The past decade has seen the introduction and rise of crypto currencies. In most climes, it has now become an acceptable mode of payment for some industries including real estate, retail, and lots more. It is decentralized in the sense that the demand, supply and price are not controlled by any national or international body. Rather it is controlled by its block chain technology
Due to its decentralized nature, it is volatile and largely unstable. It could be your biggest investment and it can also be the worst, Cryptos can always fail.
This is not to freak you out but you should know that crypto-coins are highly volatile and they are swayed by the market forces of demand, supply, and usability. These forces are what sustains it. A coin is only valuable as much as it has use cases. If it is not usable, it limits how successful the coin will be.
Despite the popularity, it is ill-advised to start trading on any crypto without making proper enquiries and research. This is so that you know the best one to invest in, proper timing to invest, and how to handle the investment.
Here are four things you should consider before investing in crypto currency.
1. Understand how the industry works.
It will be foolhardy to invest in an industry you do not have a first hand knowledge about how it works. You should first take out time and study how the crypto industry, and block chain technology works. This helps you know what to expect or not to. You can
also prepare your mind to bear whatever comes as you invest.
Take time to study and have a knowledge of coins on offer, you may be tempted to look at the big names e.g Bitcoin and Ethereum. You should also research about lesser known coins that have the potential to do well. You can check their market capitalization and the quantity of coins they have in circulation. Coins with high market capitalization and circulating quantity is more stable and are not prone to fluctuations. Also check the coins volume of trade. Low volumes of trade may mean that the coin is phasing out and you are not advised to put your money in there.
2. Invest what you can lose.
This is another advice you should consider if you want to protect yourself from heartbreak. It is a risky venture to invest more than you can spare on crypto. The rule is to invest a small cash at a time, watch how it grows, invest some more, and continue watching.
This means that if the coin graph takes a downward plunge, you will not be losing all of your liquid cash at that moment.
3. Consider the use cases.
Coins that have a lot of usability have better chances of surviving. Before investing, First ask: What can it be used for? Bitcoin, the most popular crypto have been used to buy something as small as pizza. Industries like real estate, clothing, e-commerce, blogging, and online shopping are waking up to the possibilities of having crypto currency as a viable payment option.
4. Take note of the timing.
Timing is key when it comes to investment. The earlier it is done, the better the chances of having the best experience.
Even though having an early investment doesn't guarantee profits, investing late still isn't advised. By late, this means that investing when a coin is at its highest might not actually augur well for your money. Most person take the risk of investing during an initial coin offering (ICO), without knowing the future of the token. On some occasions, it has paid. On others, they incurred losses. Studying the progression of the token over time gives you an idea about what to expect in the future or you can decide to take the risk and trust in fate.
Last words
Crypto currency is sweeping the digital financial stage and changing how things are done in that space. While this always looks like a viable investment option, there are still a lot of risks involved. The only thing that can help your decision is to carefully study, ask questions, and research.
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