How Do You Use Cryptocurrency? Managing Your Financial Life Using Digital Coins.

Cryptocurrency is the latest and most popular investment option in the past few years.

With Bitcoin and Ethereum soaring on the market, many people have begun to place the bet from the start. As Wiseman once said, the earlier you know how to grow your money, the wealthier you get by the end of the day.

Thus, people invest their fortune in many different assets, such as bonds, stocks, and real estate. And today, cryptocurrency is climbing as one of the most potential and profitable investments in the market.

But what is cryptocurrency? 

In simple terms, it is a digital or virtual asset used as a medium of exchange. Cryptocurrency is decentralized and not subject to government or financial institution control. This makes crypto a very appealing investment for many people because there is no middleman involved. Instead, transactions happen between peers through the use of blockchain technology.

What Makes Cryptocurrency So Special?

So, why is cryptocurrency preferable to other assets? First of all, it is a very volatile asset. The price of Bitcoin, for instance, has increased by more than 1000% in the last year. If you invest early and wisely, you can make a large return on investment (ROI).

Another great thing about cryptocurrency is that it is borderless. Unlike stocks or bonds, which are regulated by governments, crypto can be used anywhere in the world. This makes it a great option for people who want to invest in assets outside of their own country.

More importantly, cryptocurrency is still a new asset class. This can mean two things, but positively a new asset means that there is a lot of growth potential. As more people become interested in investing in crypto, the prices are likely to go up.

The Debate Around Cryptocurrency

Although crypto coins are very promising, there is still a big debate on whether or not they are worth investing in. One of the main arguments against cryptocurrency is that it is very volatile. The prices can go up and down quickly, making it a risky investment.

Another concern is that crypto is not backed by any asset. This means that if the prices crash, there will be nothing to back up the value of the coins.

Lastly, some people argue that cryptocurrency is too complicated for the average person to understand. Unlike stocks or bonds, which have a long history and are regulated by governments, crypto is a new and complex asset class. This makes it difficult for people to know how to invest in it safely.

How to Start Investing in Cryptocurrency

If you're totally new to this, purchasing your first crypto can be terrifying. However, it's not as complicated as you may think. Here are a few simple Cryptocurrency tips and tricks to get started:

Find a reputable exchange

The most important thing when it comes to buying cryptocurrency is to find a safe and reliable exchange.

There are many different exchanges available, so be sure to do your research before choosing one. Some things you should look for include security features, user-friendliness, and transaction fees. 

You may consider opening a brokerage account with an all-in-one investment app where you can trade not only Crypto but also stocks and ETFs.

Choose the right wallet

Once you've found a good exchange, you'll need to choose a crypto wallet to store your coins in. There are two main types of crypto wallets: hot and cold. Hot wallets are connected to the internet and, therefore, more vulnerable to hacks. Cold wallets are offline and much more secure.

Transfer your fiat currency

Once you've chosen an exchange and a wallet, you'll need to transfer your fiat currency (i.e., USD, EUR, etc.) into the account. This can usually be done via bank transfer or credit card. Make sure you have a bank account to support this transaction.

Buy cryptocurrency

Once you have your fiat currency in your account, you're ready to buy cryptocurrency. Simply select the coin you want to purchase and specify how much you want to buy. The transaction will then be processed, and the coins will be deposited into your wallet.

Start trading

You can start trading when you have your coins in your wallet. This simply involves buying and selling coins on the exchange in order to make a profit.

Now that you know a bit about cryptocurrency, it is time to learn how to use it to manage your financial life.

6 Tips for Successful Cryptocurrency Investing

Now that you know the basics of how to invest in cryptocurrency, here are a few tips to help you succeed in managing this asset:

1. Do your research

As with any investment, it's important to do your research before buying crypto. This means learning about the different coins, their prices, and the exchanges they're traded on.

You can start by reading crypto articles on websites, watching presentation videos, learning from other experiences, comparing the advantages and disadvantages of certain coins, and finding the best time to buy your first crypto. Researching can be daunting, but it's an essential step to take if you want to be a successful investor.

2. Stay up to date with news

As mentioned, the cryptocurrency market is very volatile, and news can have a big impact on prices. Make sure to stay up-to-date with all the latest crypto news in order to make informed trading decisions.

Join crypto communities and follow news outlets that specifically report on finance and economics, as these topics contribute to the formation of the digital currency industry.

3. Create a portfolio that diversifies your risk

When investing in cryptocurrency, it's important to diversify your portfolio. This means you should invest in different types of coins, on different exchanges, and in different wallets. By doing this, you'll minimize your risk and give yourself the best chance of success.

4. Have a long-term perspective

Cryptocurrency is still a relatively new investment, and it's important to have a long-term perspective. This means that you shouldn't invest more than you're comfortable losing and should be prepared for prices to fluctuate wildly.

Unlike stocks or bonds, which can be held for years, crypto is often traded daily. As such, it's important to stay up-to-date with the latest news and prices in order to make the best trading decisions.

It's also worth noting that the cryptocurrency market is still relatively small, so it's important not to invest more than you can afford.

5. Start small and grow your portfolio

When first starting out, it's a good idea to start with a small investment. This will help you get comfortable with the process and minimize your risk. As you become more experienced, you can invest more money and grow portfolios.

Cryptocurrency investing can be very volatile, and it's important to remember that prices can go up as well as down. That’s why it's essential to be patient and not invest more than you're comfortable losing.

6. Use stop losses

A stop loss is an order that you place in exchange for selling your coin if it reaches a certain price. This is a useful tool to protect your investment and minimize your losses.

For example, let's say you bought 1 BTC at $5,000 and placed a stop loss order at $4,800.

If the price of BTC falls to $4,800, your stop loss order will be executed, and you'll sell your BTC. While you may have sold your BTC at a loss, this loss would've been much bigger if you didn't have a stop loss in place.

The Beginners' Luck and Mistakes in Cryptocurrency Investment

If you've never heard of beginners' luck, well, it's a term that describes the phenomenon of new investors making large profits in a short period of time. This is often followed by a period of losses as they become more experienced.

While there's no guarantee that you'll make money when you first start investing in crypto, it's important to remember that mistakes are part of the learning process. Make sure to educate yourself on the different aspects of cryptocurrency investing, and always take your time when making decisions.

Here are some common mistakes that new investors make:

1. Take a shortcut

It's very important to do your research before buying any crypto. This means you should invest your time first to learn about the cryptocurrency itself from various sources, including cryptocurrency infographics and videos. 

Many beginners skip this part only to follow what the masses tell them to do, like buying a certain coin without a credible background behind it. New investors often fall into this 'broker' trap where they are forced to believe that the information provided by a third party is accurate.

2. Follow the hype

Just because a cryptocurrency is getting a lot of media attention doesn't mean it's a good investment. Oftentimes, the opposite is true.

It's important to remember that crypto prices are very volatile, and they can go up or down very quickly. This is the reason why you should never invest more than you're comfortable losing.

3. Over-diversify your portfolio

While diversification is important when investing in crypto, you shouldn't overdo it. This means you shouldn't invest in too many different coins, as this can lead to confusion and losses.

Instead, focus on a few solid investments that you understand well. This will help you weather the ups and downs of the market and ultimately be more successful in the long run.

4. Not having a clear strategy

It's important to have a clear investment strategy before buying any cryptocurrency. You should have an idea of what you're trying to achieve and how you're going to do it.

For example, are you investing for the short term or the long term? What kinds of risks are you willing to take? By having a clear strategy, you'll be less likely to make impulsive decisions that could jeopardize your investment.

5. Not monitoring your investments

Once you've made an investment, it's important to monitor it closely. This means tracking the prices of your coins and keeping an eye on market news.

By monitoring your investments, you'll be able to make more informed decisions about when to buy or sell. Additionally, this will help you spot any potential red flags that could indicate a scam.

Do You Actually Need to Invest in Cryptocurrency?

Make sure to thoroughly research before deciding to invest in crypto coins. Do not follow the hype! Many investors are tricked into rashly joining the bandwagon without considering the risk.

The truth is that you do not need to invest in cryptocurrency to make money from it. There are other ways to profit from the rise of digital currencies without putting your hard-earned cash at risk.

Here are a few alternative ways to profit from cryptocurrency:

1. Trading

If you don't want to put your money into buying crypto, you can trade it instead. Cryptocurrency trading is similar to forex trading, where you buy and sell coins in an attempt to make a profit from the price difference. This is a more speculative approach, and there's a greater risk of losing money. However, if done correctly, it can be very profitable.

2. Mining

Mining is how new bitcoins are created. Anyone with a computer can mine for bitcoins, and the process is relatively simple.

However, as more people start mining, the difficulty of creating new coins increases, and it becomes less profitable. Nevertheless, it's still possible to make money from mining, and it's a great way to get started in the cryptocurrency industry.

3. Staking

Staking is an alternative to mining that allows you to earn interest on your coins. With this method, you hold your coins in a wallet and receive rewards for keeping them there.

The amount of interest you earn will depend on the coin you're staking and the length of time you stake it for. This is a more passive way to earn money from cryptocurrency, but it's also generally less profitable than mining or trading.

4. Affiliate marketing

If you have a website or blog, you can sign up for affiliate programs and earn a commission from promoting cryptocurrency products.

For example, if you have a blog about investing, you could sign up for an affiliate program with a cryptocurrency exchange and earn a commission whenever someone uses your link to make a trade.

Wrapping Up

Cryptocurrency is the new big thing in the financial world. If you want to get involved, make sure to do your research and invest wisely.

And remember, you don't need to actually buy any coins to profit from cryptocurrency. There are other ways to make money from this emerging industry.

Have you invested in cryptocurrency? What tips would you give to someone who's thinking about it? Let us know in the comments below!

Further Readings: 

• 34 Websites To Make Money–$100 A Day Online
• Blockchain Integration In E-Commerce – Trends In 2022 And The Future Of Secure Transactions