Just a decade ago, cryptocurrencies were sidelined to the corners of the internet where technically inclined folks dealt with them. But when the price of BTC and other altcoins started surging around 2016-17, and people made generational wealth using crypto, the entire world took notice. Since then, investing in cryptocurrencies has become the go-to method for the new generation.
So if you have not invested in crypto until now and are curious about where to buy cryptocurrency, then we have got you covered. In this article, we bring you our detailed guide on where to buy crypto and what are the various ways in which you can make money through cryptocurrencies.
What Is Cryptocurrency?
In simple words, cryptocurrencies are a form of digital/virtual currency that can be used to make transactions, trade and invest. But what separates cryptocurrencies from traditional currencies that also exist virtually is the fact that crypto is decentralized and exists on the blockchain. This means that there is no centralized authority or institution that controls them.
Each unit of a cryptocurrency is known as a token, or a coin, and records of its transactions are stored on the blockchain’s distributed ledger publicly. Cryptocurrencies technically have no assets backing them and derive their value mostly from their demand in the market.
Pros and Cons of Investing in Cryptocurrency
Pros
- They have no single point of failure like fiat currencies and can be considered risk-averse to global financial crises like the one in 2008.
- They can be used to make financial transactions globally without the need for any third-party intermediaries.
- They have proven to be one of the most profitable asset classes to invest in.
Cons
- They can be used to make illegal transactions, launder money, and be used by criminals and other nefarious organizations.
- The price of cryptocurrencies is highly volatile, and that has caused a lot of people to lose tons of money.
- There is no regulation in place, so in the event of a hack or theft, there is no way of getting your money back.
What to Look for vefore Investing in Cryptocurrency
Understand How They Work
The first thing to consider is knowing how they work and what gives them value. There are thousands of cryptocurrencies to invest in, but not all of them will give huge returns. Hence, understanding things such as tokenomics, market cap, etc., before investing is the key.
Decide How Much to Invest
It is not wise to invest all your money into crypto as they are highly volatile in nature. A good rule of thumb is to invest only the amount of money that you can afford to lose in case it goes to zero.
Always Take Profits
HODLing might sound like a rallying call for crypto investors, but it might not prove to be the best strategy in the long run. The risk of it going to zero is also very high. Hence, it is the best strategy to always take at least partial profits out of your crypto investments.
Ways to Earn on Cryptocurrency
Cryptocurrencies are a great source of earning either passive income or even making life-changing money. Thousands of people globally have earned millions of dollars through cryptocurrencies and still do so to this day.
Crypto presents a once-in-a-lifetime opportunity to make money. And the best part about that is the fact that there are multiple ways to do so through crypto. So even if you are not a trader or an investor, there are numerous opportunities for everyone, as mentioned below.
Trade Cryptocurrency
Trading is the most popular way of making money through cryptocurrencies. It doesn’t matter if you are a day trader or plan on holding crypto for the long term; trading is one of the easiest routes to earning money. You can trade them through centralized or decentralized cryptocurrency exchanges that charge a very minimal fee for using their services.
Unlike traditional asset markets, crypto markets are open 24/7, and hence you can place trades at all hours. You can not only spot trade but also trade in cryptocurrency derivatives with leverage to take advantage of the highly volatile nature of crypto prices.
Save Cryptocurrency
Just like a traditional savings account, you can also buy and put your cryptocurrency tokens into a savings account and earn interest as high as 10 percent. A lot of cryptocurrency exchanges, such as Coinbase, Kucoin, etc., allow you to deposit your assets to earn interest on them.
The upside to this method is that, while your assets are in your savings account and their price goes up, not only do you earn interest on them, but the dollar value of it also increases.
Cryptocurrency Bet
Crypto betting is one of the fastest and most popular ways of making money. You can easily find crypto casinos and sports betting platforms online. It brings together two of the most popular things currently, i.e., betting and cryptocurrencies together to give massive returns to their users.
It should, however, be kept in mind that betting is highly addictive and the volatile nature of cryptocurrencies makes it much riskier than using fiat money. So it is always a wise choice to bet only the money that you can lose and not be affected negatively.
Cryptocurrency Mining
Mining is the process through which transactions are verified on a blockchain by solving complex cryptographic problems using computers. In return for verifying transactions, the people performing mining are given out tokens as mining rewards. It is the earliest method in which people have earned through cryptocurrencies.
Mining only works on proof-of-work blockchains and is also very energy and capital-intensive. So, the cost of entry into the mining business can be high unless you join a mining farm and pay them a small fee.
How to Protect Your Cryptocurrency?
Now that you know how to invest and make money using crypto assets, the next step is to keep your investments safe. The crypto industry is unregulated, and there are no safeguards for protecting users against fraud, scams, thefts, etc. In this scenario, it is vital that you keep your assets secure.
One of the best ways to do this is through a self-custody wallet, i.e., a wallet where you have control over its private and public keys. You can choose either a software or a hardware wallet to store your assets and keep them out of the reach of scammers, hackers, etc.
Conclusion
Investing in any asset right now is a very risky business given the state of the global financial markets, with no relief expected in the near future. In such a scenario, having a diversified portfolio is one of the best decisions you can make regarding your investments.
Hence, investing in cryptocurrencies is one of the best ways to perform diversification. They present a wonderful opportunity for investors right now, as with the mass adoption of blockchain technology in the coming years, the prices of these assets are poised to skyrocket.
