Investments are always risky, but some experts say cryptocurrency is one of the riskier investment choices out there, according to Consumer Reports. However, digital currencies are also some of the hottest commodities. Earlier this year, CNBC forecasted that the cryptocurrency market is expected to reach a value of $1 trillion by the end of 2018. If you’re planning to invest in cryptocurrencies, these tips can help you make educated choices.
Before you invest one dollar, learn about cryptocurrency exchanges. These platforms provide the means to buy and sell digital currencies, but there are 500 exchanges to choose from, according to Bitcoin.com. Do your research, read reviews and talk with more experienced investors before moving forward.
Know How to Store Your Digital Currency
If you buy cryptocurrency, you have to store it. You can store it on an exchange or in a digital “wallet,” for example one of the crypto wallets described in our Blog post Which cryptocurrency wallet to choose. While there are many different kinds of wallets, each has its own benefits, technical requirements and security. As with exchanges, you should investigate your storage choices before investing.
Diversify Your Investments
Diversification is a key to any good investment strategy, and it holds true when you’re investing in cryptocurrency too. Don’t put all of your money in Bitcoin, for example, just because that’s the name you know. There are thousands of options, and it’s best to spread your investment around to several currencies.
Prepare for Volatility
The cryptocurrency market is a volatile one, so be prepared for ups and downs. You’ll see dramatic swings in prices. If your investment portfolio or mental wellbeing can’t handle that, cryptocurrency might not be a wise choice for you.
Cryptocurrency is all the rage right now, but remember, it’s still in its infancy. Investing in something that’s new comes with challenges, so be prepared. If you plan to participate, do your research and invest conservatively to start.