When it comes to investing your money, there are plenty of options to choose from, with one of them being a cryptocurrency or digital currency. Although it has only been around for a short time, its popularity for investors has steadily risen, especially in recent years.
However, while this means there are more digital currencies to choose from, this has made it difficult to discern how to smartly invest in cryptocurrency, especially considering how volatile the fluctuations are in the market. Although these wild fluctuations can mean high risk for investors, it can also give them bigger gains if they go about it correctly.
With that said, we have created this article that aims to provide you with a comprehensive guide on how to invest in crypto so you can minimize your risks even when participating in a high-risk market.
What is Cryptocurrency?
In simple terms, cryptocurrency is a virtual currency that uses cryptographic encryption and is usually based on blockchain technology. Because of the encryption, it makes it difficult to forge cryptocurrency. The basic premise of cryptocurrency is decentralization, meaning they are less likely to be interfered with or manipulated by any governing body.
However, cryptocurrencies are considered much riskier and more volatile than regular currency due to the lack of government backing as well as precious metals such as gold — factors that are often present with regular currency. Thus, cryptocurrencies are only valuable when people perceive them to be such.
Some of the most popular and recognizable cryptocurrencies are Bitcoin and Ethereum. Even though there are over a thousand other cryptocurrencies and new ones continue to emerge, those two are the to-go coins for the investors.