Today, when the cryptocurrency market is becoming more mature and boasts hardly believable ROI, more and more traditional finance-minded people are investing in crypto for superior gains. We decided to help newcomers with their first steps and present a quick introduction to the most important aspects of crypto investments.
Every novice investor has a number of questions that immediately arise in his/her head: what to buy, when to buy, and where to buy. We will try to clarify the main points that many beginners are concerned about.
What cryptocurrencies are there?
Launched in 2009 by Satoshi Nakamoto, Bitcoin was the first and the best-known cryptocurrency in the world. But what is cryptocurrency?
To make the long story short, crypto is a digital currency built on the blockchain, somewhat like a totally decentralized and immutable database where no single person or group has control over the system. This makes crypto decentralized and non-controlled by governments financial instruments that can be used for payments, investments, store of value, etc.
Soon after the appearance of Bitcoin, alternative coins — or altcoins — began to appear. The best-known altcoins that are issued on their own blockchains are possibly Ethereum and Litecoin, but there are many more.
What are tokens?
Tokens, unlike coins, are not based on their own blockchain but are built on top of other blockchains, Ethereum or Tron for example. They are more like company shares or internal currency. Some tokens confirm your right to have a share in the project; others allow for using some ecosystem privileges, for example, to reduce the fees.
Why do you need tokens if there are coins?
To the investors, tokens sometimes have a greater value than coins. Investing in crypto means investing in the success of some blockchain, whereas token investments are exposed to the success of a single project. Thus, the risk of investing in tokens is usually higher as well as the possible gains. Still, knowing the difference between a crypto coin and a token is paramount.
The investing process, especially when searching for cryptocurrency to invest in, is easier when all your crypto trading activities are presented on a single dashboard. Midas.Investments offers a complete solution for managing and monitoring passive income portfolios, which will be easy and convenient to use even for beginners.
How to choose a cryptocurrency wallet?
Choosing a crypto wallet is one of the main stages in the process of working with digital assets.
There are several main types of crypto wallets, that are presented below.
|Type of crypto wallet||Description||Security|
|Online wallet||These wallets are available from any device: you just need to browse the page and enter your username and password. Each digital currency (for example, Bitcoin, Ethereum, Monero) has its own online service for creating a wallet.||They are considered the least reliable of all the wallets connected to the web.|
|Local wallet with installation on a PC||These are programs that are installed on your computer. They often take up a lot of hard disk space (about 100 MB).||They are considered the most secure among wallets, connected to the web because the secret keys are stored locally on the device, and not on any third-party server.|
|Hardware wallet||A hardware wallet looks like a flash drive, meaning they store private keys securely on a physical means.||Such devices are considered the most reliable, since they are not connected to the Internet, which means that it will not be possible to hack such wallets from the outside.|
|Apps for smartphones||A mobile wallet is the best choice for users who earn money by trading Bitcoin online or often pay with cryptocurrency on the go.||High-quality mobile wallets securely encode the secret key and store it on your smartphone.|
|Wallet on the account of the cryptocurrency exchange||Wallet on the account of the cryptocurrency exchange features support for a large number of cryptocurrencies in one account and, in addition, are available from any device.||Since users sign up on them remotely, and their data is stored on the server, such wallets are also considered insufficiently secure.|
All these repositories for digital money differ from each other in the level of security and usage opportunities.
There is a myth that online wallets are not secure, because many of them store private keys on their servers, which can easily be hacked, but reliable online wallets do not have servers connected to the web, which protects them from possible attacks. Midas.Investments has multi-layer wallet security that protects your coins.
How and where can you exchange cryptocurrency?
There are several ways of exchanging cryptocurrencies for regular, fiat money (for example, dollars and euros): cryptocurrency trading platforms, cryptocurrency cards, which can be used to withdraw cash from crypto ATM, and the most popular – cryptocurrency exchanger.
The exchange algorithm is simple and clear even for beginners. It is alike on most exchanges: you find an appropriate exchange pair (for example, bitcoin-dollars), create a request form with wallet numbers, and receive your money within 15 minutes. The only drawback of this method is that you can often come across high fees. There are usually not enough reserve funds for popular exchange pairs on the platforms with small fees. For example, the Binance fee reaches 0.1% from each side, and the fee on one of the largest decentralized exchanger Bisq reaches 0.7% for the buyer.
Please note that there are a large number of scammers, so before exchanging money, make sure that you are going to work with a trusted platform. Thoroughly read cryptocurrency exchange reviews for an initial image before dabbling.
If you do not know where to start, just start with Midas.Investments. We have different strategies and shares that will help you to start your journey in crypto market
What do you need to know before investing in crypto markets?
Despite the fact that the cryptocurrency market is very attractive, it is also very risky, therefore caution must be practiced before investing in crypto. Unfortunately, fraud is a common practice in the digital world and cryptocurrency projects are no different. There are several most frequent scams in crypto: fake websites and mobile apps, scamming letters on social media and emails, pyramid schemes, fake cryptocurrencies and others.
Furthermore, provided by the specifics of the market, the prices of cryptocurrencies are very sensitive to events taking place in the world and are therefore very unstable. When you become a crypto investor, you should form your own predictions about the events that influence the market and its further development, because crypto experts can also make mistakes.
To stay updated, you should check out these resources: CoinDesk, CoinTelegraph, TodayOnChain, CoinGecko, CryptoSlate, CoinMarketCap, Bitcointalk. With these resources, you will not only be able to learn more about cryptocurrency but also become a part of the community and take part in conversations with many crypto enthusiasts.