Crypto investing is an unregulated market, which means there are no regulations governing how you invest in crypto. There’s a lot of misinformation about the viability of cryptocurrency compared to traditional markets like stocks and bonds. However, since it has been around for several years now, many people have learned that trading cryptocurrency can be profitable in the long run. Read on to learn more.
Is Cryptocurrency Legal?
Cryptocurrencies aren’t considered legal tender because they’re not backed up by the government. They aren’t governed by any set of laws or rules. This could affect your ability to buy them. If you’re looking to use cryptocurrencies as part of your portfolio diversification strategy, make sure that you understand the risks involved.
While some governments may be open to accepting cryptocurrencies if they’ve passed strict regulations restricting their usage, others may restrict it. For instance, China’s anti-crypto regulation law bans all digital currencies. Countries like North Korea and India also don’t accept Bitcoin, so if you want to buy one, expect the process to take longer than you think.
What Are Some Pros And Cons Of Using Digital Currencies As Your Investment Method?
There are plenty of pros and cons when it comes to using virtual coins. The most significant benefit of purchasing crypto is that it offers a quick way to access investment opportunities without having to go into debt over time. Also, many people consider buying cryptos as a safer option than stocks because they aren’t regulated by any central authority and are more difficult to cheat or steal. Lastly, because cryptos are decentralized, users are able to spend the money however they choose, rather than depending on their bank account. All of these features give crypto investors an advantage over stock investors because they won’t need to pay taxes or hold cash in a physical bank like they would with actual stocks.
However, that doesn’t mean you shouldn’t look into how much your investments will grow. Because of its volatile nature, prices of most cryptos fluctuate drastically sometimes within days or weeks of being released. You don’t see this with traditional assets like real estate because they’re often held by companies with specific investment goals, so prices rise or fall accordingly. Since cryptos are decentralized, you’re free to do whatever you’d like with your investment money (maybe it goes towards something else).
Should I Buy Or Trade Them?
Buying and holding a virtual coin might be risky, but it’s also financially lucrative. Depending upon what you make from each trade, you can potentially get returns as high as 70% or more the more trades you make. On average, you’ll receive 5% per buy and 2% per sell, so if you hold 30 thousand dollars worth of cryptos (or even just a few hundred), you could end up making 200% or more per trade. Even if the price drops before selling, this still leaves you enough money to quit your day job and enjoy the return on your investments.
If you want to buy and hold, buying or selling them individually will cost less than $2 per month per crypto, but buying a bundle and holding them together costs anywhere between $4-$16 per month. Overall, it seems like investing in cryptocurrency is a smart move, especially if you are familiar with the volatility that is inherent to any type of asset.
How Do I Choose A Good Wallet To Store My Funds?
You can store your funds with different types of wallets depending on which cryptocurrency you decide to buy. Popular exchange apps such as Coinbase and Blockchain for example allow users to store their cryptocurrencies through an app called cold storage. Cold storage allows users to store their funds securely offline. Unfortunately, this requires a person to download an application onto their phone and maintain it manually.
If you don’t mind setting personal boundaries and making sure that only certain individuals have access to your cryptocurrency, then hardware wallets seem like the best option. Hardware wallets generate their own private key while allowing users to spend the funds they have in their wallet outside of exchanges. Not only does this improve security, but it also gives off a higher level of privacy to keep your funds safe. With cold storage, you don’t have to worry about losing access to your cryptocurrency, and you can keep track of how much you have in a single device.
Should I Use An Exchange To Swap Tokens?
Though exchanges are popular among cryptocurrency enthusiasts, they offer too many benefits. First of all, if your goal is to profit from the volatility of crypto prices, the easiest way to get started is with an exchange. After all, exchanges offer users a chance to earn passive income through fees charged to the user. Just remember that transactions usually take at least two times longer than usual, which can lead to lower profits in the future. Another downside is that when cryptocurrency prices drop, trading volumes decrease. Lowering prices will likely encourage other traders to jump ship, so you may experience fewer gains.
Should I Get Professional Advice Before Buying?
You should definitely consider getting professional advice before making the decision to purchase cryptocurrency. Though most of us know the advantages of buying crypto, not everyone wants to pay an independent expert hundreds of dollars. So, if you feel unsure about adding cryptocurrency to your portfolio, it might be better to consult with someone who specializes in finance or wealth management that specializes in helping wealthy investors grow their portfolios. When it comes to financial matters, taking advice is a good idea as well. When you hire someone who manages your finances professionally, you’ll find out exactly why you’re doing things that you didn’t always realize were a problem. So, when choosing whether to stay in crypto or switch to another asset, you’ll have peace of mind knowing where you’re going wrong and how to fix it. After all, your advisor knows all about investments and has seen firsthand how the industry works. Plus, having a dedicated financial advisor will help you save money by offering free financial planning services.
Is Investing In Virtual Currency Legit Or Scam?
Investing in bitcoin or other “cryptoassets” is known as ‘HODL’ or ‘hold on for dear life.’ People typically get burned by this term. It refers to a situation where a trader believes he or she will never lose the value of what he or she has invested, and thus continues to hold onto the asset for as long as possible. This behavior is generally frowned upon because the investor could lose all his or her capital just from keeping him or herself in crypto. Therefore, the HODL is a sign of desperation, recklessness, and risk-aversion.
On the contrary, there are ways to avoid burning yourself by trying to beat the inflationary crisis caused by rising interest rates. Many retail investors prefer to hedge against inflation by locking in contracts that lock in a fixed rate of interest that will keep the price of goods and services stable over the long-term. One of the world’s biggest banks, BlackRock, recently made headlines for announcing that they would stop storing all their employees’ monies in crypto. Investors could benefit immensely by simply converting all of the savings held in the bank into gold instead. That was definitely the right call regardless of how bad the news made headlines.
To Sum Up…
In short, cryptocurrency is a great method of investment, and many believe it to be a secure alternative to traditional equity and bond investing. But whether or not you should invest in cryptocurrency depends on factors that include your knowledge of blockchain technology, tax implications, the stability of the company, and how liquid the project is. Once you understand the ins and outs of crypto, you can be rest assured that it’s an awesome investment opportunity.
