Cryptocurrency has become all the rage in recent years despite it only being established for a short amount of time. Investments and trades in cryptocurrency can be carried out with a simple click of a button online and from the comfort of your home to make big gains (if you can bear the risks!), so it’s no surprise why it’s fast become popular amongst the general population. However, for those who are inexperienced, it can be a little overwhelming to navigate and there are risks of serious fraud! So, how exactly can you invest your cryptocurrency in a safe and secure manner? Let’s find out.
Things to know before investing
Before we dive into the volatile world of cryptocurrency investments, there are certain things to consider before exchanging your hard earned money for digital tokens.
Firstly, as we’ve already covered, the cryptocurrency market is ever changing, so it is constantly fluctuating – for example, Bitcoin, one of the main forms of cryptocurrency, has dropped 30% in one week and skyrocketed to records high the following week! Therefore, there is no guarantee on any stability or returns.
Also any holdings you have in cryptocurrency are not currently insured by the FSCS (UK) or FDIC (US), so if your investments go bankrupt, are hacked or the service you use closes down, there’s pretty much no way to get it back!
Finally, cryptocurrency is a taxable form of income, so if you’ve started to gain from your investments, be sure to declare it to the relevant departments depending on where you reside, so that you are not served with legal notices for fines or imprisonment!
What do you need to invest
To begin your journey into cryptocurrency investments, nearly all digital platforms will require one or more of the following documents:
- Personal identification documents
- Bank account information
- Secure internet connection
Yes, that’s really it!
How to invest
Now, onto the exciting part – be aware things might get a little detailed here! In simple terms, you need a place to purchase cryptocurrency to begin investing and a place to store it securely. Most individuals purchase cryptocurrency from exchanges, such as Coinbase, GDAx and Bitfinex, via their debit or credit cards. However, keep in mind that exchanges usually charge a fee on transactions.
If you want to avoid transactional fees, you can purchase cryptocurrency directly from users who are looking to sell their assets, such as via LocalBitcoins. However, this process can be quite lengthy and there is no way to guarantee the validity of the cryptocurrency being sold. Therefore, as a new investor, it’s best to use exchanges.
There are also many other ways to invest in crypto, such as crypto exchange or broker stocks as well as Blockchain EFTs. Furthermore, there are various ways to “earn” cryptocurrency for free either through learning or mining – so be sure to educate yourself on all the options available to you!
Tips to store your cryptocurrency safely
Once you’ve made your cryptocurrency purchases, your digital assets will be placed into a software wallet – you’ll automatically receive one when you create an account with an exchange. If you’re more serious about your investments, you may also consider purchasing a hardware wallet; this is a physical device to securely store your cryptocurrency and it’s more secure than a software wallet.
On a final note
Investing in cryptocurrency can be very rewarding once you make substantial gains. However, there are many risks associated with it. Therefore, it’s essential to thoroughly consider all your options and make a choice depending on your financial situation.
Until next time.