Before getting involved with cryptocurrency, you need to know the basics. Cryptocurrency is a digital currency that you can use to make transactions without the oversight of a central bank or national regulator.
While most people have heard of Bitcoin, it and cryptocurrency are not interchangeable. There are thousands of cryptocurrencies of which Bitcoin is just one – albeit the cryptocurrency with the largest number of users and the highest market cap.
While many people are considering investing in cryptocurrencies due to its novelty and increasing value, it’s vital you remember that the market is always changing. The value of the currency you are buying might not always increase and may in fact drop, leaving you at a loss if you’ve invested heavily in one coin. Another thing to note is the lack of institutional support – while cryptocurrency’s decentralization is freeing, it also removes ability to appeal to banks or other regulators in the event that your money is stolen or you are defrauded. If you have your money stored in a "digital wallet" by a company, and the company gets hacked or is taken down, you won't be able to avail the services of the government to help you in this regard.
In light of this, it’s vital that you practise caution and stay aware of potential scams and hacks. There are many scammers present on the Internet, and you might be made a target if you are not careful. You need to consider multiple factors when investing, and if someone near to you has experience in cryptocurrency, consider asking them for advice – but always be cautious about your money and investments.
Investing in Cryptocurrency
Before you invest in cryptocurrency, there are certain things you need to know. First, the currency is "volatile." This means that the value of an individual coin can rapidly rise and fall, often even within a day. To this end, it’s important to consider how much you want to invest in a single cryptocurrency – bad timing could see a portfolio worth thousands of dollars today rapidly fall to hundreds of dollars tomorrow.
Secondly, the barrier to entry for cryptocurrency is quite low. You do not need an accredited investor to purchase it. Many cryptocurrencies also offer alternative ways to acquire coins apart from trading, rewarding people for helping to maintain the network through mining and other duties.
Additionally, while you may have heard otherwise, cryptocurrency is anything but anonymous. The transactions you make are saved on a public ledger; this means that anyone can see your transaction history recorded against your randomised address. Although the address present on this ledger can't be used to identify you, people’s identities have been deduced from their addresses before, so trade with this in mind.
Before you invest in cryptocurrency, be sure that you are doing so on a trusted website. When buying cryptocurrency, you need to ensure that the website you're purchasing from is safe and protected. If you are doing so through an individual and they are assuring of 100% profit, then beware. They might be a scammer.
Key to this is choosing a reputable digital marketplace – where you’ll exchange traditional currencies or other cryptocurrencies for your chosen coin. CoinSpot offers security and flexibility. Sell Bitcoin, trade Ethereum and purchase btcp coin with CoinSpot and know that you’re choosing a reputable and safe marketplace.
You should have ample knowledge about the company or website you're buying through. Do your research about the platform, and get to know everything that there is.