Why you should invest in cryptocurrencies now?

by Kate Winslet Im a blogger by passion

2020 was a good year for cryptocurrency enthusiasts and investors everywhere. By now, just about anyone and their pet dog are looking to get aboard the crypto train.

Given the amazing rates of returns that we’ve been seeing, it’s no surprise to see that there has been an influx of investors into the market.

From Bitcoin to Ethereum, and Ripple XRP, the market for cryptocurrencies is on fire at the moment. Bitcoin in particular is in the spotlight with even institutional investors like J.P Morgan taking note.

Now with the recent announcements made by PayPal and Tesla BTC valuations have broken historical records as demand for the cryptocurrency continues to rise.

Thus, you may now be asking yourself the question; should you get in on the cryptocurrency game. Or have you missed the boat.

The answer is maybe.

So if you’ve got your mind set on getting in on the crypto game, here’s a simple guide to help you get your feet wet.

Know your cryptos

Most amateur investors tend to make the mistake of not going through the trouble of getting to know the various cryptocurrencies on the market.

Bitcoin being the oldest and most well-known cryptocurrency is the most popular choice. Though, it is always important to keep up with the trends, knowing how many Bitcoins are left to be mined for example.

However, Bitcoin is also the most expensive which can put off some investors. Altcoins such as Ethereum, Litecoin, and Ripple XRP are less well-known and are usually favored by crypto enthusiasts.

This is a shame as there is plenty of opportunity for growth with these coins. Ethereum for example has seen an exponential growth in valuations in 2021. While less popular, Ethereum is widely-used in the fintech industry for a variety of applications.

Instead of investing in a single type of cryptocurrency, focus on building a portfolio of different crypto assets. This allows you to diversify your risk exposure and leverage on undervalued cryptocurrencies.

Protect your investments

Now that you’ve got the basics down, it’s time to look at how you can protect your assets. Unlike fiat currencies, cryptocurrencies do not exist in a physical form.

Instead, they are stored on digital wallets that are divided into cold and hot wallets. Cold wallets are basically devices like thumb drives or hard disks that store your encrypted cryptocurrency keys. These are the safest and most secret method of safeguarding your cryptocurrencies.

However, they can be damaged or even stolen which is why you should ensure that they are stored securely at all times.

Hot wallets on the other hand store your crypto keys online via an encrypted server. Hot wallets are convenient as they allow you to easily access your cryptocurrencies with minimal fuss. However, they are vulnerable to hack attacks and digital heists which is why you should store only a minimal amount of cryptocurrencies on them.

As a rule of thumb, when storing your cryptos, always practice good data hygiene and never let your guard down. Invest in a solid safe to store your cold wallet and regularly change the passwords on your cold wallets.

Invest with reputable sources

Because cryptocurrencies are entirely decentralized, they are not issued by any single monetary authority like central banks. As a result, they can be purchased on various online exchanges at any time.

This freedom, while convenient, makes crypto exchanges vulnerable to attacks from hackers and thieves. Additionally, this also puts you; the investor at risk of falling prey to a digital heist.

Thus when purchasing cryptocurrencies, always take care to deal with only reputable exchanges at all times. Also, never provide your personal information and regularly update your passwords.

While investing in cryptocurrencies is highly profitable, it is not without its fair share of risks. Being an extremely volatile currency, the market for cryptos is fraught with risk and danger. It is no place for the faint-hearted but offers unlimited opportunities for those willing to take the risk.