Digital currency or coins have brought about a new investment hype. There is a lot of money circulating in this industry such that you can easily make massive profits, in a short span or serious losses in the same span. Bitcoin and Ethereum are the most popular cryptocurrency with great potential, but of late, other coins referred to as altcoins have been developed. Having multiple coins give investors a wider pool for investment. It is important to note that cryptocurrencies are extremely volatile, thus, you need to be very cautious when investing. Here are 4 ways in which you can invest in this industry.
1. Cryptocurrency Mining
Mining is one of the ways in which you can invest in cryptocurrency. It involves solving complex cryptographic problems using specialized mining machines to earn coins. You can then sell these coins on various exchanges for fiat currency or make online payments. You need specialized mining equipment which you can find at crypto drilling to mine profitably. Ensure that you also identify highly liquid coins so that you can sell them easily after you mine them successfully.
2. You Can Buy and Hold
Like stocks and other commodities, you can also speculate on digital currency. About eight years ago, Bitcoin was less than $100. In just a few years, the coin had shot to more than $1000, at one point reaching a high of $20,000. Those who had bought and kept the coin while it was still below the $100 mark made a substantial amount of money. There are many more other coins apart from Bitcoin that have shown potential for growth. The best investment strategy is to buy different coins and diversify your portfolio, thus, spreading your risk. In case some coins lose value, they can be covered by the rest in your portfolio.
3. Buy from an Exchange and not from Brokers
Buying and selling coins will involve paying fees to exchanges and brokers. You can avoid these fees and increase your profit margin. Try and look for exchanges that request for low fees but also check for their reputation. It is very easy to get scammed if you fail to carry out due diligence. Avoid buying these coins from brokers as they charge a substantially high fee. Brokers pose a greater risk of getting scammed as compared to crypto exchanges.
Check out this California-based financial firm SoFi which has added zero-fee cryptocurrency trading to its platform SoFi Invest – website .
4. Long and Short Selling
If you are looking for immediate returns, you can either go long or short a particular cryptocurrency. Taking long position is betting on the value of a particular digital currency going up, while going short is betting on the value going down. Considering the volatility nature of most cryptocurrencies, there are usually massive fluctuations in prices that can earn you handsome profits if a trade favors your position. There are various trading sites that now list major cryptocurrencies like Bitcoin and Ether with some enabling leverage trading. Be aware that you can as well make significant losses if the position you place goes against you.
Last Updated on February 4, 2021 by Indrajeet Bhuyan