How to invest in cryptocurrencies? The guide to start Part 2
Secure your cryptocurrencies well. Knowing how to secure your digital possessions is essential when you start investing in digital assets.
The first thing you need to do, of course, is to enable double authentication on the apps and websites used to buy and sell crypto as soon as possible.
Also avoid trading cryptos when using insecure internet connections in public places.
Next, you will have to get familiar with wallets (digital wallets). There are several types:
hardware wallet or cold wallet - an external cryptographic storage medium disconnected from the Internet (the most secure method);
virtual or hot wallet: a virtual wallet that stores crypto on a computer, phone or tablet. Less secure, but more comfortable to use.
Hacking is a real threat that needs to be taken seriously in the world of crypto assets. Therefore, if you doubt the security of your private data on your computer, we advise you to check your entire system with a good antivirus. Investing is much more pleasant when you have peace of mind!
How to select an interesting crypto project?
Choosing a project in which to invest your savings can be complex. Every day, hundreds of tokens appear or disappear. Stories of scams and theft are frequently in the news. Many self-proclaimed experts advise betting on the "next Bitcoin". In short, it's easy to get lost in a jungle of information about a market that never closes.
Just like in the stock market, no one can determine for sure whether or not a company will appreciate in value. However, we can limit the risks and maximize the chances of betting on a crypto project that has potential.
Analyze the documentation and means at your disposal
Spend some time looking at the documentation and materials available on the web about the crypto project you are interested in. The website is the first step – it usually allows you to disqualify or disqualify a crypto project.
The white paper must be easily accessible on the website. This document is comparable to the business plan of a new company. It should explain:
the objectives of the project;
the technologies used;
Who is in charge of developing the project?
What is the economy of tokens or cryptocurrencies?
Also consult the legal notice and contact pages. Information about a company's status and the identity of representatives is usually accessible from the bar at the bottom of a site's page.
A company based abroad in a tax-efficient country (Malta, Isle of Man, Estonia, etc.) is not necessarily suspicious. However, in the event of a problem, you will have very little recourse to recover your funds.
Finally, find out about referral and affiliate programs. Almost all crypto platforms, as well as many blockchain projects, offer it. The principle is simple: a company's client invites one of his acquaintances to join the company, and everyone receives a bonus (in euros, in crypto, in free subscription, etc.). An affiliate program is common, it is normal to find one. However, if it is over-presented and seems disproportionate, beware: it could be a pyramid scheme and you may be dealing with fraud!
Communication around the project.
Like all companies, projects built around blockchain technologies use marketing to promote themselves. This is normal. However, some communication campaigns can warn about the seriousness or otherwise of a project.
First of all, a project that promises a return prospect should be discarded. Certain terminologies should alert you, especially when the founder or founders are selling their invention as "an innovation not to be missed" or even "the opportunity of the year."
Focus your research on crypto projects led by a team of experts explaining what they plan to do and what problem they want to solve. Serious speeches popularize technological explanations to help explain a smart solution in the world of blockchain.
Finally, it is important to know how to recognize good sources of information. Discovering a blockchain/crypto project on an authority site, whose content is recognized as a trustworthy source, is more reassuring. Conversely, hearing about a blockchain project from dodgy influencers, or worse, being contacted directly by the founder is often a bad sign.
In which cryptocurrencies to invest?
As a novice in the world of cryptocurrencies, it is not advisable to search at all costs for the next nugget. Maybe you'll get there one day, improving your level of understanding of the crypto markets. Here are some ideas to invest in cryptocurrencies in 2022.
Cryptocurrencies preferred by beginners
To begin with, it is safer to focus on already well-established cryptocurrencies: Bitcoin, Ethereum or Cardano and Solana. One of the most important reasons is that the information available about these cryptocurrencies and their blockchain is understandable and easily accessible.
Bitcoin (BTC) is the cryptocurrency of choice for most beginners. Often compared to a digital version of gold, Bitcoin is the most traded cryptocurrency in the world.
Ether (ETH) is also positioned as a good starting point. Ethereum blockchain technology is used in most decentralized finance projects. These projects use Ethereum to issue smart contracts. The growing adoption of decentralized finance is creating strong demand for Ether.
Other crypto assets, also called "alternative currencies" or "altcoins", emerged in 2021. Cardano (ADA) and Solana (SOL) are among the tokens with high development potential according to many blockchain specialists. They will likely feature among the top caps for years to come.
Invest in crypto projects without buying cryptocurrencies
The sometimes extreme volatility of tokens scares off many investors who fear a speculative bubble. Others are anxious about making a mistake or not securing their crypto well. Fortunately, there are ways to gain exposure to blockchain innovation, the metaverse, and the cryptocurrency industry in other ways.
Invest in crypto ETFs
An ETF is a fund that replicates the price of a financial asset. Here, the ProShares ETF has futures contracts on the valuation of Bitcoin.
Futures contracts are financial instruments that anticipate changes in the price of an "underlying" asset in the future: a stock index, a stock, or a digital asset such as a cryptocurrency. This financial asset is bought and then sold at a certain price and quantity, on a date scheduled from the purchase of the contract.
The main interest of this ETF is that you can invest in it by buying shares through a securities account, without buying Bitcoin directly.
Create a basket of target stocks in the stock market
In addition to ETFs, it is possible to buy shares of listed companies that are already present or planning to invest in the blockchain sector. Here are some examples:
Coinbase (NASDAQ: COIN): crypto platform;
Block (NYSE: SQ) – Payment App, Blockchain Innovation with Square Crypto;
Nvidia (NASDAQ: NVDA) – the world's largest producer of graphics processors used to mine cryptocurrencies;
IBM Blockchain (NYSE: IMB): Blockchain research and development.
In conclusion, investing in cryptocurrencies
Now you are ready to understand how crypto assets can increase your wealth. Although some experts are still skeptical, it is undeniable that blockchain technology and its many uses will be part of our future.
As a reminder
Do your own research before deciding to invest your money in a cryptocurrency project. Every investment involves risk.