Cryptocurrencies there are many. The best known of them is bitcoin, one of the most quoted currencies today that has achieved values never before seen by other types of currencies. And it has been able to take all-time highs, even reaching more than 34000 euros for just one bitcoin. But it has also fallen to the bottom. For this reason, experts recommend not getting carried away by "dreams and illusions" and knowing everything you need to know before launching yourself and looking for how to invest in cryptocurrencies.
And, as with other situations, such as investing in the stock market, you must first take into account many concepts and the risks you face. But, Do you want to know how to invest in cryptocurrencies? Next we are going to talk to you about it.
What is a cryptocurrency?
Before starting to learn how to invest in cryptocurrencies, it is almost more important to know what a cryptocurrency is. Its definition is not yet included in the Dictionary of the Royal Academy of the Spanish Language (RAE) but there is a concept that explains what it is.
A cryptocurrency is a virtual currency. This is based on blockchain technology, which is something similar to a ledger. In this way, the operations that are carried out will be recorded in it, leaving the independent programmers themselves as verifiers.
Cryptocurrencies they are made up of a digital file that has a unique code. This can only be read by a program, where it is viewed, preserved and acts as a mediator to be able to carry out transactions with them.
In other words, we find a digital currency that, instead of being physical, what it does is use cryptography to be able to guarantee its value and secure it for the person who has it. In turn, transactions can be managed, be it the purchase, sale or even payment with cryptocurrencies in stores.
One of the characteristics of cryptocurrencies is that there is no central government or body in charge of creating foreign exchange or money in the market, that is to say, that they are what there are.
How to invest in cryptocurrencies: types that exist
As we have told you before, if we asked you to name three or four cryptocurrencies, the most likely thing is that very few would know names to reach that number. And one of them would undoubtedly be bitcoin. But there are actually many more: Dash, Ripple, Ethereum ... By way of illustration, you should know that there are currently more than 2000 virtual currencies around the world. And every year new ones are released on the market.
The best known are Bitcoin, Ethereum, Ripple, Litecoin, Nxt, Tron, Monero, Zcash ...
How to invest in cryptocurrencies step by step
Now that you know a little more about cryptocurrencies, surely you want to get fully into the work of investing in cryptocurrencies. And yet our first advice is that you acquire knowledge. Not only about these virtual currencies, but also through other concepts, such as the crypto ecosystem, cryptocurrency trading, investment systems that exist, etc.
You are also going to need money, and if you want to get something, then add the adverb "a lot."
Once you have this, the steps you should take are:
Choosing the cryptocurrency exchange to invest in
A cryptocurrency exchange is a digital exchange platform where you can exchange digital currencies, either for money or for other currencies or products. And it is the first thing you have to decide when investing in cryptocurrencies.
Among the many there are, some have a "higher reputation", mainly because they are more reliable, such as Kraken, Coinbase, Binance or, if you want the platform in Spanish, Bit2Me.
You will have to register on the platform with your complete information to verify your identity. Once you do, you can start operating, and the first step you must take is to invest the money you want to spend. Normally you should look for the "Deposit" section to be able to make a transfer (or pay with your credit card).
Choose the cryptocurrency to invest in
Let's go to the next step: decide in which cryptocurrency to invest. You have already seen that there are more than 2000 different currencies; However, if you want to go over-safe, We recommend three of them: bitcoin, Ethereum and Litecoin. Right now, they are the ones that promise the most and where you can get a somewhat safer business (within how difficult this market is).
Before launching, it would be good if you controlled the evolution of the currencies, to see, through graphs and other tools, if it is the best time to invest or it is better not to do it and bet on another.
How to invest in real cryptocurrencies
We reached the most important step. You already have the money, the cryptocurrency you want and you just have to start buying and selling (at the time) to make a profit. Normally, the first thing you do is choose the money you want to spend and choose the currency to make the first purchase. From that moment, you will already be a holder of cryptocurrencies and that means that, if you are aware of how they are going, you can sell at the right time and "make money", or at least earn a profit that you did not expect.
Now, you should also know that, in addition to the people to whom you tell that you have cryptocurrencies, the Treasury will also know. And that will have an impact on the Income Statement. In fact, when you go to do it you will get a warning. So try to keep a good control of what you buy and what you do (sell, make a profit, etc.) so that later they do not ask you for an inspection.
Once you buy, you have two options in most cases:
- Leave your cryptocurrencies on the exchange and have them guard your coins.
- Become your own "custodian" yourself.
Experts always recommend the second option because that way you have full control of your coins and, if anything happens on the exchange, you know that your money is going to be safe with you. Now, where can you keep them? For this there are cryptocurrency wallet, which are, as the name suggests, a wallet or purse that serves to store these cryptocurrencies.
Actually, it is a software where you will be indicated the coins you have. And there are many types, so you should choose the one that best suits what you want (one of the safest is the paper wallet, a physical way to have your coins and the safest because it does not depend on the Internet and cannot be hacked ).