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Can I Invest in Cryptocurrency? Cryptocurrency as an Investment Instrument.

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Can I Invest in Cryptocurrency?

Are you ready to start investing in cryptocurrency? Can I invest in Cryptocurrency?

If the answer to the above question is YES, then you can start investing in cryptocurrency.

Before, you start investing in cryptocurrency you must know about some basics and check your risk tolerance.

A little more than a decade after the first cryptocurrency, Bitcoin, was launched, the industry that’s developed around the new technology has seen explosive growth. Today, there aren’t just cryptocurrencies available, but a few blockchain-based digital assets, including crypto tokens and NFTs.

Cryptocurrencies have emerged as an asset class that provides you with a chance to invest and earn substantial returns. Despite the lack of government backing, this asset class has garnered massive popularity in recent years.

From tech billionaire Elon Musk to actor Gwyneth Paltrow, everyone’s talking about cryptocurrency and the craze it has generated among people about a future that is largely driven digitally.

But does it really hold that much water as an investment instrument? The crypto coins do have a high rate of returns, but they are equally volatile and susceptible to frequent market crashes.

So how does a person decide whether they should invest in these virtual coins that, Mr. Musk says, could become the future currency of the world.

There are several methods for starting your investment journey in crypto. Depending on whether you want help managing your investment or if you want to align with the ethos of the ecosystem and “be your own bank,” there are opportunities for those just starting out.

Keep in mind that like every other investment class, investing in cryptocurrency is still risky — you could lose the entire value of your investments — so make sure you’re in a financially sound position and take the time to assess your risk appetite, haven an effective cryptocurrency investment strategy before putting money towards the asset class. Before we answer the question Can I invest in Cryptocurrency? You must first know what is cryptocurrency and how cryptocurrency works.

What is cryptocurrency?

Cryptocurrency is a digital payment system that doesn’t rely on banks to verify transactions. It’s a peer-to-peer system that can enable anyone anywhere to send and receive payments. Instead of being physical money that is carried around and exchanged in the real world, cryptocurrency payments exist purely as digital entries to an online database that describe specific transactions. When you transfer cryptocurrency funds, the transactions are recorded in a public ledger. You store your cryptocurrency in a digital wallet.

Cryptocurrencies work using a technology called a blockchain. Blockchain is a decentralized technology spread across many computers that manage and records transactions. Part of the appeal of this technology is its security.

So, where the heck do we get the word cryptocurrency from, anyway? Glad you asked. Cryptocurrency got its name because it uses encryption to verify transactions.

This means advanced coding is involved in storing and transmitting cryptocurrency data between wallets and to public ledgers. The aim of encryption is to provide security and safety.

How does Cryptocurrency work?

The concept of digital money that people spend online is not that complicated in itself. After all, most of us will be familiar with transferring money from one online bank account to another.

Cryptocurrency works a lot like PayPal or a credit card, except you exchange digital assets for goods and services instead of US dollars. To make a transaction with cryptocurrency, you must exchange currency with a peer using a digital wallet known as a cryptocurrency wallet.

Cryptocurrency runs on blockchain technology, but what exactly is a blockchain? The term has become so commonplace, its meaning and significance are often blurred. A blockchain is simply a digital ledger of transactions.

This ledger (or database) is distributed across a network of computer systems. No single system controls the ledger. Instead, a decentralized network of computers keeps a blockchain running and authenticates its transactions.

A cryptocurrency wallet is a software that allows you to transfer funds from one account to another. To complete a transaction, you need access to a password, known as a private key.

The private key is much like a bank account. You can own multiple keys and own all the funds sent to those keys. Transactions are recorded on a public ledger, which shows the transaction totals without revealing the identities of the parties involved.

While cryptocurrency trading is the current rage and may even yield potentially high returns, Chris must understand that cryptocurrency is an incredibly speculative and volatile buy. The market is still in its infancy. Investing in something that’s new comes with challenges, so she must be prepared for ups and downs, including some dramatic swings. If his investment portfolio or risk appetite can’t handle that, cryptocurrency might not be a wise choice for him.

How to Invest in Cryptocurrency

Cryptocurrency often provides better returns than traditional investment tools. Many people made massive amounts of money when the crypto market was on a bull run during the first four months of this year.

Consider this: Bitcoin gave a return of over 800 percent during the financial year 2020–21. In April 2020, it was trading around $6,640 but by April this year, it had neared $65,000. Most other coins too witnessed a surge in prices, giving handsome returns to the investors.

Investing in cryptocurrencies can be an intriguing prospect for a portion of your portfolio, but you should make sure to diversify your investments with other holdings.

If you’re ready to find a trusted cryptocurrency investment company that can help you achieve your financial goals, get started now.

If you’re planning to invest in cryptocurrencies, these tips can help you make educated choices.

1. Research Cryptocurrency Investment Company or Exchanges

Before you invest one dollar, learn about cryptocurrency investment companies or exchanges. These platforms provide the means to buy, sell digital and invest cryptocurrencies, but there are 500 exchanges to choose from, according to Bitcoin.com. Do your research, read reviews and talk with more experienced investors before moving forward.

One of the best and most popular cryptocurrency investment companies is Bitcoininvestmentrex. It is suitable for cryptocurrency beginners and pros alike. They provide a safe and secure platform where you can invest in cryptocurrency and make money with ease.

can I invest in cryptocurrency

2. Learn How to Store Your Digital Currency Safely

If you purchase cryptocurrency, you have to store it. You can store it on an exchange or in a digital “wallet,” for example one of the crypto wallets described in this blog post Which cryptocurrency wallet to choose. While there are many different kinds of wallets, each has its own benefits, technical requirements, and security. As with exchanges, you should investigate your storage choices before investing.

3. Diversify Your Investments

Diversification is a key to any good investment strategy, and it holds true when you’re investing in cryptocurrency too. Don’t put all of your money in Bitcoin, for example, just because that’s the name you know. There are thousands of options, and it’s best to spread your investment around to several currencies.

4. Prepare for Volatility

The cryptocurrency market is a volatile one, so be prepared for ups and downs. You’ll see dramatic swings in prices. If your investment portfolio or mental wellbeing can’t handle that, cryptocurrency might not be a wise choice for you.

Cryptocurrency is all the rage right now, but remember, it’s still in its infancy. Investing in something that’s new comes with challenges, so be prepared. If you plan to participate, do your research and invest conservatively to start.

5. Don’t invest what you can’t afford to lose

We are huge fans of crypto, we conceive it as something that, in very small doses, might help clients get more diversification since it performs so differently from stocks and bonds.

We advise interested clients to invest no more than 2% of their liquid portfolios in digital currencies. In other words, they should only invest a small percentage of the money they have above and beyond their home equity and their retirement and education savings.

“By investing 2% they feel like they’re participating, but not so much that it creates problems,”

Elliott suggests having no more than 5% of your overall portfolio dedicated to speculative investments of all kinds, including crypto, but only if you have little to no debt and are willing to accept the risk of losing what you put in.

Arizona-based certified financial planner Christine Papelian thinks direct exposure to crypto is too volatile for her clients, who are primarily investing in retirement

But she said she reminds clients that they may already have some indirect exposure to crypto assets through investments in tech companies that invest in blockchain technology, which makes it possible for the crypto trading universe to function.

Or investors may have exposure through actively traded mutual funds and exchange-traded funds, which themselves may have crypto or crypto-related companies, like Coinbase, in their portfolios, Papelian said.

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Which is the Best Cryptocurrency to Invest in Now?

This is a personal question based on your interest in technology and risk appetite.

The Best Cryptocurrency to Invest in Bitcoin, Bitcoin is on top of the food chain that everyone knows about, but it’s not the only kind of cryptocurrency out there. Bitcoin was what started it all and has the highest market cap of any other coin, at over $1 trillion as of writing in mid-October 2021.

The project has a healthy developer ecosystem constantly working to upgrade the code and has the most users by many metrics.

Currently, bitcoin is trading around $57,000 a coin, although the price sees massive swings in both directions from time to time. For instance, bitcoin reached an all-time high price of $63,576 on April 14, 2021, before falling by more than half to $29,971 only a couple of months later.

Ethereum is another good bet for investors. Ethereum innovated on Bitcoin by implementing what’s called smart contracts that allow for more complex tokens and transactions. While the Ethereum blockchain has dealt with significant scalability issues since it launched at the end of July 2015, it is the most actively used blockchain.

It’s been the blockchain of choice for several innovations, including the crypto fundraising mechanism initial coin offerings (ICOs), NFTs, and decentralized finance (Defi). Ethereum also has the largest developer community of any cryptocurrency project.

You never have to buy a full unit of a cryptocurrency. Cryptocurrencies are highly divisible. For instance, you can purchase $10, $100, $10,000 of bitcoin, instead of one whole bitcoin.

Let’s emphasize the 3 contenders:

1. Bitcoin (BTC)

Theories on Bitcoin’s utility differ, but there’s no denying that it’s been the dominant player in its field since its creation. Bitcoin’s growing adoption is its saving grace; both retail and institutional investors are primed to dip their toes into cryptocurrencies with Bitcoin first. Plus, some of today’s smartest business minds are increasingly gravitating toward the “digital gold.” Twitter Inc. (ticker: TWTR) and Square Inc. (SQ) CEO Jack Dorsey has said he doesn’t think there’s anything more important in his life to working on, seeing it as a way for poor countries to guard against currency depreciation and for faster, cheaper funds transfers across borders. And although Bitcoin’s price lost more than half within two months of hitting all-time highs of about $65,000, Tesla Inc.’s (TSLA) decision to put Bitcoin on its balance sheet earlier this year could serve to usher in more corporate treasury inflows over time.

2. Ethereum (ETH)

The Scottie Pippen of cryptocurrency, Ethereum has been capably playing second fiddle to Bitcoin for years now. With a market capitalization of about $276 billion, Ethereum’s share of the overall crypto market is about 18% — a far cry from the 47% commanded by Bitcoin but more than four times the next-closest token. The native currency on the platform is technically called ether but is colloquially referred to as Ethereum. The leading platform for decentralized finance, or Defi, Ethereum allows users to create smart contracts that automatically execute when certain conditions are met. The potential to cut out third parties such as banks, brokerages, and clearinghouses makes Ethereum an exciting, money-saving platform. The rising tide of Defi should continue resulting in higher usage of this platform, which can be used to issue new cryptocurrencies or create and exchange nonfungible tokens, known as NFTs, among other things.

3. Cardona (ADA)

Like Ethereum, Cardano is a decentralized blockchain platform that uses a native cryptocurrency, in this case, Ada, to enable secure peer-to-peer transactions. It was founded in 2015 by Ethereum co-founder Charles Hoskinson, who left what is now the leading platform for decentralized finance to found Cardano, which is designed to use a fraction of the energy demanded by Bitcoin and Ethereum. One way Cardano does this is by using a “proof-of-stake” protocol that doesn’t incentivize high energy usage and is an increasingly popular way for blockchains to validate transactions for security reasons. Cardano, which at $43 billion is the fifth-most valuable cryptocurrency, is transitioning toward enabling smart contracts that should be fully operational by fall 2021.

Summary

As the crypto industry matures, investing in crypto assets becomes both easier and more secure. It’s an exciting space that offers you access to a new technology that’s shaping innovation in many industries, but it also comes with risks.

Investing in cryptocurrency is still risky — you’ll want to be in a financially secure position before you start putting money into crypto assets. Make sure to do your own research and remember that your assets are not FDIC-insured.

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The information presented is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing provided shall constitute financial, tax, legal, or accounting advice or individually tailored investment advice. This information is for educational purposes only.

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