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Now that the cryptocurrency market has stood the test of time and proven that it can be an excellent investment, more and more people are looking for ways to invest in cryptocurrencies.
Assuming you have some basic knowledge of how the cryptocurrency market and blockchain technology work, let's see what the investment process looks like.
How to invest in cryptocurrencies
1. Choosing a crypto broker
Cryptocurrency trading platforms such as binance There are really many, and they are growing like mushrooms every day. Choosing the right cryptocurrency broker or exchange should be taken seriously, as your hard-earned money is at stake. Before choosing the right one, read reviews of cryptocurrency brokers. What you should pay attention to are spreads, security of transactions and leverage requirements, ease of use of trading platforms.
Before contacting any cryptocurrency broker, you must decide in which cryptocurrencies you intend to invest. Then find a broker with the highest trading volumes for that particular cryptocurrency.
2. Top up your cryptographic account — Fiat to Bitcoin Exchange
If you are new to the market, you will probably want to fund your account with fiat money. In this case, you obviously need a broker that allows fiat and cryptocurrency transactions. Keep in mind that many exchanges only accept bitcoins when it comes to funding your crypto account. If you want to trade cryptocurrencies and buy altcoins such as Ripple, Dash or Litecoin, this is usually only possible with bitcoins. That's why it's important to first switch from fiat currency to bitcoin exchange.
After you choose your crypto broker, you will open an account for depositing funds. You can top up your account with fiat money using a credit card or using your bank account. The good news is that you can recently top up your account with Paypal, as Paypal has recently allowed its customers to buy, sell and store cryptocurrencies.
3. Choose your crypto wallet for cryptocurrencies.
To invest and trade cryptocurrencies, you will definitely need a crypto wallet to store your assets. Of course, you can always store your cryptocurrencies on exchanges or in a brokerage account. However, putting them in a wallet is the safest way to store your funds. You have two options: a cold wallet, also called a hardware wallet, since this device can work offline, keeping your private key and user address completely safe.
And the second option is a hot wallet, which is a piece of software that you have to download to your computer or mobile phone to store your digital assets. It is not unusual for crypto investors to have several wallets, both hot and cold, for security purposes. If you plan to purchase goods and services with your cryptocurrency, then a hot wallet is a more practical option. Many hot wallets are designed to work only with a certain mobile application or a specific cryptocurrency.
4. Choose a cryptocurrency — diversify your portfolio.
As with any other asset investment, diversification is important. Don't invest in just one cryptocurrency. You can choose a cryptocurrency with a large capitalization, such as Ethereum, Litecoin, Bitcoin Cash, Tezos and Ripple. When it comes to mid-cap cryptocurrencies, you can choose from NEO, DASH or VeChain and many others.
5. Create your investment strategy.
The investment strategy of the cryptocurrency market consists in the correct choice of cryptocurrencies at the right time. Comprehensive verification is of primary importance before buying cryptocurrency and includes monitoring of market trends. Also keep in mind mid-cap and low-cap altcoins, as they can be good investment opportunities. If the value of some assets exceeds the estimated investment size, look for brokers that allow you to trade CFDs. Speaking of time, if you invest in cryptocurrencies with a large market capitalization, choose long-term investments. As for smaller and more volatile cryptocurrencies, use day trading and short-term strategies to offset most of their price fluctuations. And do not forget about risk management tools that will protect you from risky actions.
