Since the launch of Bitcoin in 2009, digital currencies have grown from a marginal phenomenon and an object of speculation for individuals to a dominant actor in the financial sphere.
In recent years, Bitcoin has seen immense increases in value but has suffered almost as large losses in value. So the question arises whether cryptocurrencies like Bitcoin, Ether, Dogecoin, and others have what it takes to gain ground in the financial market and consequently offer an investment opportunity for investors.
If you are thinking about investing in cryptocurrency, you need to arm yourself with the right information to be successful in the game. So, in this article, we have put together everything you need to know about crypto investment. Read on to see all we’ve got for you in the piece – thanks to Topiacoin.io for supplying us with most of the info in the article!
How Cryptocurrency Started
The journey of cryptocurrency started with Satoshi Nakamoto’s white paper. The real identity of those behind the development of the cryptocurrency idea is still unclear because the name Satoshi Nakamoto is a pseudonym; hence, it has not been traced to any individual or team.
Bitcoin was the first of the fifty (50) cryptocurrencies launched in January 2009. Ever since over two thousand one hundred (2100), other digital currencies exist, with an estimated total market capitalization of around 131 billion US dollars. Today, digital currencies are an established and widely accepted legal tender.
Reasons to Invest in Cryptocurrencies
Almost everyone talks about the investment opportunities in cryptocurrency, while many others are still grappling with an understanding of this “new” investment terrain. Here are a few reasons you may consider a cryptocurrency investment.
#1: More practical use
Cryptocurrencies allow for fast and seamless transactions with minimal transaction costs. Today, more and more platforms all around the world accept cryptocurrencies as a means of payment.
#2: Anonymity
Our digital footprint is growing all the time. People in the 21st century are largely vulnerable to too many threats following the trails we leave during our day-to-day activities. Digital currencies provide a bit of a remedy, as the transaction between two parties does not have to be processed by a third party, such as a bank.
#3: Support for the decentralized financial system
It was not just after the global economic crisis that many people believed that the traditional banking system was no longer up to date. Digital currencies are completely independent of central banks, which are actively supported by many people.
#4: Profitability
The value of cryptocurrencies is increasing. An excellent example is the case of Bitcoin (BTC). Today, many digital coins are taking a similar path. Those who start trading in good time can hope for a multiple of the investment.
Best Cryptocurrency to Invest In?
What is the best cryptocurrency to invest in? This is a common question that most individuals who are interested in cryptocurrency investment ask. This is a crucial question that many investors are asking themselves. There are now multitudes of ways to invest in cryptocurrencies and make money.
While this is of course an important question, we often leave another crucial question out: How to invest in blockchain? Where is the best place to invest in a cryptocurrency?
In the following, we have therefore created a small overview that offers investors help on where and how best to invest in cryptocurrency.
How Can You Invest In Cryptocurrencies?
Crypto parking lot
Individual investors meet in crypto marketplaces to do business with each other and exchange coins. Offers to buy or sell all common cryptocurrencies can be advertised here. The prices result from supply and demand.
Crypto exchange
You can purchase real coins on a crypto exchange at current market prices. While the prices are created by the market participants in a crypto marketplace, this process is completely automated on the crypto exchange.
Crypto broker
If you are not interested in digital currencies, but only want to benefit from the price development, the best thing is to find a crypto broker around you. Crypto brokers usually trade CFDs (“Contract for Difference”) – derivatives that reflect the development of the value of the respective currency.
Summary of the Crypto Investments
There are different ways to invest in cryptocurrencies. Depending on the preferred type of investment, the risk also increases. Thus, Wallets with which cryptocurrencies are only kept at relatively low risk. CDF trading in crypto exchanges is only suitable for investors with strong nerves and who will take risks.
Below is an overview of the different ways to buy and trade with Bitcoin and Co:
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Mining; Generating cryptocurrencies
The mining of Bitcoin, which is also known as Bitcoin mining, was the best-known form of Bitcoin investment, especially at the beginning of cryptocurrencies. In mining, the investor makes computing power available to the Bitcoin network to process transactions and ensure synchronization and security of the network.
In return, he receives Bitcoins or Bitcoin shares. Because that’s on the hash rate (unit of measurement of the computing power of a Bitcoin network) related costs for Bitcoin mining are now very high, this variant is only worthwhile if the investor can reduce these costs.
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Crypto marketplaces – crypto trading among individual investors
In crypto marketplaces, investors can make offers to buy or sell cryptocurrencies, which can then be accepted or rejected by other users.
The price at which investors can buy and sell bitcoins is therefore a direct result of supply and demand. There is no initial course formation.
Check out the best crypto trading platform according to forbes.com.
Important Note: because of the large number of trading platforms, we strongly recommend that you make a detailed comparison of the individual providers and their trading commissions.
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Bitcoin exchanges and CFD brokers – trading course certificates
When trading via Bitcoin exchanges and brokers, the investor does not own the cryptocurrencies. Instead, he trades with a derivative or a Contract for Difference (CFD).
Similar to stocks or ETFs, it speculates on the performance or price development of the cryptocurrencies, which are calculated by the respective platform based on the trades on the international crypto market.
By using leverage, a large return can be achieved even with a small fortune. However, the risk of loss or total loss is also considerable.
Trading in CFDs takes place over the counter and, outside the regulated market. The CFD broker acts only as an intermediary between the investor on the one hand and the financial markets on the other.
Take Away
It’s a known fact that cryptocurrency investment has rewarded a large number of people in mouthwatering ways. However it has its many grey sides because of the inherent high speculations, and lack of accurate prognoses for the development of the respective coin value. Investors are therefore advised to “invest responsibly” by putting in only what they can afford to forfeit or leave for a long period. Most importantly, information is power; hence, to succeed in the cryptocurrency world, it important for you to learn everything about cryptocurrency.
