Should you invest in cryptocurrency?

Investing is a surefire way to gain passive income with capital that can work for you. For ten years now, a new investment object has appeared in the world, in addition to gold, real estate, and minerals. It is crypto investing. A large number of helpful implementation methods, a high level of security, the absence of inflation and regulation by a single digital bank, as well as several other factors form the investment attractiveness for investors:

• The investment market is replenished with new players from China and India. Following the announcement of the President of China on the support of the blockchain, BTC rose in price by 40% per day in October 2020.
• The cryptocurrency market is subject to the same laws and principles as the stock market. Besides, technical analysis also works in crypto investing, which allows you to calculate risks, choose the right time for investments, and create a strategy.
• The availability of digital currency is increasing, and new tools for storing money are being used, mining is developing.
• The world’s largest online stores began to accept bitcoins, thereby popularizing the currency and increasing user confidence.

Cryptocurrencies as investment objects

There was another surge in interest in cryptocurrencies, which pushed their quotes up in November-December 2020t. The second week of December 2020 showed unprecedented growth in bitcoin, its rate reached $23,500, and the total capitalization exceeded $400 billion.

The statistics speak for themselves over the past two years; the main form of cryptocurrency has risen in price by more than 600%.

Experts predict the massive distribution of cryptocurrencies is on par with the internet. They assume that by 2024, 1 billion people will use cryptocurrencies. Naturally, this will entail an increase in investment interest, both among ordinary people and among companies.

In these rapidly evolving trends, it is necessary to consider the benefits of crypto investing in bitcoin and other promising cryptocurrencies.

Benefits of crypto investing

Low entry threshold. Traditional investment options involve large financial investments (from several thousand dollars). In cryptocurrencies, you can take the smallest amount of money and buy the relevant amount of cryptocurrency with it. It can be done either regularly, by buying bitcoin upon receipt of a salary, or by purchasing cryptocurrency with the money saved or earned unscheduled.

Moreover, the regularity of the purchase leads to price averaging, to an increase in profitability in the long term.

High profitability. Despite the volatility, fundamentally, Bitcoin has only grown in value since its inception in 2009. If you draw a line on the graph of its price from $1 in 2011 to $23,000 in December 2020, ignoring local peaks and troughs, you will see growth.

Liquidity. The system works equally quickly in two directions; you can sell cryptocurrency as speedily as you buy it. Therefore, if an investor needs cash, he can get it back almost instantly, unlike selling gold or stocks. Crypto investing is a dynamic marketplace.

Ease of market entry. Conservative investment methods require the involvement of intermediaries. Cryptocurrencies can be bought in a few clicks by simply downloading the application. Some of them are completely anonymous and do not even require verification.

Low costs. There is no cumbersome and costly intermediary infrastructure in the cryptocurrency market, as in the securities market. Application algorithms provide an optimal purchase rate and low commissions.

What to look for when investing in crypto assets?

Volatility. It is the most common argument for which cryptocurrencies are branded. Indeed, you can regularly see large price fluctuations up and down. If you buy bitcoin at the peak of its value in such conditions, then if the price falls, you can lose a significant amount of money.

In the short term, volatility is of tremendous importance, but if you look at the situation in retrospect, everything looks different. The story of how, back in 2010, an American bought two pizzas for 10 thousand bitcoins is a fait accompli that illustrates a trend.

Therefore, it is necessary to closely monitor the market and trends and choose the right time. Investing in cryptocurrency in 2020 requires studying the issue in retrospect and becoming familiar with the crypto industry trends.

Risks. There is no risk-free crypto investing, but risky investments tend to be the most profitable. In the case of bitcoin, there is a risk of falling prices in the short term. Also, special attention should be paid to the security rules when working with cryptocurrencies.

Safety regulations. You need to know the following simple things to avoid risks when investing in cryptocurrencies:

• Buy/Sell cryptocurrencies only in time-tested services.
• Trust the storage of funds only to non-custodial services.
• Safely and securely store private keys and seed-phrase from an asset wallet.

There are two types of cryptocurrency storage services:

• Custodian liquidity providers who store and transfer crypto assets themselves on behalf of the user, usually interacting with them through websites. They store the user’s private keys and manage their assets. A classic example of cryptocurrency exchanges. This type of storage is not recommended for the long-term storage of crypto assets.
• Non-custodial is software hosted on a user’s PC, phone, or other devices that allows him to store and carry out transactions with cryptocurrencies securely. They exist mainly in the form of mobile applications called crypto wallets. In this case, the user does not transfer his private keys to anyone and conducts operations independently, without involving exchanges and intermediaries. The main thing for the user is to write down and securely save the seed phrase generated when creating the wallet.

The developers of such wallets do not have access to operations or user data or keys.

Where should a potential investor start?

•  Have a general level of erudition regarding cryptocurrencies, mining, leading coins, and the market situation in general.
• Determine the amount of investment and outline a strategy.
• Choose the currency that you are not afraid of losing. It is unnecessary to chase BTC, but it is worth taking a closer look at beginners and promising ones, which are traded in the range of 100 USD per unit since the cryptocurrency market is extremely high-risk.
• Choose a trader or a consulting company that will accompany you at all stages, analyze, minimize risks, and determine the most profitable strategy.

The trend of investing in cryptocurrencies is only gaining momentum. It is very simple, accessible to everyone, and quite profitable. At the same time, it is necessary to follow simple safety rules, choose reliable services and study promising cryptocurrencies for investing in 2021.