5 Best Ways to Invest in Blockchain [Don’t Miss Out]
Blockchain is changing the way companies do business and transforming a global economy. Cryptocurrencies offer a new way to invest backed by the security of blockchain technology. But, with every new frontier – especially one with little to no regulation – navigating an unfamiliar system brings with it anxieties and challenges to consider. Here are tips, strategies, and best practices to invest in blockchain successfully.
7 Tips for Cryptocurrency Investing
Cryptocurrency values can fluctuate dramatically, causing even the most seasoned traditional investor to hesitate. Learn the best tips for investing in crypto without breaking the bank.
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Find the Right Exchange
Crypto exchanges range from complicated to uncomplicated. Make your life easier by using PayPal, Cash App, or Robinhood to buy your cryptocurrency.
Don’t Use a Broker If You Don’t Have To
Don’t use a broker when you can use an exchange. Buying and selling on Coinbase Pro can save you money on fees you’ll have to deal with in standard Coinbase.
Technical analysis analyzes price and volume data and tries to predict future trends based on that. Crypto doesn’t always follow logic, but fundamental indicators can be helpful to understand. Every trader has an opinion, but their views are often wrong. Do your own technical analysis. Only you know what works for you.
Crypto & Stocks Are Not the Same
It makes sense to sell losers with stocks, but that isn’t necessarily true in crypto. With stock trading, if a particular company isn’t doing well, it can be smarter to sell their stock and buy one that is doing well. In crypto, significant changes happen quickly and often. If you aren’t at a computer 24/7 trading frequently, it’s wiser to steadily build a position in a coin that may not be doing as well but that you think could pay off in the long term.
Watch Out For Scams
Be careful about anyone promising free coins, dramatic returns, or who wants you to lend them your money. Buy coins using a prudent strategy and ignore all the sites promising you they’ll outperform the market if you just do X, Y, and Z for them. Also, don’t share passwords, and double-check you are using the correct link always. Scam sites like to use a similar domain or screen name. Double-check everything.
Watch Out For Market Manipulation
Crypto is an unregulated market. Think of it as a digital wild west of currency exchange. A too-good-to-be-true price dip or spike can often be the work of market manipulators or bots. Be cautious and check with crypto advisors when in doubt.
There are several social media groups dedicated to cryptocurrencies where you can exchange ideas and concerns. It’s a great way to learn vocabulary, too. Not only is it easier to invest and trade when you understand the standard terms, but building a network with other traders is never a bad idea.
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6 Strategies to Consider When Investing in Crypto
Cryptocurrencies aren’t science, but learning strategies to combat the uncertainty of their markets can be a valuable asset. Consider these important points when deciding to invest in blockchain-backed funds.
Focus on Limit Orders
When you buy or sell using an exchange, focus on limit orders instead of market orders. Limit orders are often cheaper and easier to work with because you can set them and leave them, avoiding slippage.
Ladder Your Buys & Sells
Instead of buying or selling everything at once, set incremental orders to buy when the price goes down and sell when the price goes up.
The Market That Never Sleeps
Cryptocurrency is a 24/7 Global Market. Automate your investing strategy using limit orders and stops.
Buy Low, Sell High
Look at the price trends. Never buy at the highest point of a time period, whether it be the past 24 hours, a week, or a quarter. Buy when the price dips. Drops will happen; you must be patient.
You want to make sure to have the money available when dips hit in one currency, so making sure all your funds aren’t wrapped up in another is critical. Spread your money across different currencies and buy on the dips; sell on the peaks.
Watch the Order Book
The order book can show you what buy/sell orders are sitting on the market. If you want to sell and find a lot of sell orders seated at a specific price, you should aim to sell under that price. Similarly, if you’re going to buy and are waiting for a price drop, compare with other buy orders and raise yours a fraction higher than the average.
Related: The Gender Problem in Cryptocurrency Investing
3 Steps to Investing in Cryptocurrency
You’ve made the decision to invest in crypto, but you don’t know how to do it. Follow these three easy steps to launch your cryptocurrency portfolio.
Don’t Allocate Your Entire Portfolio to Crypto
Cryptocurrency isn’t an investment the same way stocks can be, and they weren’t designed to be. It doesn’t pay interest or dividends. Cryptocurrencies are mediums of exchange widely seen as alternatives to sovereign currencies regulated by individual governments instead of the global marketplace. Individuals still handle most trading, and the use of crypto to purchase and sell goods is still in the fledgling stages.
Choose Your Crypto
There are hundreds of cryptocurrencies, soon to be thousands, because new currencies come online practically every day. Hundreds have already come and gone completely, and crypto’s only been around for about ten years. Start with established cryptocurrencies that will be around for a while before investing in newer ones that may have the best opportunity for rapid growth but could fail.
Choose a Platform to Buy Cryptocurrencies
Crypto still isn’t widely available in typical financial places like banks and investment brokerage firms. However, there are indications this is changing or soon to change. For now, you’ll mostly be limited to buying, selling, and holding crypto on dedicated cryptocurrency exchanges. Here are a few of the more established, largest exchanges to consider:
This is the American-based arm of the parent company, Binance. It offers lower trading fees than most other exchanges. Still, the US version doesn’t offer as many trading pairs between varying cryptocurrencies as its parent company. However, it still ranks high among other comparable exchanges.
Developed with the “radical” idea that anyone, anywhere, should be able to easily and securely send and receive Bitcoin, Coinbase has become one of the most trusted and easy-to-use platforms. Coinbase features access to more currencies than most exchanges, providing a path to the larger, global crypto economy.
eToro is pretty advanced and might not be the platform to dive into when getting your feet wet. Still, it also offers exciting functions that newer traders can take advantage of. One such offering is an investment option touted as using “CopyTrader” technology which copies the investment strategies of the most successful traders using the eToro platform. Similarly, “CopyPortfolios” provides automated advisors that act similar to standard portfolio managers.
Paypal was the original GOAT of digital currency payments for goods and services and has done its best to stay current. Paypal now offers bank accounts of its own with debit cards, as well as a crypto exchange for buying Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. You may have access to fewer digital currencies. Still, the ease of use, including a long-established network of vendors who already take PayPal for purchases, means your use of crypto as both an investment and means of exchange has never been easier.
Robin Hood doesn’t charge commissions when buying stocks, options, EFTs (exchange-traded funds), or cryptocurrencies. Robinhood offers access to big-name cryptos like bitcoin, ethereum, litecoin, and dogecoin. It could be a less expensive way to hold crypto if you’re planning to use it primarily as an investment instead of a medium of exchange.
If you want exposure to cryptocurrency without actually having to buy crypto, Wealthfront could be the answer. Wealthfront offers cryptocurrency funds similar to what standard brokerage firms would provide. You can trade in the most popular cryptos while paying a fee for buying or selling.
Store Your Cryptocurrency
A crypto wallet is, in reality, a software program that saves your private and public keys connecting you to the blockchain where your cryptocurrency actually exists. In addition to enabling access for buying, selling, and transferring funds, a digital wallet provides an unalterable record of transactions stored within the blockchain. Digital wallets come in a variety of options:
Digital wallets get installed on your personal computer. Because storage is local, the data is safer than with networked wallets.
Hardware wallets store your private key on an offline device like a USB drive. They’re more secure because nothing is stored online and allow you to access your cryptocurrency from varying devices.
Mobile wallets are app-based and operate on your phone or tablet. Because these wallets can be carried with you, they can be used wherever cryptocurrencies are accepted as a medium for exchange.
Cloud-based wallets are accessible from any computer. They’re more convenient, but your private key is stored online and controlled by a third party, making the data less secure.
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5 Ways to Invest in Blockchain
Investing in Blockchain technologies themselves can be complicated for ordinary people. However, there are several opportunities to do so. Here are five ways to invest in the technology revolutionizing currency and business operations.
Angel funding isn’t a new concept but investing in start-ups built on blockchain technology is an innovative variation. As crypto becomes more and more accepted by mainstream enterprises, the number of entrepreneurs interested in applying the technology behind cryptocurrency to new markets has skyrocketed. Providing start-up capital through angel funding allows you to get in on the ground floor of what could be the next Apple, Google, or Facebook. It could also be the equivalent of setting your money on fire. Be smart. Never invest more than you’re willing to lose. And study up on the markets and business before spending a penny.
Crowdfunding has gone mainstream now and is an excellent way for raising seed capital for all forms of investments. If you’re looking for ways to get involved in blockchain technologies, you can seek out crowdfunding methods for acquiring newer currencies. Prior to public launch, finite supplies of digital coins are pre-mined then sold in an ICO (initial coin offering). Varying apps and services using blockchain take advantage of pre-sale opportunities to raise funding. Investors get the opportunity to acquire coins early with the expectation that prices will increase if or when the service becomes popular.
Using “cryptocurrency” and “penny stocks” in the same sentence should impress upon even the most novice of investors the risks associated with such an endeavor. Never gamble with more pennies than you can afford to lose. However, a number of digital currencies have been developed either to compete directly with Bitcoin or to fill specific needs not met by Bitcoin. Penny stocks representing cryptocurrencies or blockchain technology can offer great opportunities when growth occurs. Just don’t put all your eggs in one basket.
Pure Blockchain Technology Play
The best options can be investing in the stocks of well-established companies experimenting with applications of blockchain technology and how it could improve varying service sectors. Major companies like IBM and Intel are investing significantly in the general uses of blockchain technologies, giving investors a foothold in the space with relatively small risk. Investors willing to take higher degrees of risk can invest in pure blockchain technology investments like Silvergate Capital or Galaxy Digital, which exclusively focus on crypto and blockchain. Make sure your formula for risk and potential return honors your current financial situation. Never invest more than you can afford to lose.
Similar to investors who stockpile gold waiting for its value to rise, digital investors stockpile different cryptocurrencies. Both assets are meant to be rare and finite, making them subject to supply and demand market values. When the supply of a product is limited while demand for it increases, that product’s value rises.
Bank Accounts Without Borders
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The Future Is Digital
Blockchain technologies and blockchain-enabled cryptocurrencies offer great investment opportunities for short and long-term gains. Reduce risk by learning everything you can, then make a strategy for success and stick to it. The future is digital and at your fingertips right now.