
Ripple is the name of the company and the network and XRP is its Cryptocurrency token, they are to serve as an intermediate mechanism of exchange between two currencies or networks—as a sort of temporary settlement layer denomination.
Litecoin is basically used as an avenue for paying people anywhere in the world without an intermediary having to process the transaction. It is measured by market capitalization. Litecoin is the ninth-largest Cryptocurrency in the world and there can’t be more than 84 million Litecoins in circulation.
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