Investing has got a jolt of new possibilities and a whole new segment since the onset of cryptocurrencies. The crypto space, since 2009- when Bitcoin was introduced in the market, got a makeover, and look it at now! It has built itself into a $1 trillion sector with more than 4000+ cryptocurrencies to invest in.
However, these vast numbers of cryptocurrencies also come with a few challenges for investors. One of the biggest challenges for the investor is to not get distracted by the hype created by cryptocurrencies. Before diving into investing in cryptocurrencies one should do thorough research and know, how to start investing and where to start investing. Apart from research on blockchain technology, in-depth research about cryptocurrencies are also important.
This blog aims to talk about the precautions one might want to take before diving into investing in the biggest asset class!
1o best ways to learn about investing in Cryptocurrency
Cryptocurrencies are digital currencies that can operate as a medium of exchange at a peer-to-peer level and enabling direct payments between individuals. Since the entire blockchain is developed using the principles of asymmetric cryptography, it was wise to call Bitcoin or any mode of exchange on a blockchain, a cryptocurrency. The idea behind the invention was to find a way to be independent of a central authority while producing a means of exchange that is secure, immutable, and verifiable.
Blockchain is a similar database that allows multiple users to record and make changes in it. Once the data is entered, it cannot be removed or changed as it only provides the feature of adding the data. The data can only be added to the blockchain once the majority of the participants provide the consensus to confirm the authenticity of the data with the process called ‘mining’. In the decentralized system, the information is not stored in one place. Every time a new change occurs or a new transaction happens, the node first verifies the transaction and then receives a copy of the new state of the ledger. All nodes on a blockchain are connected and they constantly exchange the latest blockchain data with each other so that all nodes stay up to date.
Understand the market
Now that we know what cryptocurrencies are, knowing which cryptocurrencies are doing well in the market is our next step. The best way to learn about investing in cryptocurrency comes from analyzing their market behavior. It is advisable to analyze the value of the tokens since it has been launched into the market. The best way to do so is via CoinMarketCap.
Know your cryptocurrency
The choice of your cryptocurrency should be based on how well aware you are, of the projects revolving around the token. This involves doing a lot of homework. Initially, the main concern would be to read a lot of blogs and the whitepaper around the token. Whitepapers gives detailed information about the crypto; including why it was invented and the roadmap ahead. For example, the Bitcoin Whitepaper.
Best cryptocurrencies to start investing in
The simplest way to start investing in cryptocurrencies is to look into the best-performing tokens at the time. This can be done by taking into account the following things:
- The top valued cryptocurrency
- The most talked-about tokens within the crypto community
- The real-world problem-solving token project one identifies with.
Choose your community
Cryptocurrency is a fairly new sector and has a lot of potential the world is yet to discover. To help the customers understand the crypto space so that they can start their investing journey, every exchange has a community of crypto enthusiasts. The best way we gain knowledge about anything is by sharing knowledge. Here is a list of the top forums that you can be a part of.
Choose your Exchange
You must choose your crypto exchange wisely. It is always advisable to go for exchanges that have a great customer support team. This helps in the smooth transition of any tickets that you may raise and if you encountered any issues, they can resolve them as quickly as possible. Here is a list of the top 5 exchanges in India:
Blogs and Newsletters
The best way to learn about investing in cryptocurrency is always to read as much as you can. Gather as much information on the tokens before you dive into investing. The easiest way to do so is by subscribing to the blogs and newsletters of various exchanges. Certain apps are dedicated to cryptocurrency news. Below is a list of a few blogs you can subscribe to:
Invest to learn
Similar to how the stock market works, the crypto space is equally volatile, meaning the prices of the tokens are unpredictable. To look back on the points above, till now we have discussed all the ways we can learn about cryptocurrency investment, but a hands-on experience speaks like no other. Each one of us has a unique take on every aspect of investing. Thus, you can start small and learn about how the investment sector plays out. Once you understand the risks involved, you can start investing in crypto via CoinDCX with as low an amount as ₹100!
Look out for crypto-projects
If you are someone who has just started to explore the crypto market, it can get a little overwhelming. The crypto space is a bombardment of various news every day. Not only that but there are also a lot of newer projects that are coming out. If you want to be a part of a token from the very beginning, there is nothing like following a project and how it is taking a shape into the crypto space. Here are some of the steps to keep in mind:
|1. Tokenomics | Market cap, supply and demand, and circulation|
|2. The crypto project idea and roadmap|
|3. Token use cases or applications|
|4. Social media proofs and News or PR|
|5. HNI and Institutional Interest|
|6. Project community: Founder, developer team, and users|
The Cryptocurrency adoption rate has been very impressive in the past couple of years. The dilemma lies with the numerous crypto projects coming out every day. That makes it tough to define which one might be the best upcoming crypto project or which one may turn up as a scam. To avoid the latter, it is important to be thorough with our research before we dive into investing!