Investing in cryptocurrency is a good way to make money, although not without its risks. In recent years, cryptocurrencies have surged in popularity amid interest from institutional and retail investors.
There is no doubt that the popularity, and hence the value, of virtual coins, will continue to grow and blockchain technology will spread and be adopted across many sectors of the economy. There are already nearly 20000 cryptocurrencies and tokens in the world, each with its own characteristics.
There are several main areas for cryptocurrency investing:
- Hodl. The easiest one for beginners is to simply buy and wait for the value of the coin to rise over time. This way, you can (and should) buy several different coins, rather than just one, creating an investment portfolio with assets of different risk levels. A balanced portfolio will prevent heavy losses even in the most unpredictable market situations.
- Trading. Profiting from short-term fluctuations of the exchange rate by means of frequent purchases and sales on cryptocurrency exchanges. Crypto trading is an activity for those who are already familiar with the peculiarities of the crypto market. It is not recommended for a beginner to start actively trading right away. The volatility and unpredictability of exchange rates are so high that you risk losing your deposit in one day. If you want to simplify your trading — use automated platforms such as https://stoic.ai/.
- Investing in new projects. The following mechanisms are used for it: ICO, IEO, IDO.
- Mining/cloud mining. Invest in buying mining equipment and mining cryptocurrencies. A less expensive option is to use cloud mining services.
- Steaking. It is an alternative to mining. It is how Proof-of-Stake coins work. Powerful hardware is not needed here. It is enough to keep coins locked in a wallet and receive a regular passive income from them.
- DeFi. Decentralized finance gives a huge scope for investments, but you can’t get into DeFi with fiat, you must buy cryptocurrencies elsewhere first.
It is important to clarify and test everything to find out what is best for you.
Investing in new cryptocurrencies
In addition to major cryptocurrencies, it is also possible to invest in brand-new coins or tokens. Most of them come from ICOs/IEOs (initial coin offerings).
Token sales are usually conducted to attract external investments in the development of a project. A new cryptocurrency or a token is issued. Investors purchase the token with the aim of earning further increase in its value. After the initial sale, the coin is listed on cryptocurrency exchanges and its price is determined by market mechanisms (supply and demand). A successful and working cryptocurrency investment can yield several hundred percent returns on the investment.
You can make very good money buying new cryptocurrencies (tokens) that are sold during an ICO/IEO. Investors give money in the hope of getting a few X’s worth of their initial investment capital (i.e., multiplying it by X times).
Almost every day a token sale is launched. It is recommended to get acquainted with the team and its documentation before participating, to have an idea of what they do and what product they offer, at what stage of implementation of plans, what guarantees for investors are, etc. Usually when a project has a working product, the value of its token increases dramatically.
