The explosion of cryptocurrencies’ value leads to more people taking an interest in investing in cryptocurrency and Blockchain technology projects. Thus, it is critical to take some precautions to separate the wheat from the chaff and protect your investments.
Here is some advice for investing in cryptocurrency safely and smartly.
1. Be informed
You have to understand the technological fundamentals of each cryptocurrency before you can invest intelligently. Fortunately, there are plenty of resources out there today for useful information: the Finacebrockerage site has become a reference for concisely understanding a large number of concepts. The MOOC sites, Udacity and Coursera, also offer excellent courses to follow for several weeks or months.
2. Find your reliable broker
Several years ago, regarding investing in cryptocurrencies, it was still possible to purchase bitcoin or any other crypto-currencies entirely anonymously. KYC regulations (Know Your Client) and AML (Anti Money Laundering) now require contacting authorized and regulated bodies.
The easiest method is to go through online brokers, which allows you to pay by credit card or SEPA transfer with a reduced commission.
3. Follow crypto communities and groups
One of the appealing sides of investing in cryptocurrency is the possibility for everyone to regain control of their investments, a major breeze when faced with the opacity of traditional finance. Thus, communities, groups, and clans, are formed within messaging applications, such as Telegram (crypto must have!). They must discuss crypto and investment strategy, some of which are made up of tens of thousands of members.
The other great platform for collective intelligence is Twitter, where intellectual discussions reach its peak and the big (and small) minds of the Blockchain debate in an open and sometimes antagonistic climate. Reddit also has many forums (subreddits) dedicated to these discussions and sharing educational or marketing links.
4. Define your investment strategy
Adopt a strategy for investing in cryptocurrency and follow it as long as it is rational and efficient.
The simplest IS “HOLD” strategy, which is the long-term investment in projects that you believe in, then to keep these positions despite the upward or downward turbulences.
A very profitable strategy is active crypto-currency trading. It consists of exchanging over various horizons (monthly, weekly, daily, or even over a few hours) to maximize your initial investment.
Less risky but just as or even more profitable (much more than the simple “HOLD”) is the investment in a crypto fund. While most are inaccessible to ordinary people (minimum entry ticket of 1 million or even 5 million euros), there are decentralized funds via distributed ledger technology which are open to all.
5. Protect your digital wallet
Your computer or mobile becomes your “safe”! When you buy crypto-currencies, you store them in your digital wallet. It allows you to save your cryptocurrency online on a USB key. It generates a code such as bank tokens to perform transactions.
The other two crucial elements are the public key and private key. The public key corresponds to your address or your bank account number. The private key is the password that authorizes transactions. This private key must be kept in a secure location. In the crypto world, there is neither customer support nor “I forgot my password” button. Except in the case of the “seed phrase,” a series of words allows you to reset your password.
If you want to diversify your investments or develop new professional skills, the best strategy is to engage in the crypto community actively! Via Twitter, Reddit, and forums such as Bitcointalk at first. But above by finding a reliable crypto broker and keeping yourself informed and educated. The crypto sector is changing very quickly, and the pioneers as you will be the giants of tomorrow!