The world is becoming a digital place and hasn’t left out the financial system with the introduction of cryptocurrency.
Digital currency has been predicted to take over the traditional form of money. This had led many people to focus their investment in cryptocurrency.
Investment in cryptocurrency is no doubt the riskiest form of investment due to its volatility. However, the averse risk-takers have made a fortune via investment in crypto & its endeavors.
In this post, we’ll look at the major ways of investing in cryptocurrency so as to make a profit. Before then, let’s have a sneak peek into the world of cryptocurrency.
What is Cryptocurrency?
Cryptocurrency is a digitally encrypted, decentralized currency that is not linked to or regulated by any government or central bank.
It is based on blockchain technology, which is a distributed ledger framework. Bitcoin is the first cryptocurrency created which has led to the creation of others alike known as altcoins.
Cryptos are categorized as virtual or digital currencies. They were originally developed to provide an alternative mode of payment for online transactions.
However, cryptocurrencies have not yet been generally adopted or legalized by many nations. They are actually too unreliable to be used as payment methods.
What is Blockchain?
Blockchain is a distributed ledger that is managed by a network of computers. It maintains an exact copy of the database and updates its records by consensus based on pure mathematics.
Blockchain store data in block that are then linked together via cryptography. It can be used to store different types of information but the most common use so far has been as ledger for transactions.
Blockchains and cryptocurrency are part of the most used words in our world today. Although it is known for its role in cryptocurrency system, it has several other functions.
5 Ways of Investing in Cryptocurrency
Although only a few of the world’s population are into cryptocurrency. The majority of these people are involved in the buying and selling of these digital currencies for profit making. There are other options of investing in cryptocurrency which are discussed below-
1. Buy Cryptocurrency Directly
You can invest in cryptocurrency by buying one or multiple cryptocurrencies. The number one crypto today is Bitcoin which can be invested for profit. Other altcoins such as Ethereum, Dogecoin, Cardano, etc are also options when diversifying the portfolio.
You can buy these cryptocurrencies on major crypto exchanges such as Binance, Kraken, Coinbase, etc. There are also trading platforms such as Prestmit where buyers can get these crypto assets at good market rates.
2. Invest in Cryptocurrency Companies
This is another good option if you consider investing in digital currencies. You can invest in companies with a partial or total focus on cryptocurrency. These could be cryptocurrency mining companies, mining hardware makers, and companies that support crypto.
Some of these companies are PayPal Holdings, Robinhood Market, MicroStrategy Incorporated, and so on. You can make a fortune through this option.
3. Invest in Cryptocurrency Focused Funds
There are companies that give funds for crypto projects, launchpads, and others. You can invest in them rather than individual cryptocurrency companies.
You have a choice of exchange-traded funds (ETFs), such as index funds and futures funds. Some crypto-focused funds invest in cryptocurrency directly, while others invest in crypto-focused companies.
4. Invest in a Cryptocurrency IRA
There are benefits of choosing this means of crypto investment. Here, you can garner the tax advantages afforded by an individual retirement account (IRA). Another advantage is that you invest in cryptocurrency IRA.
Using the services of a crypto IRA provider can also facilitate more secure storage for your cryptocurrency holdings.
5. Become a Crypto Miner or Validator
This is another direct option of investing in cryptocurrency. You can mine it or act as a validator in a crypto network.
Crypto miners and validators earn rewards in crypto, which they can either hold as investments or exchange for another currency. Many became overnight millionaire when Bitcoin started some years ago. Miners and validators are still using this option to make profit through cryptocurrency.
Tips for Crypto Investors in 2022
Here are important things that crypto investors both beginners and veterans should do.
1. Do your own research- If you’re going to invest in cryptocurrency, it is very important to understand the industry. Do your own research on the token, exchange and keep yourself abreast with the with the happenings in the market.
2. Do not fall for the hype– You’ve to avoid falling for hype in the market. You’ll need to check if an asset is on an upswing on its own or riding a bubble. This is because coin may rise quickly and then loses its gains suddenly.
3. Volatility in price is certain– Asides stablecoins such as USDT, several others are volatile. This is very certain in the crypto market. You need to have this at the back of your mind when putting your money into crypto assets. There’s no guarantee that you’ll have return on investment always as asset will see a dip.
4. Be patient– You need to exercise patience and let your investment grow naturally, over a period of time. This is very important if you’re diversifying your portfolios into small cap altcoins. If in doubt, invest in market leaders like Bitcoin and Ethereum.
5. Beware of scam– You’ve to beware of ponzi schemes if you’re investing in cryptocurrency. Fraudsters often try to take advantage of the numerous beginners who has yet to have full knowledge of the industry. They may lure you with huge return on investment. This may come through emails or text.
Cryptocurrency and blockchain technology are no doubt among the top inventions of this age. There are many possibilities to the use of blockchain technology and cryptocurrency which include investment.
The most popular of crypto investment is by buying these crypto assets. The other options available to invest and earn makes it a wide for of financial system.
As stated earlier, investment in crypto is the riskiest form of investment. If you must invest, make sure you put what you can afford to lose.
Also Read– What is Hash in Cryptocurrency?
Prestmit is one of the best exchange platforms where you can trade cryptocurrencies. If you ever find yourself in a position to buy/sell crypto in Nigeria or Ghana, Visit Prestmit, it’s the best platform for you.