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Are you thrilled about your first purchase of cryptocurrencies? This is expected because of the popularity these digital currencies are enjoying these days. However, it is best to contain your excitement first. You still have a lot of things you should consider before you purchase or invest in cryptocurrencies. In this article, we will discuss some of them:
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Risks
Take note that when you invest in cryptocurrencies, you are taking a high level of risk. You are to make a highly speculative investment on something that is based on supply and demand and is also very unpredictable. But, so as not to discourage you from your enthusiasm, know that speculative investment is, yes, highly risky but it can also mean opportunities for substantial profits.
So what should you do? You can continue to invest but make sure that the amount is something that you can afford to lose. Meaning, if you are thinking of investing using all your retirement savings, drop it. You are not sure yet what the future holds for cryptocurrencies so investing a percentage of your savings will do. Consider this scenario: If you earn big from this investment, good for you. If not, you will not be surprised and disheartened anymore because right from the start you have prepared yourself for it.
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Where to store cryptocurrencies
You can store your cryptocurrencies on crypto or digital wallet. You can keep, send, and receive digital currencies through your digital wallet. You will secure this wallet through a cryptographic key pair: a public key and a private key. Give your public key to others so they can send funds to your wallet. On the other hand, your private key is yours alone as it is the access to your funds. If you lose it, you lose access to your digital wallet.
Digital wallets have two types: hot wallets and cold wallets. Hot wallets are user-friendly. You can access your digital wallet anywhere using your smartphone or any device that lets you connect to the Internet. However, along with this convenience is their vulnerability to cyber-attacks. Hot wallets come in the form of an app.
Cold wallets, on the other hand, are in offline mode. If you wish for a safer option or to avoid threats to your security and privacy, the cold wallet is ideal for you. This is because it does not require an Internet connection.
Cold wallets are available in two forms: paper wallets and hardware wallets. If you opt for a paper wallet, you have something to hold that reveals both the keys and is printed using an online printer and a paper wallet tool found online. Typically, you’ll see a QR code on the paper wallet that you can scan and sign to be able to transact. The disadvantage, however, is if it is lost, destroyed or found illegible, you may lose access to the address where your funds are placed.
Hardware wallets, on the other hand, make use of a smartcard or an offline device to get private keys offline. An example of this is the Ledger USB Wallet, which works like a USB. It needs a computer, as well as a Chrome-based app, so you can keep the private keys offline. Make sure that you do not lost or damage it or else, you may lose your access to the wallet.
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Knowledge about digital currencies
Because you are new to cryptocurrencies, it is only vital that you make an effort to learn more about the industry. How does it work? What are the different currencies offered? These are only two of the questions that you have to understand. After you are able to find the answers to these questions, you also have to discover blockchain technology so you get a better understanding of how the world of cryptocurrency works.
Do not get intimidated by the information you’ll come across while trying to understand blockchain technology because you have no background in computer science or coding. You can find details about it online that can easily be understood by a newbie. As you get a better understanding of blockchain technology and cryptocurrencies, you will find the reason to continue investing—or otherwise.
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Where to buy cryptocurrencies
With the popularity of digital currencies, there are already several places where you can buy them. The most common purchase method is through a trading platform or an online exchange. Yes, exchanges allow the buying and selling of many cryptocurrencies at the best possible rates. To adhere to legal obligations, you must first provide your personal information to verify your identity.
In Canada, first-time investors or users can first buy Flexepin vouchers and redeem them for digital currencies at available exchanges. Other countries, which are by the way too many, have Bitcoin ATMs installed. If there’s an available Bitcoin ATM near you, you can buy it using cash or a card. Later on, you can use the currency to trade on an online platform.
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Cryptocurrencies available for investment
Your excitement may lead you to act on impulse. Avoid this. Never buy or invest in the first digital currency you know. There are a lot of cryptocurrencies available. Okay, you may choose one on impulse because it’s popular. But no, it’s still important that you do research and study each digital currency available. Check their features, accessibility, and investment potentials. You must identify which cryptocurrency offers the most number of advantages or benefits when you make an investment. Go for the best, not the first option.
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Crypto returns
As mentioned earlier, cryptocurrencies are speculative in nature. Because you are a new investor, it may be difficult for you to take that risk. But if you are after the possible high profit that they say comes with a high level of risk, you can still continue investing. However, at this point when stock performance data for the first decade isn’t available yet or no earning reports for the quarter to look on, it may be hard to calculate a return of investment.
Cryptocurrencies are popular nowadays. You’ll hear and read more about it online. Individuals from around the world are said to be making huge earnings out of their investments. However, do not be easily swayed by potential returns. Know that you are taking a risk by investing in digital currencies. However, identifying the things to consider before you purchase cryptocurrencies may help you minimize the risk and enjoy profits. More importantly, ensuring that you are fully equipped with knowledge will give you more confidence to trade.