Your Fast Track Guide to Profiting with Cryptocurrencies
As you may have already heard, cryptocurrencies have a record of being one of the most profitable investment classes of all time. After all, the cryptocurrency market has exploded from $4 billion to over $350 billion in the last five years, while cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC) have appreciated by well over 10,000% apiece, while some lesser-known assets have gone even further.
However, though cryptocurrencies have eclipsed every other asset class in terms of percentage appreciation in recent years, most people are still missing out, due to the misconception that cryptocurrency investments are only accessible to tech-savvy financial professionals. But the truth is, investing in cryptocurrency is actually easier than many people think, and can take just a few short steps to get started.
Step 1: Get A Wallet
With cash, you need a wallet to keep all your money organized and within reach at all times. In the cryptocurrency industry, you need a cryptocurrency wallet instead, these are downloadable programs or physical devices that can usually be used to securely store a variety of different cryptocurrencies in one place.
Much like your regular wallet or bank account, you want to keep your cryptocurrency wallet protected at all times and avoid giving out personally identifiable information, such as login credentials and passwords, or the private keys and seed phrases that could be used to access your cryptocurrencies.
There are a huge number of cryptocurrency wallet applications available, but beginner and intermediate users will likely be best served by Coin.Space, which is one of the most accessible and easy to use wallets there is. Available for both mobile and desktops, Coin Wallet supports several popular cryptocurrencies like Bitcoin, Litecoin, Ethereum, and ERC20 tokens, and features bank-level security.
Step 2: Buy and Trade Cryptocurrencies
Once you’ve got your wallet created, you will then be ready to purchase some cryptocurrencies. Depending on where you’re from, which cryptocurrency you are interested in, and how much you are looking to buy, there are a few options available to you.
If you are an absolute beginner, then one of the myriad cryptocurrency brokers are likely to be your best first port of call. These are essentially simple platforms that allow users to purchase cryptocurrencies with a variety of popular payment methods like debit and credit cards, as well as bank deposits and more. These are the easiest way to get your hands on cryptocurrencies and usually deposit your cryptocurrencies to the wallet address you specify (e.g the one you created earlier) once payment has been made.
Popular cryptocurrency brokers include Coinbase, Coinmama, CEX and Changelly — each of which provides access to a range of cryptocurrencies and are relatively fool-proof to use.
For more advanced users, cryptocurrency exchanges like Binance, Poloniex, and Coinbase Pro represent better alternatives, since they are cheaper to use, but are more complicated. You can learn to use platforms like these by taking the free cryptocurrency trading course offered by NewsCrypto, if you plan to dive deeper into the industry.
Once you have purchased your cryptocurrencies and deposited them to your wallet, you will then be able to hold on to them while they appreciate in value. Since cryptocurrencies are quite volatile, it may be best to hold for 6+ months to ensure you are not adversely affected by any temporary losses. Once you’re happy with your profits, you can then sell your assets through the same broker or cryptocurrency exchange you got them from to begin with to lock in your profits.
Step 3: Jump Into the DeFi Revolution
Although prominent cryptocurrencies have demonstrated a long-term bullish trend, and are more likely than not to gain value in the coming months and years, it’s also possible to turn a relatively safe profit on your cryptocurrency holding by investing in one of the myriad popular decentralized finance (DeFi) projects.
Arguably the simplest DeFi platforms to start with are open lending protocols like Compound and Aave, which allow you to safely lend your assets out to earn interest. Borrowers on these platforms need to deposit collateral to ensure you receive your investment back plus interest, no matter how the market behaves. Likewise, cryptocurrency staking, a process that sees token holders rewarded for temporarily locking up their tokens to earn rewards, has become far more accessible in recent months — and can now often be accessed by beginners with little hassle.
Beyond this, yield-farming and liquidity provision are becoming increasingly popular in 2020, as they can generate substantial yields on cryptocurrency holdings. However, they’re best leveraged by experienced users, since the risk of loss can also be significant. As with all potential investments, it’s important to do your due diligence in advance, and the only risk as much as you’re willing to lose.