In today’s day and age, the digital world is booming in every industry. One such industry is the world of investment and finance fiat currency is gradually being taken over by cryptocurrency. Cryptocurrency, in its most basic understanding, is a term that encases a variety of digital currencies, the most famous ones being Bitcoin & Litecoin.
According to writer Sabya Sachdeva in her piece on the rise of cryptocurrencies, the bitcoin was valued at less than one dollar, but now it is worth thousands of dollars. These digital coins have come out as a disruptive tool that provides complete safety and security to its users by cryptographically encrypting data that is decentralized; meaning it’s neither in control of the SEC or the state bank. So, one thing investors can rest assured about is the fact that whatever they are investments, it is all backed up by a large firewall which is near impossible to break.
Will scams beat the cryptocurrency world?
While cryptocurrencies have led to the rise of frauds, they also provide means of identifying such activities beforehand, thus making it a secure network to follow. Moreover, in the present day, there isn’t an industry that suffers a setback but digital currencies are secure, and the only way fraudulent activities can take place is when hackers get access to e-wallet passwords stored on a persons’ computer. The simplest way to avoid this issue is to either memorize passwords or to write it on a piece of paper. While this is just a basic idea to keep your money protected, there are quite a few ways to carefully evaluate investment opportunities leading up to a perfect strike!
1. Digital does NOT mean safe:
As the digital economy continues to flourish, many people, especially millennials seem to have built this idea of keeping everything on record by storing it digitally. While the digital existence of records has made tasks easier and concise, it is important to know that not everything with a digital existence tends to be secure.
Alexander Borodich, the CEO of Universia.io talks about cold wallets which refer to the investor being solely in control of their private keys by keeping them safe somewhere offline.
Ledger Nano S and TREZOR are examples of hardware wallets which offer a vast range of offline storage devices that give the investors control of their private keys.
2. Activity-specific cryptocurrencies:
Just like an ICO works by creating newer digital currencies in exchange for existing digital tokens, it is also a good idea to grab opportunities which offer specific cryptocurrencies pertaining only to that transaction. The Autoblock being one such organization makes use of this notion by developing its’ own digital currency called the AutoCoin. This innovative idea not only provides a safety net for potential investors but also displays the authenticity and credibility of the members of this organization. This form of customized cryptocurrency ensures secure payments and stability. The AutoCoin is used specifically for transactions about the automotive industry and aids in enhancing the car valuation system.
3. Looking out for technical loopholes:
The integrating ingredient of cryptocurrencies is the blockchain technology; hence it is crucial to have some technical understanding of how the system works. As discussed, the use of cryptocurrencies is skyrocketing as more and more people are learning to invest in these money-making machines. This may sometimes result in system traffic thus slowing down certain functions such as withdrawing funds from your wallet or may even make them unavailable during transactions. In such a case, the investor has no option but to wait and is in a questionable position under the power of another exchange.
4. Background Search:
Just as any venture or idea requires a complete strip of its background, it is crucial to research and analyze the crypto offering team and its members. These digital currencies are supposed to solve particular problems that are widespread in the investment world. A lot of companies knowing this seek to receive investment but do not have complete knowledge about it. This may lead to the risk of the entire project failing and cause the investor a huge backlash. Hence, it is advisable to indulge in an exchange where the organization knows its way around the problem.
5. Time is money:
This phrase holds a much more literal meaning in the crypto world. Here, potential investors must keep track of the right time and trends to generate higher returns and maximize on their profits. There are tools such as Cryptowatch or Bitcoin wisdom which determine and analyze changing trends thus pinpointing the right time to buy into these currencies.
6. Diversification is key:
While Bitcoin has been one of the rising cryptocurrencies in the market whose value has reached a whopping $20,000 according to Alexander Borodich, it is advisable to stay clear of investing in just one altcoin. The first and foremost rule in the investment world is to minimize your risk by diversification of your portfolio. One shouldn’t invest every chance they get as that increases the chances of risk but should definitely steer clear of risking all they have into one entity.
Investing is not a good idea for individuals who play by their emotions. This game of money making is just like gambling. It involves sudden price hikes and falls. According to Ada Ivanova in one of her articles, it is natural to experience daily or weekly fluctuations and rates can go to almost 25% of the initial pricing. One such incident was when the bitcoin lost more than half its value in the January of 2018, but it leaped back from $6000 to $10,000 as stated by Sissi Cao at observer magazine. Thus, do not panic and think of sudden buying or selling based on these changes.
8. Experience counts:
One thing that can really help potential investors is to be careful if they are new market entrants. Firstly as an article on Bitcoinist suggests, if such is the case then it is advisable not to invest in altcoins that are not listed in the top 20s’. This is because while Bitcoin and Litecoin are stable cryptocurrencies, other newer coins may not be as reliable and constant.
9. The blockchain community:
Most investors and companies have formed integrated groups that allow communication through online forums and telegrams. This creates a sense of unity and entitlement for existing members along with newcomers. Their purpose is to help each other out and make the blockchain industry thrive globally.
10. White Paper:
Last but not least, if the people behind the project are able to present their aims, purpose, and thoughts physically on paper, it shows that they have experience and command over their idea. The Autoblock is one such organization that displays responsibility on their part as they took a new step by implementing the blockchain system into the automotive industry to make car dealings more efficient.
It doesn’t matter if you’re well aware of the crypto market or are just testing the waters, these guidelines will be more than enough to ensure that you know what you are investing in, making it easier to speculate the chances of success for your venture.
Evie Harrison is a blogger by choice. She loves to discover the world around her. She likes to share her discoveries, experiences and express herself through her blogs. Find her on Twitter here
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This e-book on Amazon explains what Bitcoin is, it explains that Bitcoin (BTC) is a virtual currency, digital, not physical, and independent of banks. Useful links and resources for the newbie and advanced Bitcoiner or cryptocurrency enthusiast.