The Best 5 Ways to Make an Investment in Cryptocurrency
Over the past few years, cryptocurrency has been gaining great popularity. That is why such concepts as bitcoin, cryptocurrency trading, or mining can be heard from people who are not involved in the world of cryptocurrency. Moreover, a huge number of investors prefer to invest in the cryptocurrency market to traditional stocks. Due to the rapidly growing popularity of cryptocurrency, we have decided to provide you with information on investing in cryptocurrencies and what projects to choose.
What should a beginner know before investing in cryptocurrencies?
Many people are interested in cryptocurrencies mainly in terms of investments and as an opportunity to earn money. But, before you decide to invest in digital currencies, you should investigate the cryptocurrency market, as you can lose funds without the necessary knowledge.
The investor always starts by studying the investment market and assets. It is better to make a Fundamental and technical analysis. Fundamental and technical analysis is used to investigate the digital currency market, as in traditional trading.
What is the Fundamental analysis?
Fundamental analysis allows assessing to assess the state of a certain cryptocurrency project by checking it:
- reliability;
- financial capabilities;
- development prospects;
- customers/users.
If you are going to make investments in a new project, you should check the following points:
- White Paper. You need to check if there is a technical document for the development of a cryptocurrency, platform, or another asset that is being offered for investment.
- Team. It is necessary to pay attention to whether this is a real team, who is the owner of the project, and who is developing the product. Also, you need to find information about the experience of the team and the resources of the project.
- Roadmap. The project must have a development plan that describes its implementation period and what actions the team will take to increase the value of their platform or cryptocurrency.
If you are looking for investment opportunities, you will have to choose between two types of assets:
- Cryptocurrency is a virtual currency. Nowadays, there are a lot of kinds of cryptocurrencies, Bitcoin and Altcoins (Litecoin, Ether, Bitcoin Cash, and Ripple).
- The token is a digital asset that doesn’t have its own blockchain. Therefore, tokens are installed on the blockchain of other digital currencies, such as Omni, Ethereum, Tron, Neo.
When choosing an investment of crypto assets, you should also pay attention to the technical specification of the project, in particular:
Consensus algorithm — transactions can be confirmed in several ways: Proof of Work (PoW), for example, Bitcoin, Proof of Stake (PoS), for example, Cardano.
Inflation — some cryptocurrencies have a determined finite amount. For example, the limit for bitcoins is 21 million units, while others can be created indefinitely, like Tether, which has a new pool from time to time.
Before investing money in a specific cryptocurrency, it is worth checking if the project is based on blockchain or DLT technology.
What is a Technical analysis?
Technical analysis is mainly based on the study of cryptocurrency price charts for different periods of time. It uses a variety of price prediction methods such as Elliott waves, Japanese candlesticks, or Fibonacci levels. Technical analysis is mainly used in fairly “stable” markets that have been around for about a decade. Cryptocurrency/token rates are volatile, and using this analysis can be very risky.
The most popular cryptocurrencies among investors
Among the whole variety of cryptocurrencies, several of the most popular today can be distinguished:
Bitcoin (BTC) is the first digital currency that was created as an analog of fiat money. You have an opportunity to use it to buy products and services, but not all shops allow paying by Bitcoin yet, and some countries forbid it.
Ethereum (ETH) is a platform that allows you to create smart contracts and tokens; the Solidity programming language was created specifically for the project.
Ripple (XRP) is a distributed, not decentralized project for the rapid transfer of funds in international trade.
Litecoin (LTC) is very similar to Bitcoin, differs only in faster block confirmation (2.5 minutes), a finite number of units (84,000,000), and encryption method (Scrypt).
Polkadot (DOT) is a token that provides management of the Polkadot network and its operations, and it is also involved in the creation of parachains (parallel chains) by linking.
Binance Coin (BNB) is a cryptocurrency created by the Binance exchange offering discounts related to exchange commissions and other bonuses.
Stellar (XLM) is a cryptocurrency primarily used for micropayments and also offers smart contract creation.
Chainlink (LINK) is a digital currency that aims to stimulate the global network of computers to provide reliable, real-world data for smart contracts running on top of blockchains.
Synthetix (SNX) is an Ethereum derivatives liquidity protocol that allows synthetic assets to be issued and traded. Every synthetic asset is an ERC20 token tracking the external asset cost (for example, shares of various companies).
Top 5 ways to invest in cryptocurrency
5 — Lending
Landing is a kind of earning a passive income in a percentage of your crypto assets. Many peer-to-peer (P2P) lending platforms provide investors with locking some of their coins for a certain period to get returns. The interest rate can be fixed and defined by the platform, or you have an opportunity to set it in accordance with the current market rate.
Lending is allowed on some exchanges with the option of margin trading.
This method is suitable for investors who are going to hold a cryptocurrency for a long time and increase their incomes without any effort. Every investor must remember that locking funds in a smart contract have the risk of possible bugs, and you can lose your funds.
4 — Setting up the Lightning Network
The Lightning Network is a second layer added to Bitcoin’s (BTC) blockchain that provides uses with off-chain transactions.
To generate income through the Lightning Network is to launch a Lightning Node.
The Lightning Node allows users to customize Lightning payment channels that other users have an opportunity to use to process payments on the Lightning Network. In exchange for managing the channel, users get rewards through transaction fees, which the Lightning node operators can set by themselves.
Although the amount you can earn by running the Lightning Node will not make you rich, any way you can rely on the few hundred dollars a year.
3 — Mining
Mining is a kind of getting cryptocurrency. Nobody regulates the issue of cryptocurrency so that everyone can get the coins.
Mining is the process of getting cryptocurrency with the help of solving cryptographic equations by using powerful computers. The solution process involves validating blocks of data and adding transaction records to the blockchain.
It is worth noting that mining equipment consumes a lot of power. By the way, you must have at least initial knowledge concerning investments and technologies before you start setting up and maintaining the mining equipment.
2 — Staking
Staking is an analog to mining and is intended to participate in verifying transactions on the blockchain with proof of stake (PoS). On these blockchains, the holder of a certain cryptocurrency with the minimum required balance has an opportunity to confirm transactions and get staking rewards.
1 — Trading and Algorithmic Trading
Trading and algorithmic trading takes 1st place in our list.
Cryptocurrency trading is trading coins on specialized platforms, which are called exchanges. In such services, a large number of users buy and sell cryptocurrency at a certain moment at a certain rate. Trading manually is suitable for experienced traders who understand the trends of the cryptocurrency market.
Algorithmic trading is computerized trading, including different solutions like trading robots, signal trading, and many others. This kind of trading is perfect for both beginners and experienced traders.
Cryptorobotics: The best platform for cryptocurrency trading
Nowadays, Cryptorobotics is considered one of the best cryptocurrency trading platforms as it offers various solutions for traders. On this platform, traders are given the opportunity to trade both manually and engage in algorithmic trading.
For algorithmic trading, this platform provides users with the following Algotrading tools:
Cryptorobotics trading platform allows its users to subscribe to a new channel of Autofollowing that is based on Artificial Intelligence algorithms. This system provides the information about the price for every next hour and makes a decision to give a signal now or wait for a more favorable trend. Because of the machine learning algorithm, the system is capable of identifying global and local support and resistance levels, as well as a movement algorithm. Also, the algorithm considers the following points:
- level of trades;
- speed and dynamics for changing in the motion vectors;
- minimum entry point.
This system has been trained for over a year and is now ready for real trading.
Besides, each trader can customize such functions as Limit and Stop-limit orders, as well as OCOs, or Smart orders that allow making the trading process safe and profitable.
There are also integrated 15 cryptocurrency exchanges into the trading platform, where you can trade 24/7.
If you want to start trading and receive returns, you should register on the Cryptorobotics platform. By the way, you can find here a lot of detailed instructions on how to operate on the platform.
