There’s plenty of interest in cryptocurrencies, but based on the questions people are searching Google about digital assets, there’s also a lot of ignorance on the subject. Whether you’re already in investor or are just beginning to explore the topic, there’s plenty for you to learn on the subject.
With the price of Bitcoin oscillating between the all-time high of $68,000 last November and around $50,000 in December, people’s interest in Bitcoin and cryptocurrency continues to rise.
According to trends in Google searches, the following are what most people want to know about investing in BTC and cryptocurrency.
What’s the first step when investing in crypto?
Most experts say that Bitcoin and Ethereum are the best cryptocurrencies to invest in as a beginner. Once you’re ready, the first steps are:
Select an exchange: cryptocurrency exchanges are online trading platforms to buy crypto. Always consider security, fees, and available coins when choosing an exchange.
- Fund your account: You can use the leading currencies, Debit/Credit cards/PayPal, etc., to fund your account.
- Place an order: The process may differ from one exchange to another, but it involves exchanging your cash for your crypto of choice.
- Practice self-storage: Choose between keeping your crypto coins within the exchange account and moving them into your own hot or cold wallet.
What percentage of my portfolio should I invest in crypto?
Even though cryptocurrency investment involves a certain amount of risk, it is still a good diversifier of an investment portfolio. However, since crypto markets are still somewhat volatile, you should invest a small percentage of your portfolio.
Most experts believe that you should invest anywhere between 1% and 5% of your portfolio in cryptocurrencies, depending on your financial situation. Since the volatility level of digital assets is still high, you only need to invest as much as you are willing to lose.
What should I choose between crypto and traditional funds?
There’s no doubt that crypto investment is highly speculative. Therefore, it is recommended that you set up a retirement fund before investing in cryptocurrencies. However, if you already have a good retirement fund, go ahead and diversify with crypto in addition to a traditional fund. Experts advise that you should:
- Begin with a small percentage
- Be prepared to lose your investment
- Invest long-term to avoid short term fluctuations
What cryptocurrencies should I Choose?
For starters, you’re better off choosing Bitcoin or Ethereum; these are the largest cryptocurrencies by trade volume and market cap. While they’re also volatile and speculative, they’re considered less risky than the newer emerging coins.
Altcoins, which are all other coins apart from Bitcoin, are designed for unique purposes. Some are more energy-efficient than BTC or offer potentially better means of transactions. However, some have a smaller chance of growing in value and can be riskier when compared to the more stable BTC and ETH.
Can I be Hacked and Lose my Investment?
Yes, there are chances that your selected exchange or digital wallet could be hacked. If you hold your coins in a soft-ware based hot wallet or on an exchange, ensure the chosen platforms have robust security measures in place.
However, the safest storage is a cold wallet, which is entirely off-line, giving almost zero chances of hacking since they’re off-line. Take note, also, that you risk losing your investment if you lose your cold wallet or the encrypted keys used to access it.
While hacking is a significant risk, the level of cryptocurrency crime has grown in tandem with the growing value of crypto. Always be on the lookout for crypto fraud or scams. Your safety mainly lies in recognizing scams from a distance so you can protect yourself and your money.
The most common crypto scams to look out for include:
- People who only accept cryptocurrency for the payment for goods or services
- Unsolicited offers to help you make money or increase your holdings
- Initial coin offerings for fake cryptocurrencies
- Crypto-pump and dump schemes
Tom is a long-serving freelance writer who specializes in the blockchain and cryptocurrency niche. You may even call him a crypto-enthusiast with over 10-years’ experience in content creation, blog writing, and SEO. He is a philosophical figurehead who believes that to make our world a better place, we must invest in incorruptible products and procedures, of which Bitcoin and other cryptocurrencies are leading examples.