Cryptocurrency is a new kind of digital asset that is gaining popularity every day. Since it’s relatively new and unknown, many people are skeptical before investing in it. There are several reasons why people fear investing in cryptocurrency. First of all, there is a lack of understanding of the new hot digital asset, which is just over a decade old. Cryptocurrency is still a buzzword used by several financial companies who do not educate their customers about its meaning and uses.
Secondly, cryptocurrency is too volatile. It is actually one of the most volatile investments in the world. But the reason it is so volatile is because it trades 24/7, i.e., faster than any other market. It might actually take a year for a stock market to do the kind of trading crypto does in a month. The price fluctuations in crypto are also often steep and rapid. The best example is that of 2017 when crypto rose from $1000 to $20000, but by mid-2018, it fell down to $5000. As compared to physical assets like gold that lose value slowly over a period of time, crypto definitely has dramatic ups and downs. However, all this doesn’t mean that you need to be scared of the new currency, rather investors have started using crypto to their advantage by understanding the nuances of the market.
Recently, people who were scared of cryptocurrencies have now begun investing in them. Governments and business people who were once afraid of the volatility of crypto are now opening to the world of possibilities. Recently, the Chairman of the US Federal Reserve compared bitcoin to gold, even encouraging people to buy bitcoin instead of gold. Elon Musk, the CEO of Tesla, has called cryptocurrency a revolutionizing technology on several occasions and shown his evident interest in crypto.
Cryptocurrency is just like any other cutting-edge technology that wasn’t accepted by people immediately. For instance, it took several years for people to understand and trust the internet. Currently, crypto is also going through the same phase. People are still learning how to swim in it but with time and experience, they will come to enjoy it. We are here to help you overcome your fear of investing in crypto. Here is how you can fully enjoy it!
1. Educate Yourself
You need to understand the market and its fluctuations. As we already discussed, crypto is a volatile currency but there are ways you can use this volatility to your advantage. Research shows that once people truly understand the technology behind cryptocurrency trading, they are able to make the right choice 90-95% of the time. Crypto is not just digital money; it is an asset class with similar characteristics (economic and risk-reward profiles) like other traditional investments. New investors usually panic sell their crypto when they see the prices coming down only to watch those prices skyrocketed again in shortly thereafter. There is an easy solution to this panic: talk to a registered financial professional who can monitor your financial goals and advise you accordingly.
2. Know All Your Options
Whenever someone talks about cryptocurrencies, the first thing that probably comes to your mind is Bitcoin. But did you know that there are over 2500 types of cryptocurrencies? Ethereum and Litecoin are some of the most popular ones. But there is a whole Pandora’s box that one needs to explore before investing blindly in just one kind of cryptocurrency. Educating yourself about the different types of cryptocurrencies and the right company to invest in is the first step to understanding this market. Deep research is the key here. Understand the kind of cryptocurrency you want to invest in before riding the “investing” bandwagon. We suggest that you must diversify your investment portfolio and not invest all your money in one kind of cryptocurrency.
3. Don’t Invest Just Because of FOMO
FOMO (fear of missing out) is one of the biggest culprits in the fear of investing. The tendency of FOMO is highest amongst the younger generations. They sometimes invest because everyone is investing and seeing a great return on profit. They may hop on this train without understanding what they want from the investment. It is important for everyone to ask themselves certain questions before investing. How much can I afford to lose? How long can I invest for? Am I ready to take the risk of losing it all? You must first understand the volatility of the market and invest only how much you can afford to lose. Stress buying and stress selling your coins just because everyone is doing it is not a good strategy. Your strategy should depend on a number of factors like your future cash needs, your current financial strength, and how long you want to stay in the market.
4. Be Secure
Many people do not invest in the crypto market because they fear that they could get hacked and their personal and financial data will be stolen. This is a legitimate fear as the amount of fraud and theft in cryptocurrencies is rapidly increasing. A recent example is that of the Jaxx Wallet hack in 2017. A vulnerability in this wallet was discovered by hackers that led to the loss of over $400,000 worth of users’ money. Users must educate themselves about the basics of security in cryptocurrencies. They must use strong passwords and trust a company that keeps their data safe through a robust system.
We at Unbanked specialize in cryptocurrency and crypto banking. We want to equip people with transformative products and services so that they can have more control over their money. We aim to disrupt the status quo using crypto and blockchain technologies and thus, providing affordable financial services to all. At Unbanked, we believe that financial access and control is a fundamental human right, which is why we want to give our customers a unique and secure crypto banking experience. With us, your information is protected in accordance with the federal and state regulations of the US and the General Data Protection Regulation of Europe. To know more about how we can help you buy, sell, and exchange your crypto, visit us today.