What are the ways in which I can invest in cryptocurrency? Are there safe approaches to investing in cryptos, so that I do not end up losing my money all at once? Are there any guarantees when it comes to crypto investments? If you have been asking yourself the above questions, then you are in the right place because, in today’s post, I will be providing the answers you need. Read on till the end of the article to find out more.

P.S:

See Gold Retired’s Top-5 Recommended Cryptocurrency IRA Service Providers

Investing in Cryptocurrencies

Cryptocurrencies can be very rewarding investments but are not a good choice for every investor. For starters, cryptos are famous for their price volatility, with their prices fluctuating wildly daily. As it has come to the knowledge of even the most seasoned investors, even the seemingly stable cryptocurrencies present their significant downturns.

This, however, does not mean that cryptocurrencies are to be viewed as bad investments. We can view them as risky investments. Some investors have established unique ways to invest in these cryptos despite them being quite risky, and have ended up amassing massive fortunes.

As a beginner in the world of crypto investments, you can pick up a few ways through which you can invest in cryptos without exposing yourself to more risk than you can stomach, or excessive risks. The strategies I will lay out for you can enable you to maximize your earnings while keeping your risk as low as possible.

How to invest in cryptocurrencies safely

1. Invest a small amount of money in well-known cryptocurrencies

As a beginner, it can be quite tempting to sink huge amounts of money into the next big cryptos, driven by the hype to become the next crypto millionaire. Unfortunately, making investment decisions on pure speculation may not always work (it does not work in most cases), and may only lead to you losing a lot of money and getting frustrated.

A safer option would, as such, be to invest a small amount of money in cryptocurrencies that have a higher probability of growing over time. This can, in itself, be risky, as cryptocurrencies are also highly speculative, and it is not possible to determine their outlook in a decade or so. This, however, is the case with many other types of investments, but we can always use historical data to determine which ones are worth trying out.

Some cryptocurrencies are more established and stronger than others and come with the promise of gradual growth over the long-term horizon.

No matter where you invest, however, you should know that there are no guarantees, so you should only invest money that you can afford to lose. The rest of your investment portfolio should also be strong, to ensure that your position as an investor is not affected by any major fluctuations.

You should also be prepared to stomach short-term volatility, as you aim at reaping the long-term gains.

2. Invest in cryptocurrency stocks

Another option through which you can gain exposure to the crypto industry is through investing in cryptocurrency stocks.

Crypto stocks are offered by companies that are in one way or another involved in the cryptocurrency sector. It could be a company such as Nvidia, that has invested heavily in the technology used to build the computers that are used to mine cryptos. It could also be in companies such as Square, that make it possible for merchants to accept payments in certain cryptos.

If cryptos end up becoming widely adopted, then any of such stocks could benefit greatly and increase in value. Even if this option does not work out very well, your stocks could end up becoming viable long-term investments.

Before you invest using this approach, however, you should be aware that the underlying company’s involvement with the crypto industry is just one element of the state of their stocks. You should, as such, research the company as a whole, before purchasing any stocks. For starters, the stocks should offer the promise of significant returns over the long-term horizon, and if the cryptos involved also show the promise of excellent returns in the future, then that’s an added bonus for you.

3. Investing in Bitcoin ETFs

Bitcoin-linked ETFs have not been around for long, but have been a go-to option for investors who have dealt with ETF investments. Exchange-Traded Funds essentially enable an investor to gain exposure to an asset without purchasing it directly.

You can for instance try out the ProShares Bitcoin ETF which does not invest directly in Bitcoin, but in Bitcoin futures contracts (there are derivatives of Bitcoin). Like any other ETFs, the performance of these ETFs may not necessarily align with the performance of Bitcoin in the market, because they are not directly backed by Bitcoin. In general, however, as the value of Bitcoin increases, so does the value of the ETF.

One thing about investing in ETFs is that they come with significant risks, which everyone should be aware of before whipping out their checkbook. If, however, you are more concerned about the direction that Bitcoin prices will take in the future, you can purchase Bitcoin ETFs to gain exposure to this cryptocurrency. You only need to ensure that the rest of your portfolio is well-diversified, and you are parting with an amount of money that you can afford, owing to the fact that Bitcoin ETFs carry similar risks to cryptos.

Note that cryptos are very volatile investments, and even these safe options that we have discussed today may always be ‘very safe’. If you are eager to invest in cryptos, however, there are ways through which you can minimize risks, by being strategic. You can also opt to open a cryptocurrency IRA, which helps you save a lot of money in taxes since IRAs have tax advantages by design. Below are some top-recommended crypto IRAs worth considering.

Also read: 16 Cryptos to have in your IRA

OR

Also read: Top-5 Recommended Gold and Silver IRA Solutions

That will be all for this post in which we have responded to the question “What are the ways in which I can invest in cryptocurrency?”. I hope that you found it helpful and that you will now move forward with an idea of how you can get started with crypto investments. If you have any questions with regards to this topic, kindly let me know by dropping them in the comments section – I will get back to you ASAP.

I wish you well,

Eric, Investor and Team Member at Gold Retired!

How does cryptocurrency work? Is the technology behind it realistic or just another smokescreen aimed at luring people to invest their money before they lose it? What should you know before spending a single cent on cryptocurrency? Welcome to today’s post in which I will help you get the answers to the above questions. Read on to find out more.

P.S.

See my top-5 recommended Gold & Silver IRA Service Providers

What is cryptocurrency?

Cryptocurrency is best defined as a peer-to-peer system that enables people to send and receive money, without relying on banks to verify the transactions as they occur. It is a viable replacement for the physical money system which most people are used to. Cryptocurrency payments eliminate the need to walk around with paper currency, by enabling an environment in which digital entries to online databases are made in a bid to describe transactions. Whenever a transfer of cryptocurrency funds occurs, the transactions are usually recorded in a public ledger that anyone can access and view.

Cryptocurrency, also referred to as crypto, in short, is usually stored in digital wallets. Its name is to a great extent tied to the encryption technology used in the verification of transactions. The term points to the advanced coding technology that is used in the transmission and storage of cryptocurrency data between the crypto users’ wallets and to the public ledgers. Encryption provides safety and security.

The first cryptocurrency to ever be created was Bitcoin. After its creation in 2009, this crypto went on to become the best known and most widely used crypto on a global scope. Like other common currencies, cryptocurrency can be used to make money for those who own them. Some people try to profit from cryptocurrencies by trading in them like stocks, while others (speculators), hold on to them ( this is known as hodling in the crypto industry) as they await significant price increases over the medium to long-term horizon.

How does cryptocurrency work?

Cryptocurrency runs on a distributed public ledger that is referred to as a blockchain. This public ledger is simply a record of all the transactions that are usually updated and held by cryptocurrency holders.

Units of cryptocurrencies are usually created through a process known as mining, in which powerful computers solve very complex mathematical problems in a bid to generate coins. One can also purchase cryptocurrencies from brokers, and store them in cryptographic wallets so that they can spend them later.

The one thing you should know is that if you own cryptocurrency, you do not own anything tangible- you only get to own a key that enables you to move a unit of money to another person, without the need for verification/authorization by a third-party financial institution such as a bank.

As much as most people who are introduced to cryptocurrency are mainly introduced to Bitcoin, other cryptocurrencies, as well as the application of blockchain technology, are still rapidly emerging and being adopted on a large scale. It has become apparent that assets such as bonds, stocks, and many other financial assets can be traded using blockchain technology.

Is cryptocurrency safe?

This is one common question that’s asked by those who are not sure whether they should get started with the use of cryptocurrency. Cryptocurrencies are created to be used safely, but the owners of the cryptocurrency must ensure that their cryptographic wallet private keys do not fall into the wrong hands, otherwise, they could end up losing all their cryptos.

As we have already seen, cryptocurrency runs on blockchain technology, on which transactions are usually recorded into blocks, and are usually time stamped. This process is quite technical, but the end result is a well-structured digital ledger that is safe from hackers.

Beyond that, most transactions use the 2-factor authentication process. Users may, for instance, be required to enter usernames or passwords to initiate certain transactions. One may also have to enter the authentication code sent to their smartphone.

The fact that the blockchain is secure does not mean it is entirely hacker-proof. We have already seen cases of successful cryptocurrency heists, in which the hackers stole millions of dollars worth of cryptocurrency. To solve this problem, crypto service providers have come up with offline storage wallets (cold storage), that are hackers cannot access (unless they steal them forcefully).

Note that, unlike government-based money, the value of cryptos is usually driven by the forces of supply and demand, and this results in very wild swings. Such swings are responsible for massive gains for investors, or significant losses as well.

Finding your way into the world of cryptocurrencies

Cryptocurrencies are no longer very new to the world. We have already had an entire decade’s worth of information about them, as a result of the use of Bitcoin and other newly-created cryptos. If you are getting started with cryptos, you need to get started on the right foot, and this calls for you  to:

Research the cryptocurrency exchanges

Before investing your money in cryptocurrencies, you should learn about the existing cryptocurrency exchanges ( they work like stock exchange platforms, by enabling you to buy and sell cryptos). There are currently more than 500 crypto exchanges in the present day, and you should research, read customer reviews, or consult with experienced experts before getting started.

Know how you will store your cryptocurrencies

Another common concern is how to store one’s cryptos. You have the option to keep the cryptos in an exchange, or to store them in a digital wallet. There are currently many types of wallets, and each has its unique pros and cons, that you ought to know before signing up.

Diversify your portfolio

Diversification is a proven investment strategy, that lets you put your money into different assets to shield yourself from losing all your money if a single investment sinks. This strategy also applies to cryptos, where you diversify within this asset class, by putting some money into Bitcoin, some of it into Ethereum, and some other portions of it into any other crypto that you find promising.

Interested in investing in cryptos for your retirement years? Check out the review below, with our top-recommended crypto IRA service providers.

See Gold Retired’s Top-5 Recommended Bitcoin IRA companies

OR maybe you are interested in another alternative asset:

See Gold Retired’s Top-5 Recommended Gold & Silver IRA companies

Thank you for making it to the end of this post in which we have addressed the question, “How does cryptocurrency work?” I hope that you found it helpful and that you now know a thing or two about cryptos, that can help you take the right steps as you get started with investing in them as a beginner. Let me know if you have any questions about today’s topic, or if you need any help getting started with crypto investments.

I wish you well,

Eric, Investor and Team Member at Gold Retired!