Dipping your feet into cryptocurrency can be a bit challenging and frightening. With all the risk that you hear around and price volatility, you could almost think that it is impossible to invest as a rookie. But the fact that other humans, like you and I, are in this space means that it is possible to make returns here. Often, the first thing that you need to do is to identify the cryptocurrency that you want to invest in. Assuming that you go with Bitcoin, which has the largest market capitalization, then you’d need a Bitcoin Cryptocurrency app.
Cryptocurrency seemed to have taken the world by a storm with everyone trying to get a piece of this vibrantly-growing industry. Even celebrities like Justin Bieber seem not to be left behind, as they are purchasing NFTs. But you can easily get too excited about joining the crypto wave to forget that you need to make calculated steps. So, here are three steps that you can use to invest in cryptocurrency responsibly:
Ensure You Have a Strong Financial Foundation
Your financial background will determine how you make an entry into cryptocurrency. You’ll need to ensure that you have a strong financial foundation that can allow you to take on a risky venture such as cryptocurrency. The cryptocurrency space has a lot of volatility in prices, which makes it a lot riskier than conventional forms of investments.
There’s a lot of uncertainty and potential loss that you will face when you enter the cryptocurrency space. And you need to prepare for this adequately. Otherwise, it can take you back to zero. Investing in crypto also needs some background knowledge in finances and the subject itself. And this will help you gain a stronger foundation when you’re getting into this space.
Therefore, it would be wise to read more books, blogs, and publications in the cryptocurrency space for a better understanding. In addition, you can watch videos that can help you get a better mental picture of the subject. All these factors are building up to your firm financial foundation that will help you invest better in cryptocurrencies.
As much as the world of cryptocurrencies is a fast-pacing one, you need to understand that they are still a high-risk investment. The best way to start is to first check what you’re willing to invest, and what you’re comfortable losing. The reality is that there’s a likelihood of losing money. And this is why you need to consider losses even before they occur. The importance of checking your savings or emergency fund is to ensure that you have something to fall back on when things don’t go right for you.
Also, it would help a lot if you have cleared your debts, so that they can’t eat up your returns. Generally, investing in the crypto sector requires you to prioritize other needs first then you can invest.
Choose the Right Bitcoin Cryptocurrency App
Again, we’re assuming that you’re trading/investing in Bitcoins, and that’s why we’re suggesting that you choose the right Bitcoin Cryptocurrency app. There are several of this kind and you need to choose the one that will serve you best.
For beginners, there are several Bitcoin Cryptocurrency app platforms that are full of resources to help you get through everything in this space. You can easily purchase crypto from conventional finance apps such as Afriex. But on such a peer-to-peer payment platform, you will only be able to purchase Bitcoins. Typically, you also won’t be able to send your tokens off to a crypto wallet that you have.
The Bitcoin Cryptocurrency app platforms that support trading have a limited selection. This means that if you would want a wider selection of options, you can choose to trade using a centralized exchange. Some of the most widely used exchanges include Gemini, Kraken, and Coinbase. When using a centralized exchange, you are insured in case of security breaches by cybercriminals. The only downside is that your funds can easily get frozen or constrained because of the presence of a middleman. If you want more control and ownership of your crypto assets, then you can choose to use a Bitcoin Cryptocurrency app like Afriex or Cash App.
Diversify Your Investments
The recommended percentage that you should allocate to cryptocurrency is 10% – at least according to Molina’s rule of thumb. Yes, cryptocurrency can be a long-term investment that you make. But you need to understand that it is highly volatile. And that you could lose every single investment that you’ve made in a flash.
Diversification ensures that you have spread out the risk evenly. This is so that one investment won’t affect your portfolio as much when things go south. You can then have other investments within your portfolio offset the loss that you have encountered from the failed one.
Investing in cryptocurrency isn’t rocket science. You just have to get your house in order first. And part of doing that is following the steps above. Also, remember how important it is to get the right Bitcoin Cryptocurrency app when you’re investing in Bitcoins.