How to Invest in Cryptocurrency
You want to invest in cryptocurrency but don’t know how to start. There are lots of scams on the internet and you really need to do your homework as to understand what you are investing. Below is a good video which will give you some tips on what to watch out for. Then I will summarise and comment on what they told you in the video.
Before we start, there are two terms that you need to understand.
ICO (Initial Coin Offering) – It is an event which a new cryptocurrency project start and they need to raise money for their operations. So they will sell their first batch of cryptocurrency (or called coin, token) in the market to the prospect investors. Most ECO raise money in Bitcoin or other cryptocurrencies. Then these coins can be freely traded in the market.
White paper – A report that informs readers about a complex issue and provides a solution. It is used by marketers to educate their prospect customers explaining a particular methodology. As for the white paper of cryptocurrency, they are very hard or nearly impossible for a lay person to understand. Here is an example – The Ripple Protocol Consensus Whitepaper. Ripple is one of the most popular coins besides Bitcoin and Ethereum.
I am interested in Ripple and I have invested some money into it. I will use it to give you examples below.
The advice from the video above – how to invest in cryptocurrency.
- The first and most important advice. Do not invest any money that you cannot afford to lose. Because nobody knows what will happen to cryptocurrency in the future and will bitcoin still exists in 5 to 10 years.
- You can visit the website of the company. Example – Ripple.com. From the website, you can find information about this coin.
- The CEOs of this company and who are they, what are their backgrounds?
- What problem does it solved in the real world and does it make sense?
- Who are their customers?
- Where is the headquarter of the company?
- Does this business has a good future?
- Check out the forum and see if they are responsive? Also, what people are asking in the forum?
Besides the website, you can search for other information on the internet. For the popular coins, you will be able to find tons of materials.
In the video, they said “do not believe what other people tell you.” I think it is only half true. We should believe others when what they said make sense, or we use our only experience to judge what they said to be true or untrue. My advice is always listen to both side of the story and you will be able to make a better judgement, don’t be biased. Besides this, most of the advice they give in the video is sound and logical.
Investing in cryptocurrency is the same as other investment, but cryptocurrency is apparently more risky. With more risk, it gives you more rewards. As an example, if you have brought Ripple coins when it first issued, then you would have make a lot of money. Because of this, many people are willing to take the plunge to trade or invest into it.