Welcome back dear readers of Invest in The Stock, we are always very happy and satisfied to have you always here with us and more and more. In today’s article we are going to deal with a topic very close to all people who decide to invest money, in fact we will talk about how to invest in cryptocurrencies.
We will go to see how to make profits and we will dissect all the characteristics of this financial market, which is booming.
What are Cryptocurrencies?
Let’s start by understanding what cryptocurrencies are, also defined with the name of crypto asset, they are in practice coins or virtual currencies, alternatives to traditional types of payment.
Furthermore, this type of virtual currency can also be used as a source of income through cryptocurrency investments.
Cryptocurrency decentralization
The substantial difference between cryptocurrencies and traditional forms of payment is decentralization, which means that they are released from any type of control body.
Unlike other forms of payment, cryptocurrencies are not subject to any type of supervision, either as regards the issue or their diffusion on the market.
This is in fact one of the peculiarities that has ensured its success on a global level.
How do cryptocurrencies work?
Now let’s talk about the actual functioning of these cryptocurrencies in which to invest.
This electronic money is based on the so-called Distributed Ledger Technology (DLT), which is based on systems formed by registers where every single point owns a copy of the entire database, thus being able to dispose of it and read it at will.
It can also modify it without first having to request any authorization from the central system, unlike the canonical payment systems, where it is necessary to have the consent of an entity or system to verify the transaction.
Blockchain and cryptocurrency encryption
While with the Distributed Ledger Technology the changes take place through encryption and by means of special algorithms that guarantee their security.
So when we hear about blockchain, what does it mean? how does it work? We’ll explain it to you right away.
What is Blockchain?
The blockchain is essentially a type of DLT, therefore, a register where all the information of a specific cryptocurrency or a specific token is entered, together with all the related transfers.
So, in summary, the blockchain register is made up of a series of blocks joined together in chronological order, precisely through this blockchain technology.
For this reason, the cryptocurrency data inside them is practically unassailable, given that their security is guaranteed by an inviolable encryption system, which makes it very safe, inviolable and decentralized.
Crypto assets
In addition to this, crypto assets can be divided into three main categories, namely:
- Cryptocurrencies
- Utility tokens e
- Security tokens
With different and well-defined peculiarities and characteristics for each category.
How does investing in cryptocurrencies work?
Let’s go now to see, concretely, how to start investing in cryptocurrencies.
The first option for investing in cryptocurrencies in a safe way is certainly to use the Exchanges, which provide for direct operations using the digital coins owned by the investor on duty.
The first step is to find a good exchange platform that has a solid reputation, especially online.
To do this, it is necessary to register for the first time, also attaching personal documents to verify their identity and choose a cryptocurrency wallet on which to make payments.
Crypto Exchange: pros and cons
Now let’s see what are the strengths and weaknesses of these crypto exchanges.
Pros
Among the former, we can certainly mention the low commission costs, both for making purchases and for selling cryptocurrencies directly, this is also possible thanks to greater liquidity.
They are very versatile and immediate to use, provided you know in detail what you are going to do.
Versus
Now let’s talk about the flaws. Overall, we would like to tell you that you must be very careful when registering online.
In order to avoid scams that are commonplace on the part of impromptu and solid exchanges for online cryptocurrency trading.
Even if this obstacle can be safely and easily bypassed, just do a thorough search on online channels to find the one that’s right for you, without running too many risks.
Financial instruments
Another very popular method for how to start investing in cryptocurrencies by trading virtual currencies is what happens through the use of specific financial instruments, also known as:
Contracts for difference, or with the acronym CFD
In practice, the investment operation is based on the price trend and positive or negative trends, on which to then place an order to buy online, through the trading platforms.
CFDs
Certainly among the advantages of CFDs we find that of being able to invest in various cryptocurrencies, even with low initial capital, and of being able to use free tools that guide you and help you improve, such as:
- Educational centers
- Demo for online training
- Video tutorials
And finally, the opportunity to practice alongside expert traders in the sector
If we talk about defects, we find the non-direct purchase of the virtual currency.
However, we would like to recommend the use of these platforms, due to:
- The specific characteristics of contracts for difference
- The advantage of being able to invest in real time
- Consulting market trends on a daily basis, carrying out cryptocurrency sales operations, buying online, which has allowed us to see the number of crypto investors rise exponentially.
Which cryptocurrencies to invest in?
Let’s go now to see which are the main online trading platforms and where it is possible to invest in cryptocurrencies.
At the beginning, however, it is always better to rely on an expert broker, especially if you have just entered this complex financial world, to avoid nasty surprises and unexpected capital losses.
Now let’s get specific and start with Etoro, currently considered one of the best trading platforms on the market.
Read also: eToro Income Statement, Complete Guide
Very little is needed to start, around 50 euros and you are ready to invest in cryptocurrencies.
Another giant in the sector is certainly CRYPTO.COM, which allows a lot of freedom to its customers, and is one of the safest crypto platforms on the net.
There are many realities to rely on in today’s market, for example LIBERTEX or XTB, they are also excellent exchange platforms.
The important thing is to rely on expert hands and not make risky moves.
Well dear readers of Invest In The Stock, now you know how to invest in cryptocurrencies without taking too many risks.
Invest In The Stock, The Editorial Staff
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