Considering Crypto
The biggest challenge for a beginner in cryptocurrency is resisting the hype. In recent years, digital currencies have become more prominent in the portfolios of large institutions, influencers and celebrities, and even countries. At the same time, analysts continued to warn about its volatile nature and unpredictability.
If you are curious about investing in cryptocurrencies, it's important to do your research. Listed below are some things you should consider before you invest.
1. Don't invest more than you can lose
Like any other investment, you should only invest what you can afford to lose. If you have large expenses on the horizon, like a downpayment for a house, those savings should be kept in stable, liquid assets. Not in crypto. When you invest in crypto, you should still be able to sleep well at night regardless of the state of the markets.
2. Research before taking action
People make money in investing, but people can also lose a lot of money in scams. Before you put any money into crypto, you should spend time investigating whether it is legitimate. Understand what problems the crypto project is addressing, and critically assess if there is potential for growth.
3. Follow relevant online communities
As the interest in cryptocurrencies increases, there is a growth in communities of crypto investors and enthusiasts. Get plugged in to relevant, credible communities to learn more about what’s happening in the industry. Question people’s biases. If a person or group is shilling a specific coin, ask why and what’s in it for them.
4. Read Cryptocurrency whitepapers
Take time to find the project's whitepaper. Every cryptocurrency project should have one and should be accessible (if not, then that’s a red flag).
5. Learn about the different cryptocurrencies offered
There are over 10,000 cryptocurrencies in existence. Choose your portfolio wisely and don’t just give in to the hype. Take the time to understand the utility, history, and teams behind your chosen cryptocurrencies. You must do your own research (DYOR) to ensure that you put your money in the right places.
6. Buy crypto, calm down
Buying into crypto can be a rollercoaster of emotions. Because this is a new space, prices are still volatile, and the value of many cryptocurrencies is far from stable. Familiarize yourself with cryptocurrencies and blockchain technology, to be fully equipped to determine whether this type of investment opportunity is worthwhile for you.