Cryptocurrencies also known as virtual currencies among other names, are on everyone’s lips. In a very short time, these terms and their technology have reached people from anywhere in the world. That is why, more and more people are interested in investing in them. To understand what they are, what they are for, how they work and how to buy them, we have prepared this guide that will help you take the first steps in this crypto-world.
What are cryptocurrencies and where are they operated from?
The first thing we should know is that a cryptocurrency does not have an established value, what gives value to these cryptocurrencies is the project behind them and what people are willing to pay for them.
There are many projects associated with a cryptocurrency, Ethereum with its smart contracts using Ether for its transactions, IOTA and its Internet of Things is associated with the currency MIOTA, Ripple and its cross-border payments through the currency with the same name are some of the examples of projects that add value to their cryptocurrencies.
The more this technology advances, the more cryptocurrencies appear, but it is not only new platforms that enter the scene, some, such as the well-known p2p network of Bittorent file exchange, have adopted this technology to carry their projects. to the next level.
Hand in hand with these virtual currencies, cryptocurrency exchanges have arrived, which are platforms in which the exchange of one cryptocurrency can be carried out by another or by fiat money.
Why invest in cryptocurrencies?
The popularity of cryptocurrencies is undeniable, just follow the media from anywhere in the world to check it. The loss of value of many national currencies, such as Venezuela’s bolivar, has led to more and more people considering other ways to secure their future and their money, such as investing in cryptocurrencies.
On the other hand, since the appearance of bitcoin (the first of all cryptocurrencies), for many, investing in digital assets or trading with Bitcoin has given them the possibility of improving their financial situation in recent years.
What are the risks of investing in cryptocurrencies?
Much has been said about whether cryptocurrency is or is not a bubble that will explode at any time. Perhaps it is the most common thought found among the most traditional financial investors, who also refer mainly to their degree of volatility. That is why it is important to be constantly aware (and we mean a period of not less than three months) about the oscillations of bitcoin [BTC] to avoid surprises and to know which decision is the best for each moment.
On the other hand, it is necessary to know that not all countries in the world officially recognize cryptocurrencies as a currency. This situation may hinder financial exchanges in some regions. In countries such as Vietnam, Indonesia or China, the use of cryptocurrencies is prohibited or directly illegal. In other countries such as Russia, Portugal or Belgium have not yet been regulated.
Another risk that often causes an investment to be lost is the lack of security on the part of the users. If our bank is required to take security measures to protect our savings, if an investment is made in cryptocurrencies, we are partly our own bank and are responsible for the security of our money.
What to keep in mind when investing?
Although it is a difficult point to answer, there are several factors that must be considered before choosing in which currency to invest. For example, before investing in any digital asset you have to take into account the legal aspects, something we have already talked about before. Some countries recognize them as a means of payment and others do not.
Study the underlying project, follow its progress, agreements and associations, are data that must always be taken into account before making an investment.
How to buy and sell Bitcoin?
There are several ways to trade with bitcoin efficiently, the most common are the acquisition or sale through cryptocurrency exchanges, or acquiring them directly to other people who are selling them.
If you opt for cryptocurrency exchanges, it is advisable to take certain security measures, such as using a secure password (mix numbers, letters and symbols) and make a backup of this password on a paper or device external to the computer used daily, this will prevent this password can be stolen through a hack on your computer.
The use of other security measures such as verification of transactions through SMS, email or activation of the second authentication factor are also very important.
How to start investing in cryptocurrencies?
First, the ideal is to decide in which currency you want to invest, as there are so many options this type of decision is crucial, an exhaustive study of the history of that cryptocurrency, in addition to being informed about the team and the project that accompanies it is essential.
The cryptocurrency investments will require a cryptocurrency wallet and an exchange platform. After having these two options covered, it is time to buy the cryptocurrencies.
We can not end this article, without first remembering a phrase that should accompany you in every investment you make.
“Do not invest what you are not willing to lose”.