The basis for starting to invest in cryptocurrencies is to be aware of the investment risks.
Investing in cryptocurrencies is an investment that is famous for its high rates of return. However, it is important to remember that it is a relatively high-risk investment. The value of cryptocurrencies is highly volatile.
Price fluctuations are very dynamic and pronounced in this market. Even Bitcoin, which is considered a more stable cryptocurrency compared to altcoins, has repeatedly recorded drops of up to 80%.
Therefore, before investing, everyone should realize that there is a risk of losing a significant part of the invested capital. And in extreme cases, it is possible to lose almost all of the invested capital (an example is the collapse of the Luna cryptocurrency, for example).
The basis for starting to invest in cryptocurrencies is to realize the investment risks.
Investing in cryptocurrencies is an investment that is famous for its high rates of return. However, it is important to remember that it is a relatively high-risk investment. The value of cryptocurrencies is highly volatile.
Price fluctuations are very dynamic and pronounced in this market. Even Bitcoin, which is considered a more stable cryptocurrency compared to altcoins, has repeatedly recorded drops of up to 80%.
Therefore, before investing, everyone should realize that there is a risk of losing a significant part of the invested capital. And in extreme cases, it is possible to lose almost all of the invested capital (an example is the collapse of the Luna cryptocurrency, for example).
How to minimize the risk of investing in cryptocurrencies?
- First, it is important to understand exactly what cryptocurrencies are and how blockchain technology works. The more you know about the cryptocurrency market, the easier it will be for you to compare different investment strategies and estimate risks.
- Secondly, it is important to have realistic expectations about the profits from cryptocurrency investments. Although some people make high profits in this market, this does not mean that every investor will be equally successful.
- Third, it’s important to invest only money that you don’t need on an ongoing basis and whose loss won’t be catastrophic for you. Investing in cryptocurrencies is a high-risk investment, so you should only invest money whose loss will not affect your daily financial situation.
- Fourth, it is worth carefully gathering knowledge about the cryptocurrency you intend to invest in. It’s worth seeking knowledge about your chosen cryptocurrency project on the Internet. You will find many cryptocurrency portals and forums on the web, where you can find expert opinions, reviews and various media reports. It is also worth keeping an eye on social media, where experts sometimes publish interesting forecasts about the crypto market (for example, Twitter is a particularly characteristic example).
What elements to pay attention to? Among other things, you can:
- research the history of a given project;
- check what kind of application a given project may have (outside the speculative market);
- check the team behind a given project;
- check the development plans;
- read the content provided in the so-called white paper;
- get an idea of what the competition is for the project;
- check the market capitalization and on-chain data of the selected project;
- check current news and media reports on a given project (social media profiles can be particularly helpful for this purpose);
- check not only the opportunities, but also what the weaknesses of a given project are.
Where to invest in cryptocurrencies?
If you decide to invest in cryptocurrencies, you need to find the right investment platform where you can buy, sell and store your cryptocurrencies. Choosing the right platform is very important, as it can affect your investments and the safety of your funds. Examples of exchange platforms for investing in cryptocurrencies include OKX or ByBit. Here are some things to look out for when choosing an investment platform:
- Security – security solutions used by the platform Security should be the most important issue when choosing an investment platform. It is worth checking whether the platform has adequate security measures. Some exchanges provide a “statement” on security on their websites. Besides, a lot of information about the security of individual exchanges can be found on the Internet. Interestingly, there are even rankings of exchanges that classify individual platforms in terms of security.
Of course, it is imperative for an exchange to use advanced technological solutions aimed at maintaining appropriate security standards (this includes data encryption, limits on withdrawals, multi-level authentication and various advanced solutions to protect against malware and hacking attacks). It should be noted that in the context of security-oriented technological solutions, the key issue is how an exchange stores cryptocurrencies (as a rule, only part of the funds are used operationally and the remaining funds are stored on various portals). Of course, technological solutions are not everything. To increase the level of security, some exchanges insure operational funds.
It is also important that the platform operates under a stable legal system. Interestingly, many exchanges in order to increase their credibility and to be able to operate in compliance with regulations in the chosen jurisdiction regularly undergo security audits, which should be conducted by independent auditing bodies.
- Costs – commissions and fees charged by a given platform
Investment platforms charge various types of fees for their services. As a rule, these are commissions for making transactions (maker and taker commissions) and commissions for deposits or withdrawals. Therefore, it is worth checking what the costs are before choosing a platform.
- Supported cryptocurrencies
Not all platforms support all cryptocurrencies. It’s worth paying attention to what cryptocurrencies a platform offers and whether it offers the ones you want to invest in.
- Interface and ease of use
An investment platform should be easy to use and intuitive for users. It is important that it is easy to navigate through the chosen platform (including making transactions, viewing the history of your investments, and depositing and withdrawing capital).
- Availability and customer service
It’s worth checking whether the platform is available in your country and in which languages customer support is available. In case of problems or questions, it is important to have easy access to technical support.
- Reviews and feedback
When choosing an investment platform, it’s also a good idea to read the opinions of other users and reviews by industry experts. This will at least give you an overview of the platform in question and help you make a more informed choice.
How to choose the right cryptocurrency for investment?
Choosing a cryptocurrency, for investment is a difficult task. Before making any decision, it is essential to spend some time. There are many different cryptocurrencies on the market, with different uses and often difficult to estimate growth potential.
Here are some things to look out for when choosing a cryptocurrency to invest in:
History of the cryptocurrency
Before investing in a cryptocurrency, it is worth thoroughly researching its history. It is worth checking how long the cryptocurrency has existed on the market and its previous price fluctuations. This can help you understand how the cryptocurrency behaves in the market and its potential chances of increasing in value. Careful analysis of history and chart data are methods of particular interest to technical analysis enthusiasts.
The use/utility of cryptocurrency
It is worth paying attention to what use a particular cryptocurrency has. Some cryptocurrencies have applications as a fast scalable means of payment, while others can be used, for example, to tokenize specific items (e.g. to tokenize real estate investments or companies) others can be used to streamline financial processes (e.g. lending in fin-tech start-ups) still others are extended platforms that allow building decentralized applications. The applications can be many, but it should be noted that not all cryptocurrencies are distinguished by their usefulness. Some are typically speculative assets (such as the DOGE cryptocurrency, which was created as a joke).
Competition
There are many cryptocurrencies on the market, which can be divided into different groups (e.g. stablecoins, memcoins, cryptocurrencies based on Bitcoin’s portocol, cryptocurrencies characterized by deletion pressure, cryptocurrencies for building decentralized applications, etc.). Regardless of how we divide and classify the cryptocurrencies available on the market, in each category individual projects compete with each other for the leading position. Therefore, it is worth paying attention to the competition of a given cryptocurrency and how it performs in comparison with other competing projects. When choosing a project to invest in, it is of course worth trying to estimate which cryptocurrency has the greatest potential to break through in its niche.
Team and development
It is worth paying attention to the team responsible for the development of a particular cryptocurrency. Good cryptocurrencies have a team of experts and developers who are constantly working to develop and improve the product. It is worth choosing a project that has an ambitious development plan and a committed team.
How to invest in cryptocurrencies so as to ensure safety?
Security is one of the most important issues related to investing in cryptocurrencies. Cryptocurrencies are stored in digital wallets, which are at risk of theft or loss. Here are some things to watch out for to minimize the security risks of cryptocurrency investments:
- Choosing a secure platform for trading
Choosing a secure platform for trading cryptocurrencies is crucial to ensure the safety of your investment. You should thoroughly research the platform, its history and user reviews to make sure it is a safe and trusted platform. It’s a good idea to simply choose platforms that have a good reputation and are recognized entities.
- Safe storage of funds
It’s a good idea to store your cryptocurrencies in a secure way, such as in so-called offline wallets (cold wallets) that are not connected to the Internet. This ensures that cryptocurrencies are not exposed to attacks by hackers and are safely stored. Hardware wallets such as Ledger or Trezor are usually the most recommended.
It’s a good idea to regularly update your wallet software and cryptocurrency trading platform to ensure their security. Updates often include bug fixes and enhanced security features that can help keep your investments safe.
- Caution when trading
It’s a good idea to be cautious when trading cryptocurrencies and avoid suspicious transactions or offers. You should also be wary of cryptocurrency scams and unfortunately there is no shortage of these on the Internet. Therefore, when we see proposals for “signals” or paid tutorials/courses/training it is essential to keep a cool head and calmly assess the credibility of such an offer before making any decision.
- Diversification
It is not worth investing all your savings in one cryptocurrency. A better solution is to diversify your portfolio, that is, invest in several different cryptocurrencies. Diversification is the foundation in investing, not only in cryptocurrencies but also in all kinds of investment assets. As the name suggests, such an action involves spreading the investment risk across different projects, which in practice significantly minimizes the risk of making wrong decisions.
Diversification of investments in cryptocurrencies can help increase the chances of profits while reducing the risk of losses. That’s why it’s worth spending time and energy to thoroughly research the market and choose the right types of cryptocurrencies to minimize risk and increase your chances of profit.
How to invest in cryptocurrencies? Short-term or long-term strategy?
Before investing in cryptocurrencies, it is worth considering the strategy you will follow. You can choose a long-term strategy, i.e. buying cryptocurrencies and holding them for a long time. As a rule, such a strategy is recommended for investors who simply believe in a particular cryptocurrency. As a rule, such a strategy is more often chosen by people who prefer to use fundamental analysis more than technical analysis.
Speaking of long-term investment strategy, it is worth noting a very popular strategy such as Dollar-Cost Averaging (DCA). This is a tactic that involves averaging the purchase price. This method involves buying cryptocurrency at regular intervals (e.g. daily, weekly or monthly).
As a result, the risk of buying at an inappropriate moment (at a so-called top) is reduced, as the final price is thus averaged.
In addition to short-term strategies, it is also possible to use a short-term strategy, i.e. buying and selling cryptocurrencies within minutes, hours or days (depending on the time horizon chosen). Such a strategy, as a rule, is considered riskier, but allows for a much faster return on investment. In this case, as a rule, it is necessary to analyze the situation on the price chart and quickly draw conclusions.
Tips for buying cryptocurrencies
Cryptocurrencies how to get started? Of course, there is no unequivocal golden advice on how to invest in cryptocurrencies. Nevertheless, it is undoubtedly possible to distinguish a few universal tips that can be helpful for beginning investors.
First, it is worth checking the current value of the cryptocurrency and its valuation history. It is also worth paying attention to its capitalization. As a rule, projects with a larger market capitalization are considered more stable, although as is well known, even Bitcoin, the cryptocurrency with by far the largest capitalization, can have large price fluctuations.
You should also pay attention to how you can buy a particular cryptocurrency. Some cryptocurrencies can be easily bought on many exchange platforms. Others, on the other hand, may be available only on selected exchanges. It may also so happen that, for example, it is not possible to buy them with a credit card or an ordinary bank transfer, but only with other cryptocurrencies (e.g. with the help of ETH).
It is also worth paying attention to the fees charged by the platform. Some platforms charge a commission for each purchase or sale of cryptocurrency, which can significantly affect our profits.
Where can you buy cryptocurrencies besides exchanges?
In addition to exchanges, Cryptocurrencies can be bought at cryptocurrency exchanges and bit ATMs.
Cryptocurrency exchange offices are companies that exchange traditional currencies for cryptocurrencies. They usually operate online and allow cryptocurrencies to be purchased using traditional payment methods, such as bank transfer or credit card. There are also exchange offices that operate in the form of regular physical locations. Then it is possible to purchase cryptocurrency for cash (e.g. PLN). An example of an operator through which exchanges can be made in physical establishments in Poland is Kanga.
Bitomats are special machines that allow the purchase of cryptocurrencies with cash. There are many bitomats available in Poland (popular operators include FlyingAtom and Egera). Using bitomats is intuitive and fast.
What’s more, in many cases exchanges in such devices are possible around the clock (which is an advantage over establishments operating as cryptocurrency exchange offices).
A few words of summary
The issues raised above are the foundation for people who are wondering how to start the adventure of investing in cryptocurrencies. At the same time, they should come as no surprise to those who already have at least some experience in this market.
First of all, the text points out that before starting to invest in cryptocurrencies, it is worth gaining adequate knowledge of the market and individual cryptocurrencies, defining your investment goals, choosing a strategy and a suitable platform for making transactions. In addition, the most popular options for buying cryptocurrencies (buying cryptocurrencies on cryptocurrency exchanges and buying at cryptocurrency exchange offices and bitomats) are briefly described.
How to minimize the risk of investing in cryptocurrencies?
- First, it is important to understand exactly what cryptocurrencies are and how blockchain technology works. The more you know about the cryptocurrency market, the easier it will be for you to compare different investment strategies and estimate risks.
- Secondly, it is important to have realistic expectations about the profits from cryptocurrency investments. Although some people make high profits in this market, this does not mean that every investor will be equally successful.
- Third, it’s important to invest only money that you don’t need on an ongoing basis and whose loss won’t be catastrophic for you. Investing in cryptocurrencies is a high-risk investment, so you should only invest money whose loss will not affect your daily financial situation.
- Fourth, it is worth carefully gathering knowledge about the cryptocurrency you intend to invest in. It’s worth seeking knowledge about your chosen cryptocurrency project on the Internet. You will find many cryptocurrency portals and forums on the web, where you can find expert opinions, reviews and various media reports. It is also worth keeping an eye on social media, where experts sometimes publish interesting forecasts about the crypto market (e.g. Twitter is a particularly characteristic example).
What elements to pay attention to? Among other things, you can:
- research the history of a given project;
- check what kind of application a given project may have (outside the speculative market);
- check the team behind a given project;
- check the development plans;
- read the content provided in the so-called white paper;
- get an idea of what the competition is for the project;
- check the market capitalization and on-chain data of the selected project;
- check current news and media reports on a given project (social media profiles can be particularly helpful for this purpose);
- check not only the opportunities, but also what the weaknesses of a given project are.
Where to invest in cryptocurrencies?
If you decide to invest in cryptocurrencies, you need to find the right investment platform where you can buy, sell and store your cryptocurrencies. Choosing the right platform is very important, as it can affect your investments and the safety of your funds. Examples of exchange platforms for investing in cryptocurrencies include OKX or ByBit. Here are some things to look out for when choosing an investment platform:
- Security – security solutions used by the platform Security should be the most important issue when choosing an investment platform. It is worth checking whether the platform has adequate security measures. Some exchanges provide a “statement” on security on their websites. Besides, a lot of information about the security of individual exchanges can be found on the Internet. Interestingly, there are even rankings of exchanges that classify individual platforms in terms of security.
Of course, it is imperative for an exchange to use advanced technological solutions aimed at maintaining appropriate security standards (this includes data encryption, limits on withdrawals, multi-level authentication and various advanced solutions to protect against malware and hacking attacks). It should be noted that in the context of security-oriented technological solutions, the key issue is how an exchange stores cryptocurrencies (as a rule, only part of the funds are used operationally and the remaining funds are stored on various portals). Of course, technological solutions are not everything. To increase the level of security, some exchanges insure operational funds.
It is also important that the platform operates under a stable legal system. Interestingly, many exchanges in order to increase their credibility and to be able to operate in compliance with the regulations in the chosen jurisdiction regularly undergo security audits, which should be conducted by independent auditing bodies.
- Costs – commissions and fees charged by a given platform
Investment platforms charge various types of fees for their services. As a rule, these are commissions for making transactions (maker and taker commissions) and commissions for deposits or withdrawals. Therefore, it is worth checking what the costs are before choosing a platform.
- Supported cryptocurrencies
Not all platforms support all cryptocurrencies. It’s worth paying attention to what cryptocurrencies a platform offers and whether it offers the ones you want to invest in.
- Interface and ease of use
An investment platform should be easy to use and intuitive for users. It is important that it is easy to navigate through the chosen platform (including making transactions, viewing the history of your investments, and depositing and withdrawing capital).
- Availability and customer service
It’s worth checking whether the platform is available in your country and in which languages customer support is available. In case of problems or questions, it is important to have easy access to technical support.
- Reviews and feedback
When choosing an investment platform, it’s also a good idea to read the opinions of other users and reviews by industry experts. This will at least give you an overview of the platform in question and help you make a more informed choice.
How to choose the right cryptocurrency for investment?
Choosing a cryptocurrency, for investment is a difficult task. Before making any decision, it is essential to spend some time. There are many different cryptocurrencies on the market, with different uses and often difficult to estimate growth potential.
Here are some things to look out for when choosing a cryptocurrency to invest in:
History of the cryptocurrency
Before investing in a cryptocurrency, it is worth thoroughly researching its history. It is worth checking how long the cryptocurrency has existed on the market and its previous price fluctuations. This can help you understand how the cryptocurrency behaves in the market and its potential chances of increasing in value. Careful analysis of history and chart data are methods of particular interest to technical analysis enthusiasts.
The use/utility of cryptocurrency
It is worth paying attention to what use a particular cryptocurrency has. Some cryptocurrencies have applications as a fast scalable means of payment, while others can be used, for example, to tokenize specific items (e.g. to tokenize real estate investments or companies) others can be used to streamline financial processes (e.g. lending in fin-tech start-ups) still others are extended platforms that allow building decentralized applications. The applications can be many, but it should be noted that not all cryptocurrencies are distinguished by their usefulness. Some are typically speculative assets (such as the DOGE cryptocurrency, which was created as a joke).
Competition
There are many cryptocurrencies on the market, which can be divided into different groups (e.g. stablecoins, memcoins, cryptocurrencies based on Bitcoin’s portocol, cryptocurrencies characterized by deletion pressure, cryptocurrencies for building decentralized applications, etc.). Regardless of how we divide and classify the cryptocurrencies available on the market, in each category individual projects compete with each other for the leading position. Therefore, it is worth paying attention to the competition of a particular cryptocurrency and how it performs in comparison with other competing projects. When choosing a project to invest in, it is of course worth trying to estimate which cryptocurrency has the greatest potential to break through in its niche.
Team and development
It is worth paying attention to the team responsible for the development of a particular cryptocurrency. Good cryptocurrencies have a team of experts and developers who are constantly working to develop and improve the product. It is worth choosing a project that has an ambitious development plan and a committed team.
How to invest in cryptocurrencies so as to ensure safety?
Security is one of the most important issues related to investing in cryptocurrencies. Cryptocurrencies are stored in digital wallets, which are at risk of theft or loss. Here are some things to watch out for to minimize the security risks of cryptocurrency investments:
- Choosing a secure platform for trading
Choosing a secure platform for trading cryptocurrencies is crucial to ensure the safety of your investment. You should thoroughly research the platform, its history and user reviews to make sure it is a safe and trusted platform. It’s a good idea to simply choose platforms that have a good reputation and are recognized entities.
- Safe storage of funds
It’s a good idea to store your cryptocurrencies in a secure way, such as in so-called offline wallets (cold wallets) that are not connected to the Internet. This ensures that cryptocurrencies are not exposed to attacks by hackers and are safely stored. Hardware wallets such as Ledger or Trezor are usually the most recommended.
It’s a good idea to regularly update your wallet software and cryptocurrency trading platform to ensure their security. Updates often include bug fixes and enhanced security features that can help keep your investments safe.
- Caution when trading
It’s a good idea to be cautious when trading cryptocurrencies and avoid suspicious transactions or offers. You should also be wary of cryptocurrency scams and unfortunately there is no shortage of these on the Internet. Therefore, when we see proposals for “signals” or paid tutorials/courses/training it is essential to keep a cool head and calmly assess the credibility of such an offer before making any decision.
- Diversification
It is not worth investing all your savings in one cryptocurrency. A better solution is to diversify your portfolio, that is, invest in several different cryptocurrencies. Diversification is the foundation in investing, not only in cryptocurrencies but also in all kinds of investment assets. As the name suggests, such an action involves spreading the investment risk across different projects, which in practice significantly minimizes the risk of making wrong decisions.
Diversification of investments in cryptocurrencies can help increase the chances of profits while reducing the risk of losses. That’s why it’s worth spending time and energy to thoroughly research the market and choose the right types of cryptocurrencies to minimize risk and increase your chances of profit.
How to invest in cryptocurrencies? Short-term or long-term strategy?
Before investing in cryptocurrencies, it is worth considering the strategy you will follow. You can choose a long-term strategy, i.e. buying cryptocurrencies and holding them for a long time. As a rule, such a strategy is recommended for investors who simply believe in a particular cryptocurrency. As a rule, such a strategy is more often chosen by people who prefer to use fundamental analysis more than technical analysis.
Speaking of long-term investment strategy, it is worth noting a very popular strategy such as Dollar-Cost Averaging (DCA). This is a tactic that involves averaging the purchase price. This method involves buying cryptocurrency at regular intervals (e.g. daily, weekly or monthly).
As a result, the risk of buying at an inappropriate moment (at a so-called top) is reduced, as the final price is thus averaged.
In addition to short-term strategies, it is also possible to use a short-term strategy, i.e. buying and selling cryptocurrencies within minutes, hours or days (depending on the time horizon chosen). Such a strategy, as a rule, is considered riskier, but allows for a much faster return on investment. In this case, as a rule, it is necessary to analyze the situation on the price chart and quickly draw conclusions.
Tips for buying cryptocurrencies
Cryptocurrencies how to get started? Of course, there is no unequivocal golden advice on how to invest in cryptocurrencies. Nevertheless, it is undoubtedly possible to distinguish a few universal tips that can be helpful for beginning investors.
First, it is worth checking the current value of the cryptocurrency and its valuation history. It is also worth paying attention to its capitalization. As a rule, projects with a larger market capitalization are considered more stable, although as is well known, even Bitcoin, the cryptocurrency with by far the largest capitalization, can have large price fluctuations.
You should also pay attention to how you can buy a particular cryptocurrency. Some cryptocurrencies can be easily bought on many exchange platforms. Others, on the other hand, may be available only on selected exchanges. It may also happen that, for example, you can’t buy them with a credit card or a regular bank transfer, but only with other cryptocurrencies (e.g. with ETH).
It is also worth paying attention to the fees charged by the platform. Some platforms charge a commission for each purchase or sale of cryptocurrency, which can significantly affect our profits.
Where can you buy cryptocurrencies besides exchanges?
In addition to exchanges, Cryptocurrencies can be bought at cryptocurrency exchanges and bit ATMs.
Cryptocurrency exchange offices are companies that exchange traditional currencies for cryptocurrencies. They usually operate online and allow cryptocurrencies to be purchased using traditional payment methods, such as bank transfer or credit card. There are also exchange offices that operate in the form of regular physical locations. Then it is possible to purchase cryptocurrency for cash (e.g. PLN). An example of an operator through which exchanges can be made in physical establishments in Poland is Kanga.
Bitomats are special machines that allow the purchase of cryptocurrencies with cash. There are many bitomats available in Poland (popular operators include FlyingAtom and Egera). Using bitomats is intuitive and fast.
What’s more, in many cases exchanges in such devices are possible around the clock (which is an advantage over establishments operating as cryptocurrency exchange offices).
A few words of summary
The issues raised above are the foundation for people who are wondering how to start the adventure of investing in cryptocurrencies. At the same time, they should come as no surprise to those who already have at least some experience in this market.
First of all, the text points out that before investing in cryptocurrencies, it is worthwhile to gain adequate knowledge of the market and individual cryptocurrencies, determine your investment goals, choose a strategy and the right platform for making transactions. In addition, the most popular options for buying cryptocurrencies (buying cryptocurrencies on cryptocurrency exchanges and buying at cryptocurrency exchange offices and bitomats) are briefly described.
