So you have finally decided that you are in the right position to invest in cryptocurrencies and have set aside the funds for it. You have hopefully done your research on where and how to buy your cryptocurrencies. But, how do you select which cryptocurrencies to invest in? Keep reading for tips.
The answer to this question is a personal one. It will depend on your interest in cryptocurrencies in general plus the technologies behind them. Not to mention your overall risk appetite.
The technology behind cryptocurrencies is still very much brand new. Thus, there aren’t any sure-fire methods to properly evaluate these investments. And since it is a very young market, you do not have an extensive track record to base predictions out of, like stocks. Do not worry too much, however, since there are still methods that you can employ to analyze whether or not a project will take off. This can include investigating the team behind the project. Or, inspecting the developer community doing their work on the protocol.
The oldest and the most secure cryptocurrency at the moment is Bitcoin. It is the first cryptocurrency, and it has the largest market capitalization of them all. This actually amounts to over $1 trillion in late 2021. This huge project has a huge and thriving ecosystem of developers that work around the clock to upgrade the code.
Bitcoin trades for around $57,000 per coin as of October 2021. Although this might change at any time since the cryptocurrency is known to have huge fluctuations both up and down. Most cryptocurrencies are volatile by nature, which makes them a particularly risky investment choice for retail investors.
Another good choice for investors is Ethereum. It places second next to Bitcoin in terms of market capitalization and popularity. Ethereum made improvements to the technology behind Bitcoin by making use of smart contracts, specialized programs that are set up to run once certain conditions are met. The use of smart contracts opened the way for more complex tokens and transactions. Even if the Ethereum blockchain had had some problems regarding its scalability since its first launch back in 2015, it is currently the most actively used blockchain.
It has been the blockchain of choice for a lot of cryptocurrency’s initial coin offerings, NFTs, and decentralized finance. Ethereum is also the cryptocurrency with the largest developer community backing it up.
Using exchanges is one of the most common ways of starting an investment in crypto. Luckily we have one that is secure and beginner-friendly. You can visit the Bitcoin Profit app, a cryptocurrency exchange application that can help you learn by trading safely. It also contains various guides from experts.
One of the most important things that you need to keep in mind once you select cryptocurrencies is that you should never give out your private keys and/or recovery phrases for your wallet.
Crypto wallets are used to store your digital assets, but some will also allow you to buy, sell, and transfer cryptocurrencies. When you start out by using a centralized exchange to buy your cryptocurrencies, later on, you might decide that you want to transfer your holdings to a crypto wallet with better features.
Your private key is an alphanumeric string that secures your crypto. This serves as proof of your identity and ownership. The recovery phrase refers to the 12 to 24 words in a specific order that can help users to reclaim their crypto holdings. This is a backup in case they forget the password to their crypto wallet or if their computer breaks down.
There is no wallet provider on earth that will ask you to reveal or share this information. The crypto market is full of scams where investors receive emails from what looks like a legitimate service provider asking for their private key. One should always be cautious of attacks like this. Especially, since there is little that can be done when the hacker succeeds in emptying your wallet.
Other security measures that you should take include using two-way authentication. These are crucial for both your crypto wallets and applications. Implementing two-factor authentication will provide an additional layer of security when you log in. They can be SMS-based, wherein a one-time password will be sent to you via text message. Or, you can generate it through a specific app.
Once you select your cryptocurrencies, you can hold them for the long term in your digital wallet. However, it is better to look into hardware wallets like Ledger or Trezor. Both of which are some of the safest storage solutions. Hardware wallets are devices that stay offline. Thus, are way less likely to be a target of a hacker than keeping your crypto purely online.
While the cryptocurrency industry matures, eventually, it will become easier and more secure to invest in. It is a continuously evolving space. This can offer you access to technologies with huge potential to shape the innovation of many industries.
Do keep in mind that investing in cryptocurrencies is still pretty risky. Thus you’ll want to be in the right financial position before you select any cryptocurrencies to money into or other crypto assets.
