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4 Ways To Invest in Crypto for Short and Long Term Investments

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VOC, Voice of Crypto, Crypto Trading

A huge percentage of the population now relies on crypto investments to maintain their wealth safely and gain maximum future profit. But investing in Cryptocurrency is not that easy for an amateur; some basic knowledge has to be gained before dipping one’s toe into the digital currency world. For new investors to avoid losing their capital, we shall discuss a strategy one can follow below. 

For a newcomer to the crypto world, buying a cryptocurrency is the first step, and it can get pretty confusing. The first thing to do is choose a crypto exchange platform or a crypto broker. A cryptocurrency exchange is a platform where buyers and sellers meet to trade cryptocurrencies. In contrast, a Cryptocurrency broker offers easy-to-use interfaces which take away the complexity of purchasing Crypto via a crypto exchange platform. 

Once a suitable crypto exchange platform or a broker is chosen, the next step is to create an account and verify one’s identity to purchase crypto assets. The third step is to deposit money into the crypto account by linking one’s bank account with it and then deposit enough cash to be able to buy some digital assets. This can also be done using a debit card. Once one decides on the type and amount of Cryptocurrency to buy, type the symbol of the currency and make the purchase. 

Choose Which Cryptocurrency You Want To Invest In

When choosing the type of Cryptocurrency, there are more than 20,000 available options, and these numbers are only increasing. Some factors like market capitalization, demand, and supply should be taken into consideration. One should check out the market capitalization and total circulation of a particular coin which implies the maximum number of coins that can enter the market. Also, a coin’s success depends on its fan base. This means more people believe in that particular Cryptocurrency. Choosing such a coin is a safer option. The underlying technology of any currency is one of the most important factors to watch out for to get a hack of competitors. For example, apart from being a cryptocurrency, Ethereum has a strong hold on various other use cases also. The bottom line is that with cryptocurrency investment, it is safe to diversify one’s investment into various cryptocurrencies. 

Decide on How Much Crypto To Buy

It is hard to understand how much is enough, especially with a new cryptocurrency like Cryptocurrency. Experts advise that at most 5% of one’s portfolio should be made up of crypto assets. But ultimately, how much Crypto one should own depends on one’s risk tolerance and personal preference.

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Experts also suggest a 50-30-20 rule for investment. This means 50 percent of one’s income goes towards necessities, 30 percent towards discretionary spending, and 20 percent towards saving, and some percentage of that 20 percent can be invested.  

Also, with most exchanges and brokers,  there is an option to purchase fractional shares of Cryptocurrency, allowing one to buy high-priced tokens like Bitcoin or Ethereum that otherwise take thousands of rupees to own.

Lastly, just as with mutual fund SIPs, it’s better to invest small amounts regularly rather than plonk down a lump sum in one go. 

Safely Store Your Private Keys in a Wallet

Since the central banks of any country do not back crypto assets, it becomes the buyers’ responsibility to protect their currencies against theft or hacking. It is important to have a secure storage place for the currencies. Storing the cryptocurrencies in a wallet becomes very safe. These are of two types. Hot wallets are crypto wallets that are stored online. They are more convenient as they can be run on smartphones, computers, or tablets, but there’s a higher risk of theft since they’re connected to the internet.

On the other hand, cold wallets are considered a safer choice as they are not connected to the internet. They are stored in the form of external devices, like a USB drive or a hard drive. But utmost care must be taken with cold wallets’ key codes and the devices, as losing the codes or failure of the device mean one might lose his currency forever.    

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Choose a Strategy

Since the central banks of any country do not back crypto assets, it becomes the buyers’ responsibility to protect their currencies against theft or hacking. It is important to have a secure storage place for the currencies. Storing the cryptocurrencies in a wallet becomes very safe. These are of two types. Hot wallets are crypto wallets that are stored online. They are more convenient as they can be run on smartphones, computers, or tablets, but there’s a higher risk of theft since they’re connected to the internet. Cold wallets, on the other hand, are considered a safer choice as they are not connected to the internet. They are stored in the form of external devices, like a USB drive or a hard drive. But utmost care must be taken with cold wallets’ key codes and the devices, as losing the codes or failure of the device mean one might lose his currency forever.   

Growing Your Investment

Most investors opt to start with a lower investment and eventually increase the amount of money invested. Buying low and selling high is the most classic strategy followed to be able to grow one’s investment. The buying increases demand and hence crypto value increases. Buying and holding is the best-suited crypto-asset strategy. This is because cryptocurrencies are highly unlikely to give any profit in a short-term period but investing for the long run improves the chances of earning tremendous profit. This allows the investor to grow his money so that in the future even bigger amounts of investments can be made. 

Learn To Earn “Free” Crypto

With the expanding market, the scope of earning free Crypto is also increasing. eToro is a crypto exchange platform that lets one earn free crypto. Coinbase is another trading platform, where it is possible to earn free crypto worth around $30. Even though $30 isn’t a huge sum of money, investors who participated in the Coinbase Learn last year now have over $100 worth of free cryptocurrency from the price appreciation. This Learn program of Coinbase is giving away free crypto for simply learning about crypto. It is a great way to earn various types of cryptocurrencies. 

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Staking is a way by which many cryptocurrencies verify their transactions and in turn, the participants earn rewards on their holdings. It is a very innovative way to earn cryptocurrency in the form of interest. However, it’s necessary to stay away from scams and rely on the more popular and most-trusted platforms in the crypto space. 

Invest in Crypto Stocks and ETFs

People who are skeptical about investing in Cryptocurrency due to its volatile nature can opt for an alternative crypto investment method. Investing in companies that are holding cryptocurrency is one such way.  These companies depend on Cryptocurrency indirectly by using their resources. 

Bitcoin exchange-traded funds or ETFs are pools of bitcoin-related assets which are offered on the traditional exchange by brokerages to be traded as ETFs. They are traded on a traditional exchange instead of a cryptocurrency exchange. The idea of the Bitcoin ETF first emerged when investors and brokers noticed that bitcoin prices were trending upward continuously and becoming more popular. An investor can purchase an ETF through a broker or advisor. Since it is a very risky investment, it’s always advised to consult an expert before trading. 

Various types of Bitcoin ETFs can be traded like Proshares Bitcoin Strategy ETF (BITO),Valkyrie Bitcoin Strategy ETF (BTF), VanEck Bitcoin Strategy ETF (XBTF), Global X Blockchain & Bitcoin Strategy ETF (BITS). 

Invest in Blockchain

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Blockchain is a decentralized distributed digital ledger that keeps data regarding Cryptocurrency transactions along with   NFT ownership or DeFi smart contracts.

No one can invest in the blockchain itself, as it is just a system for storing information and data and processing transactions. However, one can invest in assets and companies using this very technology. A blockchain is considered highly secure because most nodes need verification to get confirmation about their legitimacy. Only then, a new block is added to the ledger. This also reduces error as a single transaction is verified at multiple nodes.

The most simple way to invest in Blockchain is by purchasing cryptocurrencies like Bitcoin, Ethereum, and other tokens that run on a blockchain. Another way is to invest in companies that use Blockchain technology. Santander Bank is an example of such a company. It experiments with blockchain-based financial products and one can easily invest in its stocks. 

Mine Cryptocurrency

Bitcoin mining is a process by which new Bitcoins are circulated into the market. It involves sophisticated hardware that is used to solve very complex mathematical problems. The first computer to find the solution to the problem receives the next block of bitcoins. This reward acts as an incentive for the miners and motivates them to carry on the work of mining as mining is a crucial component of the crypto world. It generates value for the cryptocurrency.

Crypto mining lets one earn cryptocurrency without putting down any money for it. Bitcoin miners receive bitcoin as a reward for completing “blocks” of verified transactions, which are added to the blockchain. Crypto mining is a good way to earn money. When someone mines a cryptocurrency successfully, he is also rewarded with new coins. Cryptomining is very crucial for the crypto world as it is the only way to release new coins into circulation. 

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