5 Things to Consider Before Investing in Cryptos

Digital currencies have been propelled to greater heights, particularly with the astronomical rise of bitcoins. They have surpassed all the nay-says and cautions from analysts to become a prominent option for our portfolios, with some using sites like https://btcrevo.it/ to reach new financial heights. But as investors, the challenge has been whether to go with the hype or not?

For those interested in venturing into this new market, it's vital to research before investing a coin. Here are the things we should be aware of before investing in cryptocurrencies.

Understand the Industry

Similar to many trading options, investing in cryptocurrencies requires some basic knowledge of how this industry operates. We need to learn how to create wallet accounts, fund these accounts, which sites to trade, mistakes we can make, and withdraw any gains.

With different coins available, learning might take time, particularly to less-internet savvy individuals. Luckily, most of these currencies operate in the same way using blockchain technology. We can learn how trading in one currency operates and replicate the same to others. By understanding how they work, we're better equipped with relevant information and can make investment-worth decisions.

Cryptos Are Very Volatile

Most digital currencies are characterized by extreme volatility. Once we invest in them, we should expect many ups and downs in terms of pricing. When I first invested in bitcoin in 2017, its value was $900. Within the same year, the value swung back and forth between the initial value and $20,000.

Such high volatilities make cryptos a risky investment. On one day, our digital assets might be worth a lot but stumble to bare-bones on the next day. Digital investors need to proceed with extreme caution and avoid unnecessary risks. I tend to go with moderation when tackling this market.

Timing Is Important

The cliché 'anytime is the best time to invest' might not work well with digital coins. After doing diligent research and understanding this industry, we need to time our investment. Timing is required because of the volatility associated with these currencies.

It's always best if we monitored the prices for some time before making a move. With that said, some of us opt to invest in new, unheard of coins. In such a move, we speculate that these currencies will gain popularity with time. At this point, we can pounce on the high market values and cash out our investment.

Unproven Rate of Return

As investors in digital assets, we should be aware that the intrinsic value of cryptos is unknown. The coins are transacted using the peer to peer analogy, without any regulatory standards. There aren't any concrete market patterns that depict the rise and fall in these coins' value.

Unlike other trading options like mutual funds, we cannot predict returns or changes when trading with digital currencies. Besides, the entire digital asset industry is relatively new. At times we lack sufficient data to create a long-term investment plan.

Be Vigilant

The digital world has never been a haven. With lots of hacks and security issues, our daily Internet use is a mine walk. One wrong move and our identities are leaked, credit cards stolen or bombarded with all manner of viruses. These threats are magnified once we start dealing with cryptocurrencies.

In the crypto world, our investments will be in the form of digital coins stored in wallets. Anyone who has access to our wallets is capable of transferring our funds. Our fund's safety starts by registering with reputable wallets and exchanges. We shouldn't store a lot of coins on exchange platforms. An option is moving the said coins to our online wallets or better hardware wallets.

*Photo source Pexels

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